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Global HDI vs national HDR

  • Ivan Hadar

Jakarta | Mon, November 15 2010 | 09:07 am

The government launched the National Human Development Report (HDR) 2010 on Monday, a week after the publication of the Global Human Development Report 2010, one of the flagships of the United Nations Development Program, including the Global Human Development Index (HDI).

This year’s HDI introduced a new methodology and indicators in an attempt to put people back at the center of development talks and action plans.

The human development approach is complex and associated with a number of concepts, such as people’s choices and capabilities and the improvement of basic freedoms. The philosophical articulation of this approach has greatly benefited from the contributions of Amartya Sen and Mahbub Ul Haq.

As a globally accepted instrument to measure human development, the HDI represents people’s well-being and allows comparisons between different countries. The HDI is the first wide-ranging representation of an approach that emphasizes capability and basic needs. The HDI’s empirical relevance has proven useful to UN agencies, governments and other development partners throughout the world. And yet, beginning several years ago, the HDI has been criticized for its lack of desirable statistical properties.

The belief shared among HDI creators is that the index is an alternative to gross domestic product (GDP), gross national income (GNI) and income-based measures, while complementary to them as well.

The HDI is a multidimensional index and a measure of achievements in capability. Although the HDI is supposed to measure capabilities, Anand and Sen ( 1994 ) write that it “has been concerned only with the enhancement of very basic capabilities of people”.

The HDI is a long-term summary of three basic indicators of human development. In the past, the three measureable indicators were life expectancy, adult literacy percentages in combination with gross school participation rates for children, and per capita GDP and minimum income in US dollars (now about US$1.25/day). The measurable indicators were eventually criticized and have been improved from time to time.

In line with the progress of development and challenges facing many countries in the world, particularly since 1990, the Global HDR 2010 introduces new indicators for the same three basic dimensions of human development, namely a long and healthy life, access to knowledge and a decent standard of living.

The HDI is a comprehensive approach to human empowerment and basic needs. Changes to HDI indicators and measurement methodologies are affecting the HDI values and rankings of all countries.

This year, in addition to a reformed HDI with new indicators, the Global HDR introduces three new indices: the inequality-adjusted HDI, gender inequality index (GII), and multidimensional poverty index (MPI).

The Global HDR 2010 monitors trends over the last 30 years. Unlike the past, for example, a 1 percent change in life expectancy means a 1 percent change in education and income.

In 2010, Indonesia ranked 108th out of the 169 countries assessed, entering the middle group with an HDI of 0.600. In the last 30 years, Indonesia’s HDI has increased by 54 percent, or by an average of 1.4 percent annually. During this period, life expectancy increased by 19 percent, while the GNI per capita increased by 180 percent.

Long-term assessments are also useful to compare with neighbors or other countries in the region. For East Asia and the Pacific in 1980, Indonesia, China and Thailand had almost the same HDI. But between 1980 and 2010, the three countries developed differently.

Indonesia’s HDI of 0.600 is above average for the middle group of developing countries. The Philippines and China are rated 97 and 89, while Malaysia has a high HDI, rated 57 in the region.

The HDI, however, always “hides” inequalities. Considering inequality, Indonesia’s HDI should be 0.494, or 18 percent lower than its official value. The Philippines and China lose even more, by 19 and 23 percent, respectively. Gender inequality in Indonesia is 0.680, or 100th out of 138 countries, while 21 percent of the population suffers from multidimensional poverty and 12 percent are prone to poverty.

Similar to the Millennium Development Goals (MDG) achievement, Indonesia’s HDI has not escaped from the east-west gap, with provinces in the east generally having a lower HDI with a few exceptions, such as North Sulawesi. The central government utilizes the human development approach, especially the HDI, to distribute general allocation funds (DAU) and special allocation funds (DAK).

Some provinces, such as Gorontalo and West Java, also use the human development approach to improve their HDI and, as a bonus, they receive more DAUs and DAKs. After 2010 new methodologies and indicators for the HDI will have implications for the distribution of DAUs and DAKs. All parties involved, especially regional governments, need to be prepared.

Indonesia’s multidimensional poverty index has declined by 9 percent in the last 30 years. This indicates that despite the poverty problem, people still have access to education and healthcare.

The good news is that Indonesia is one of the top 10 countries in the world with the quickest progress in human development. With Oman, China and Nepal as the top three, Indonesia is fourth, ahead of Saudi Arabia and South Korea. So, can we make it even better?

The writer is a Millennium Development Goals and human development observer.


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