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Human development revisited: A new UNDP report
Worm Development, Vol. 19, No. I1), pp. 1469-1473, 1991. Printed in Great Britain.
0305--750X/91 $3.(XI + 11.00 © 1991 Pergamon Press pie
Human Development Revisited" A New UNDP Report M I C H A E L HOPKINS* M H Consulting, Geneva Summary. - - The UNDP's first annual tluman Development Report is reviewed and discusscd. The relx~rt introduces a n c w index - - thc human dcvelopmcnt index (liD1) - - as a counter to measures of national income such as GDP. Measuring developmcnt of countries with the aid of this indcx gives a significantly different ordering to one based on GNP per capita. "Fhis point is not disputcd, although success on the index is not a necessary and sufficient condition for success in terms of rapid economic growth, as is shown by the ease of Sri Lanka. Nevertheless, the report is welcome for its attention to human development issues, for its useful statistical annex, and for its obscrvation that the poverty of the people of the dcvcloping world has been no barrier to the affluence of their armies.
1. I N T R O D U C T I O N The
UNDP's
flagship
annual
report,
the
Human Development Report 1990, tells us that the perception of d e v e l o p m e n t has shifted - initially, from economic d e v e l o p m e n t to socioeconomic d e v e l o p m e n t with a new emphasis on poverty, and then to human development. H a v e we heard all this before? Earlier reports were, for example, the Dag Hammarskold Report in the early 1970s, the International Labor Organization ( I L O ) with basic needs in the mid-1970s, the Brandt Commission Report of the early 1980s and so on. Perhaps it is presumptuous of the U N D P to tell us that there is a shift, but it is welcome, nevertheless, to see the U N D P place such importance on the d e v e l o p m e n t of human resources b~' devoting an annual report to the subject. Such longer-term considerations often fade into the background as shorter-term, antirecessionary policies take center stage. Both the new U N D P report and the World Bank's World Development Report 1990 concern themselves with longer-term considerations - - the former with human resources, the latter with poverty. But does the new U N D P report take us any further in our understanding of human development? The Human Development Report analyzes the record of human d e v e l o p m e n t for the last three decades and glides smoothly over the experience of 14 countries in managing economic growth and human development. Contrary to many gloom
and d o o m reports of the human condition in the Third World, its main conclusion is upbeat in that many developing countries have made significant progress in achieving human development, with gaps between poor and rich countries having considerably narrowed. Nevertheless, the relentless growth of population has meant that despite a diminishing proportion of the world's population living in absolute poverty, the absolute number of poor people continues to increase. A second main conclusion of the report is that respectable levels of human development are possible even at modest levels of income, although it cites an unfortunate example to help justify this - - the war-racked island of Sri Lanka. A third important observation, somewhat buried in the report, regards the relentless rise of military spending in the Third World. This is three times the equivalent military burden of industrial countries and leads the report to remark that the poverty of the people in many countries of the developing world obviously has been no barrier to the affluence of their armies. Associated with this is the finding that a democratic political and social framework is not necessarily an impediment to the attainment of relatively high levels of human development. The 1990 report promises us that this will be examined more fully in future editions, as will the
*Thanks to Guy Standing for comments on an earlier version of this paper. 1469
1470
WORLD DEVELOPMENT
thorny issue of an index of the many aspects of human freedom - - frcc cleetions, multiparty political systems, an uncensored press, adherence to the rule of law, guarantees of free speech, personal security, etc.
2. T I l E MAIN TIIEMES O F T t l E UNI)P REPORT The report is organized into five chapters. The first introduces the human development index (examined in Section 3 below) and the second examines the available evidence about human development since 196(I. The third chapter looks at economic growth and human development in order to debunk the hypothesis that excessive concentration on human development reduces economic growth. It concludes that there is no automatic link between economic growth and human progress although, on the face of it, such a conclusion is facile. Clearly, some economic prosperity is a necessary condition for expenditure on social concerns, although it is not a sufficient condition, tlowever, the causal link is important. It would be difficult to imagine a rapidly growing economy without at least some measure of human skill development. Yet, as the relatively modest growth experience of Sri Lanka has shown us, a nation that records high levels on many social indicators does not necessarily experience rapid and sustained economic growth. Chapter 3 recognizes this and provides a sensible disaggregation of economies from which to develop its prescriptive or policy advice. There are countries that had sustained human development (Botswana, Costa Rica, the Republic of Korea, Malaysia and Sri Lanka); those that had disrupted human development (Chile, China, (?olombia, Jamaica, Kenya and Zimbabwe); and those that had missed opportunities for human development (Brazil, Nigeria, and Pakistan). This promising typology is inexplicably replaced in Chapter 4, which provides us with a (or the?) human development strategy for the 1990s. The second, newer typology is sixfold, combining low or middle income with uneven or moderate income distribution and low or moderate human development. This discontinuity marks the turning point of the report, as it then slips into "'UNese. "'l Perhaps this reflects the need for a UN report to provide concrete tasks for action. This is not a bad thing in itself. However, why do all UN reports have to do this? Cannot a piece of good analysis stand alone? The need for prescription for so many countries leads to statements such as: "'category V countries should - - if they follow good meso policies while maintaining their
generally good growth and distribution policies - - attain high levels of human development within a few years." A list of meso 2 policies is given, but these are far too superficial to bc of help in devising policy. Meaningful policy advice is impossible, anyway, in a report covering all the countries of the world. The utility is in the comparative analysis, not the individual country advice. Continuing its downward spiral in Chapter 5, the report swings into almost breathless gushing as, presumably to fill the volume out to the internationally accepted 150-page length for such reports, it leaps into a discussion of urbanization and human development. Its rationale for doing this is that (ugh!) "this is the century of the great urban experience.'" While a concern with urbanization and its problems is laudable, this issue might better have been tackled in depth in a future volume. After a few commonly available statistics are cited, wc are informed that "'small and intermediate cities, with forward and backward linkages to the rural countryside, clearly promote both rural and urban development." With a last gasp, the final statement tells us that "'to solve the growing problems of cities - - and to unleash many possibilities for human development - - is going to depend heavily on better urban management, considerably better." This is a disappointing finale to an otherwise promising first act. The report then presents a very useful statistical appendix. This overlaps the Worhl Developmerit Report's statistical appendix to a certain extent, but provides many more statistics of a social nature than does the World Bank. In addition, it derives some fascinating statistics that clearly illustrate some of the themes in the report. Most striking to this reviewer is that, of the list of 131) large countries, the winner in 1986 in terms of the ratio of military expenditure to health and education was lraq, at seven to one, followed by Iran (377%) and then Uganda (323%) with consequences of which we are all well aware. Similarly, another grim statistic tells us that Somalia has 5.3 military personnel per teacher, followed by Iraq (4.3), Egypt (3.6), Nicaragua (3.3) and Syria (3.2), compared with Costa Rica (0), the United States (I.0), the United Kingdom (0.6), and Sweden (0.9). The figures speak for themselvcs.
3. 1S'I't4E HUMAN DEVEI.OPMENT INDEX USEFUL? A useful contribution is the report's suggestion for, and estimate of, a new index of human
HUMAN DEVELOPMENT REVISITED development (HDI) that attempts to measure progress on human development concerns. The index is likely to be with us for some time, technical considerations aside, because of the importance of the U N D P as well as its intention to publish yearly reports. It therefore deserves further analysis. The index has three components that the authors claim focus on the three essential elements of human life - - longevity, knowledge, and decent living standards. This harkens back to the debate on basic needs in the mid-1970s. Then it was recognized that material basic needs could be met in prison. The HD1 also would be high for a person living a long time with access to a library in a very comfortable prison! The ILO basic needs team was very concerned to avoid this and added a component that stressed an individual's right to participate in the decisions that affect his or her life. It proved difficult to develop a measure of this. The U N D P report avoids this nettle while remarking that human development is incomplete without human freedom. Nevertheless, the report recognizes the need to quantify various indicators of human freedom and to explore the link between human freedom and human development. This is an area that will be difficult for the U N D P to take up, as it is an organization that represents member countries - - many of which only pay lip service to the UN Charter of Human Rights. To measure progress on each main component, the report selects life expectancy at birth to measure longevity, literacy to measure knowledge, and per capita income 3 (purchasing power adjusted) to measure living standards. Of the three, literacy is the weakest indicator since it is impossible to have the same international standards for the ability to read and write given language differences. The three indicators are then combined in a novel way (similar to the work of McGranahan and Pizarro on living standards for U N R I S D ) to provide a composite index. A maximum and minimum level is defined for each indicator and the proportional attainment of the difference between these two levels is calculated. The index is then one minus a simple addition of the three proportions. This is reminiscent of the physical quality of life index (POLl) developed by Morris (1979). That index comprised a simple addition of infant mortality, life expectancy at age one, and literacy, and was also used to show the inadequacy of GNP as a measure of human well-being. The PQLI proved unpopular, among researchers at least, since it had a major technical problem, namely the close correlation between the first two indicators. The HDI has improved on this.
1471
A weakness of the IIDI, as of other composite indicators of its ilk, is the simple addition of the three indicators after grading to form a total that is then used to rank countries. There is no a priori rationale that allows one to add life expectancy to literacy. It is akin to adding bananas and oranges. In the case of oranges and bananas, however, the utility of the different fruits may be measured in terms of calories. ! luman development does not have such relatively easily identified utilities. Hence there is not likely to be a widespread agreement on the HDI as, for example, there is for GDP. Since it is probably impossible to obtain agreement on weights, the simplest arrangement is the best choice (Occam's razor). It would therefore be better to spend any additional resources on improving the quality of the underlying data rather than on interminable discussions about weights.
4. IS T H E HDI O P E R A T I O N A L ? What exactly does the HDI tell us? The lowest country on the HDI is Niger and the highest is Japan. When comparing the difference between its rank by GNP per capita in 1987 and by the HDI, Sri Lanka has the largest positive difference of the 130 countries considered. Sri Lanka comes 45 places higher in the HDI list than its rank by GNP per capita. China is 44 places higher. Similarly, the largest negative difference was for the oil-rich states of Oman ( - 5 6 ) followed by the United Arab Emirates ( - 5 0 ) and Gabon ( - 4 6 ) . Knowing this, does the i l D I help us understand development any better, and thus provide guidance for international and national development efforts? For example, does the result that Sri Lanka ranks high on the HDI and somewhat low on G D P per capita tell us anything? Sri Lanka is often cited as a country that has done well in achieving material basic needs satisfaction but has done less well in obtaining rapid economic growth or in eliminating poverty (Hopkins and Jogaratnam, 1990). The 1987 estimates show that around 25% of the population is below the poverty line. Real per capita GNP rose at a respectable 3% a year, over 1965-88, but this was far less than the average 6-7% a year in countries such as Taiwan, South Korea, Hong Kong and Singapore over the same period. Performing well on the HDI thus is not a necessary and sufficient condition for rapid economic growth or poverty elimination. Going into a little more detail about the development of Sri Lanka helps us to understand
1472
WORLD DEVELOPMENT
the limitations of global indices such as the HDI. Two contrasting economic policies were pursued by Sri Lanka during 196<)--84 (Bhalla and Glewwe, 1986). From 1960 to 1977 Sri I+anka followed closed economy policies with substantial expenditures allocated to basic needs (mainly food, health, housing, and education). After 1978, economic policies were based on a more open approach, with reduced social welfare expenditures and faster economic growth. Bhalla and (;lewwe (1986) concluded that the improvement in Sri Lanka's living standards over the period 196(~78 was no better than the average of 43 comparator countries, even though Sri Lanka had high expcnditures on social welfare. Controversially, the authors argued that Sri l+anka's high ranking on social indicators derived from its colonial legacy. In contrast, during 1977-84, with reduced social welfare expenditures and little progress in indicators such as primary school enrollment and infant mortality, Sri l+anka recorded substantial economic growth. Bhalla and Glewwe suggested that this was a more satisfactory situation than earlier. The authors further concluded that the post-1977 policies were not detrimental to equity objectives. These conclusions must be tempered by the limited scope of the study: for example, the government's increased dependence on foreign credit was not considered; and the economic stagnation during 1960-78 may not have been due solely to the basic needs approach. The closed economic policies and the nationalization policies undoubtedly had a negative influence on economic growth. During 1977-84 economic growth conditions were more favorable. The reduction of unemployment after 1977 was not only due to internal policy changes; external events such as Sri Lankan labor migration to the Middle East were also helpful. Sri Lanka's high achievement on social indicators seems to have led to complacency among its people and frustration for its economic planners. It has not taken off into prosperity like its fastgrowing South Asian neighbors. The high social achievements have not developed an entrepreneurial class that can compete, and a question mark must be placed over, for example, high achievement in education but poor achievement in developing technical skills through industrial training. Thus, a country such as Sri Lanka that does well on the IlDI is not necessarily a model of successful development.
5. DOES THE REPORT tlELP FURTI-IER UNDERSTANDING OF PRACTICAL ISSUES'? The report, as befits a global statement, can only gloss over practical issues of implementing human resource development programs while keeping costs to a minimum and allowing the dynamics of new investment to take over. It claims to be "'practical and pragmatic" but, on the other hand, calls for more research (to be part of the agenda for future reports) on such questions as: What are the essential elements of strategies for planning, managing, and financing human development'? What are the requirements of a practical framework for participatory development'? What is a conducive external environment for human development? One wonders whether the report actually helps practitioners without a detailed examination of specific country experiences. Skating over the experiences of many countries at once makes for interesting reading, but is it useful? Practitioners know that every country is different and that packages cannot be borrowed from one country to fit another's needs. The report takes up the new fashion of "'meso++ policies and calls for "'well-structured" meso policies. These apparently require a mix of two main features. First, across-the-board provision of basic services to ensure that the benefits reach the deprived and, second, targeted schemes such as income support and food subsidies directed toward deprived groups. The concern with deprived groups is laudable, but the report is meant to be about human development. We do not read much in the report about the nondeprived groups which, nevertheless, provide the dynamism by which countries develop. To be more useful to human resource planners, the report would have to discuss what human resources must be developed to meet the needs of a rapidly growing economy. This would require examining such questions as: where does vocational training take over from formal education? ttow many trained numerical control experts does a country need'? What experiences have other countries had? If an expensive training program is put in place, will its graduates be technologically obsolescent'? How much training should be provided by the state and how much by the private sector? Meso policies have been suggested by the World Bank in C6te d'Ivoire to reduce government expenditure while helping to preserve the living standards of vulnerable groups during adjustment. Again, the UNDP report's policy suggestions are too general to be of very much
HUMAN DEVELOPMENT REVISITED help. For example, it does not address how the g o v e r n m e n t can redirect expenditures away from costly hospitals toward primary health care without completely losing the support of the medical establishment. Nor does it examine how to target subsidies to the poor when the poor are exceedingly hard to identify and tend to change in composition and location over time. Experience has shown that it is very difficult to include the most vulnerable in the targeting net. For example, the oft-cited targeted food stamp program in Sri Lanka was not an overwhelming success. Edirisinghe (1987), in an exhaustive study of that program, c o m m e n t e d that while many of the intended beneficiaries received transfers, about 30% of the households in the poorest half of the population did not appear to have received as much of the benefits as a similar percentage in the upper half of the population appeared to enjoy. He concluded that attempts to limit transfers to the most needy have been only partially successful.
6. F I N A L R E M A R K S Returning to the question posed in the introduction: does the new U N D P report take us any
1473
further in our understanding of human development? Perhaps this is too harsh a standard for j u d g e m e n t since the U N D P does not claim to provide new research. Rather, the report should be judged in terms of its ability to refocus current threads of debate, to synthesize human development ideas, and to help further d e v e l o p m e n t efforts. O n these grounds the report does rather well. The mere fact that a group of U N D P staff members have taken the initiative to inject research and current thinking into what is mainly a funding organization can only help that organization to raise its own awareness of successful d e v e l o p m e n t strategies and thus help it to do its job better. A small, in-house team is better able to do this than a group of outsiders. O n e can legitimately quibble, however, with the report's lack of detailed analysis about earlier approaches such as basic needs, and its failure to discuss how this new effort differs. Without this historical analysis, and knowing the fads that wax and wane in the United Nations, there is a danger that human resource d e v e l o p m e n t as now defined will end up on the scrap heap of history. Meanwhile, finance ministers will continue to give short shrift to human d e v e l o p m e n t as shorter-term issues dominate.
NOTES 1. UNese - - a statement that appeals to all, appears profound at first sight, but on careful dissection is meaningless. For example: "'an urgent task for the international community is to restore a favorable external environment in the 1990s and to assist in the implementation of essential human goods" (UNDP, 1990, p. 78). Presumably+ by the 2000s we shall have an urgent, urgent task. And how much is this statement worth now: "'major world powers should be urged to promote peaceful developments in the Third World by defusing regional tensions particularly in the Middle East"?
2. These are meant to be somewhere between macro and micro policies. 3. The logarithm of real GDP per capita was used to reflect the diminishing returns of transforming income into human capital, i.e., people do not need excessive financial resources to ensure a decent standard of living.
REFERENCES Bhalla, S., and P. Glewwc, "'Growth and equity in developing countries: A re-interpretation of the Sri Lankan experience," Mimco (Washington, DC: World Bank, June 1986). Edirisinghe, N., "'The food stamp scheme in Sri Lanka: Costs, benefits and options for modification," IFPRI Research Report No. 58 (Washington, DC: International Food Policy Research Institute, 1987). Hopkins, M., and T. Jogaratnam, "'The socio-cconomic dimensions of poverty in Sri Lanka and policy implications," Mimeo (Washington, DC: USAID, March 1990).
McGranahan, D. V., and P. Pizarro, Measurement and Analysis of Socio-Economic Development (Geneva: UNRISD0 t985). Morris, M. D., Measuring the Condition of the World's Poor: The Physical Quality o] Life Index (New York: Pergamon, 1979). UNDP, Human Development Report 1990 (New York: Oxford University Press. 1990). World Bank, World Development Report 1990: Poverty (New York: Oxford University Press, 1990).
0305--750X/91 $3.(XI + 11.00 © 1991 Pergamon Press pie
Human Development Revisited" A New UNDP Report M I C H A E L HOPKINS* M H Consulting, Geneva Summary. - - The UNDP's first annual tluman Development Report is reviewed and discusscd. The relx~rt introduces a n c w index - - thc human dcvelopmcnt index (liD1) - - as a counter to measures of national income such as GDP. Measuring developmcnt of countries with the aid of this indcx gives a significantly different ordering to one based on GNP per capita. "Fhis point is not disputcd, although success on the index is not a necessary and sufficient condition for success in terms of rapid economic growth, as is shown by the ease of Sri Lanka. Nevertheless, the report is welcome for its attention to human development issues, for its useful statistical annex, and for its obscrvation that the poverty of the people of the dcvcloping world has been no barrier to the affluence of their armies.
1. I N T R O D U C T I O N The
UNDP's
flagship
annual
report,
the
Human Development Report 1990, tells us that the perception of d e v e l o p m e n t has shifted - initially, from economic d e v e l o p m e n t to socioeconomic d e v e l o p m e n t with a new emphasis on poverty, and then to human development. H a v e we heard all this before? Earlier reports were, for example, the Dag Hammarskold Report in the early 1970s, the International Labor Organization ( I L O ) with basic needs in the mid-1970s, the Brandt Commission Report of the early 1980s and so on. Perhaps it is presumptuous of the U N D P to tell us that there is a shift, but it is welcome, nevertheless, to see the U N D P place such importance on the d e v e l o p m e n t of human resources b~' devoting an annual report to the subject. Such longer-term considerations often fade into the background as shorter-term, antirecessionary policies take center stage. Both the new U N D P report and the World Bank's World Development Report 1990 concern themselves with longer-term considerations - - the former with human resources, the latter with poverty. But does the new U N D P report take us any further in our understanding of human development? The Human Development Report analyzes the record of human d e v e l o p m e n t for the last three decades and glides smoothly over the experience of 14 countries in managing economic growth and human development. Contrary to many gloom
and d o o m reports of the human condition in the Third World, its main conclusion is upbeat in that many developing countries have made significant progress in achieving human development, with gaps between poor and rich countries having considerably narrowed. Nevertheless, the relentless growth of population has meant that despite a diminishing proportion of the world's population living in absolute poverty, the absolute number of poor people continues to increase. A second main conclusion of the report is that respectable levels of human development are possible even at modest levels of income, although it cites an unfortunate example to help justify this - - the war-racked island of Sri Lanka. A third important observation, somewhat buried in the report, regards the relentless rise of military spending in the Third World. This is three times the equivalent military burden of industrial countries and leads the report to remark that the poverty of the people in many countries of the developing world obviously has been no barrier to the affluence of their armies. Associated with this is the finding that a democratic political and social framework is not necessarily an impediment to the attainment of relatively high levels of human development. The 1990 report promises us that this will be examined more fully in future editions, as will the
*Thanks to Guy Standing for comments on an earlier version of this paper. 1469
1470
WORLD DEVELOPMENT
thorny issue of an index of the many aspects of human freedom - - frcc cleetions, multiparty political systems, an uncensored press, adherence to the rule of law, guarantees of free speech, personal security, etc.
2. T I l E MAIN TIIEMES O F T t l E UNI)P REPORT The report is organized into five chapters. The first introduces the human development index (examined in Section 3 below) and the second examines the available evidence about human development since 196(I. The third chapter looks at economic growth and human development in order to debunk the hypothesis that excessive concentration on human development reduces economic growth. It concludes that there is no automatic link between economic growth and human progress although, on the face of it, such a conclusion is facile. Clearly, some economic prosperity is a necessary condition for expenditure on social concerns, although it is not a sufficient condition, tlowever, the causal link is important. It would be difficult to imagine a rapidly growing economy without at least some measure of human skill development. Yet, as the relatively modest growth experience of Sri Lanka has shown us, a nation that records high levels on many social indicators does not necessarily experience rapid and sustained economic growth. Chapter 3 recognizes this and provides a sensible disaggregation of economies from which to develop its prescriptive or policy advice. There are countries that had sustained human development (Botswana, Costa Rica, the Republic of Korea, Malaysia and Sri Lanka); those that had disrupted human development (Chile, China, (?olombia, Jamaica, Kenya and Zimbabwe); and those that had missed opportunities for human development (Brazil, Nigeria, and Pakistan). This promising typology is inexplicably replaced in Chapter 4, which provides us with a (or the?) human development strategy for the 1990s. The second, newer typology is sixfold, combining low or middle income with uneven or moderate income distribution and low or moderate human development. This discontinuity marks the turning point of the report, as it then slips into "'UNese. "'l Perhaps this reflects the need for a UN report to provide concrete tasks for action. This is not a bad thing in itself. However, why do all UN reports have to do this? Cannot a piece of good analysis stand alone? The need for prescription for so many countries leads to statements such as: "'category V countries should - - if they follow good meso policies while maintaining their
generally good growth and distribution policies - - attain high levels of human development within a few years." A list of meso 2 policies is given, but these are far too superficial to bc of help in devising policy. Meaningful policy advice is impossible, anyway, in a report covering all the countries of the world. The utility is in the comparative analysis, not the individual country advice. Continuing its downward spiral in Chapter 5, the report swings into almost breathless gushing as, presumably to fill the volume out to the internationally accepted 150-page length for such reports, it leaps into a discussion of urbanization and human development. Its rationale for doing this is that (ugh!) "this is the century of the great urban experience.'" While a concern with urbanization and its problems is laudable, this issue might better have been tackled in depth in a future volume. After a few commonly available statistics are cited, wc are informed that "'small and intermediate cities, with forward and backward linkages to the rural countryside, clearly promote both rural and urban development." With a last gasp, the final statement tells us that "'to solve the growing problems of cities - - and to unleash many possibilities for human development - - is going to depend heavily on better urban management, considerably better." This is a disappointing finale to an otherwise promising first act. The report then presents a very useful statistical appendix. This overlaps the Worhl Developmerit Report's statistical appendix to a certain extent, but provides many more statistics of a social nature than does the World Bank. In addition, it derives some fascinating statistics that clearly illustrate some of the themes in the report. Most striking to this reviewer is that, of the list of 131) large countries, the winner in 1986 in terms of the ratio of military expenditure to health and education was lraq, at seven to one, followed by Iran (377%) and then Uganda (323%) with consequences of which we are all well aware. Similarly, another grim statistic tells us that Somalia has 5.3 military personnel per teacher, followed by Iraq (4.3), Egypt (3.6), Nicaragua (3.3) and Syria (3.2), compared with Costa Rica (0), the United States (I.0), the United Kingdom (0.6), and Sweden (0.9). The figures speak for themselvcs.
3. 1S'I't4E HUMAN DEVEI.OPMENT INDEX USEFUL? A useful contribution is the report's suggestion for, and estimate of, a new index of human
HUMAN DEVELOPMENT REVISITED development (HDI) that attempts to measure progress on human development concerns. The index is likely to be with us for some time, technical considerations aside, because of the importance of the U N D P as well as its intention to publish yearly reports. It therefore deserves further analysis. The index has three components that the authors claim focus on the three essential elements of human life - - longevity, knowledge, and decent living standards. This harkens back to the debate on basic needs in the mid-1970s. Then it was recognized that material basic needs could be met in prison. The HD1 also would be high for a person living a long time with access to a library in a very comfortable prison! The ILO basic needs team was very concerned to avoid this and added a component that stressed an individual's right to participate in the decisions that affect his or her life. It proved difficult to develop a measure of this. The U N D P report avoids this nettle while remarking that human development is incomplete without human freedom. Nevertheless, the report recognizes the need to quantify various indicators of human freedom and to explore the link between human freedom and human development. This is an area that will be difficult for the U N D P to take up, as it is an organization that represents member countries - - many of which only pay lip service to the UN Charter of Human Rights. To measure progress on each main component, the report selects life expectancy at birth to measure longevity, literacy to measure knowledge, and per capita income 3 (purchasing power adjusted) to measure living standards. Of the three, literacy is the weakest indicator since it is impossible to have the same international standards for the ability to read and write given language differences. The three indicators are then combined in a novel way (similar to the work of McGranahan and Pizarro on living standards for U N R I S D ) to provide a composite index. A maximum and minimum level is defined for each indicator and the proportional attainment of the difference between these two levels is calculated. The index is then one minus a simple addition of the three proportions. This is reminiscent of the physical quality of life index (POLl) developed by Morris (1979). That index comprised a simple addition of infant mortality, life expectancy at age one, and literacy, and was also used to show the inadequacy of GNP as a measure of human well-being. The PQLI proved unpopular, among researchers at least, since it had a major technical problem, namely the close correlation between the first two indicators. The HDI has improved on this.
1471
A weakness of the IIDI, as of other composite indicators of its ilk, is the simple addition of the three indicators after grading to form a total that is then used to rank countries. There is no a priori rationale that allows one to add life expectancy to literacy. It is akin to adding bananas and oranges. In the case of oranges and bananas, however, the utility of the different fruits may be measured in terms of calories. ! luman development does not have such relatively easily identified utilities. Hence there is not likely to be a widespread agreement on the HDI as, for example, there is for GDP. Since it is probably impossible to obtain agreement on weights, the simplest arrangement is the best choice (Occam's razor). It would therefore be better to spend any additional resources on improving the quality of the underlying data rather than on interminable discussions about weights.
4. IS T H E HDI O P E R A T I O N A L ? What exactly does the HDI tell us? The lowest country on the HDI is Niger and the highest is Japan. When comparing the difference between its rank by GNP per capita in 1987 and by the HDI, Sri Lanka has the largest positive difference of the 130 countries considered. Sri Lanka comes 45 places higher in the HDI list than its rank by GNP per capita. China is 44 places higher. Similarly, the largest negative difference was for the oil-rich states of Oman ( - 5 6 ) followed by the United Arab Emirates ( - 5 0 ) and Gabon ( - 4 6 ) . Knowing this, does the i l D I help us understand development any better, and thus provide guidance for international and national development efforts? For example, does the result that Sri Lanka ranks high on the HDI and somewhat low on G D P per capita tell us anything? Sri Lanka is often cited as a country that has done well in achieving material basic needs satisfaction but has done less well in obtaining rapid economic growth or in eliminating poverty (Hopkins and Jogaratnam, 1990). The 1987 estimates show that around 25% of the population is below the poverty line. Real per capita GNP rose at a respectable 3% a year, over 1965-88, but this was far less than the average 6-7% a year in countries such as Taiwan, South Korea, Hong Kong and Singapore over the same period. Performing well on the HDI thus is not a necessary and sufficient condition for rapid economic growth or poverty elimination. Going into a little more detail about the development of Sri Lanka helps us to understand
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the limitations of global indices such as the HDI. Two contrasting economic policies were pursued by Sri Lanka during 196<)--84 (Bhalla and Glewwe, 1986). From 1960 to 1977 Sri I+anka followed closed economy policies with substantial expenditures allocated to basic needs (mainly food, health, housing, and education). After 1978, economic policies were based on a more open approach, with reduced social welfare expenditures and faster economic growth. Bhalla and (;lewwe (1986) concluded that the improvement in Sri Lanka's living standards over the period 196(~78 was no better than the average of 43 comparator countries, even though Sri Lanka had high expcnditures on social welfare. Controversially, the authors argued that Sri l+anka's high ranking on social indicators derived from its colonial legacy. In contrast, during 1977-84, with reduced social welfare expenditures and little progress in indicators such as primary school enrollment and infant mortality, Sri l+anka recorded substantial economic growth. Bhalla and Glewwe suggested that this was a more satisfactory situation than earlier. The authors further concluded that the post-1977 policies were not detrimental to equity objectives. These conclusions must be tempered by the limited scope of the study: for example, the government's increased dependence on foreign credit was not considered; and the economic stagnation during 1960-78 may not have been due solely to the basic needs approach. The closed economic policies and the nationalization policies undoubtedly had a negative influence on economic growth. During 1977-84 economic growth conditions were more favorable. The reduction of unemployment after 1977 was not only due to internal policy changes; external events such as Sri Lankan labor migration to the Middle East were also helpful. Sri Lanka's high achievement on social indicators seems to have led to complacency among its people and frustration for its economic planners. It has not taken off into prosperity like its fastgrowing South Asian neighbors. The high social achievements have not developed an entrepreneurial class that can compete, and a question mark must be placed over, for example, high achievement in education but poor achievement in developing technical skills through industrial training. Thus, a country such as Sri Lanka that does well on the IlDI is not necessarily a model of successful development.
5. DOES THE REPORT tlELP FURTI-IER UNDERSTANDING OF PRACTICAL ISSUES'? The report, as befits a global statement, can only gloss over practical issues of implementing human resource development programs while keeping costs to a minimum and allowing the dynamics of new investment to take over. It claims to be "'practical and pragmatic" but, on the other hand, calls for more research (to be part of the agenda for future reports) on such questions as: What are the essential elements of strategies for planning, managing, and financing human development'? What are the requirements of a practical framework for participatory development'? What is a conducive external environment for human development? One wonders whether the report actually helps practitioners without a detailed examination of specific country experiences. Skating over the experiences of many countries at once makes for interesting reading, but is it useful? Practitioners know that every country is different and that packages cannot be borrowed from one country to fit another's needs. The report takes up the new fashion of "'meso++ policies and calls for "'well-structured" meso policies. These apparently require a mix of two main features. First, across-the-board provision of basic services to ensure that the benefits reach the deprived and, second, targeted schemes such as income support and food subsidies directed toward deprived groups. The concern with deprived groups is laudable, but the report is meant to be about human development. We do not read much in the report about the nondeprived groups which, nevertheless, provide the dynamism by which countries develop. To be more useful to human resource planners, the report would have to discuss what human resources must be developed to meet the needs of a rapidly growing economy. This would require examining such questions as: where does vocational training take over from formal education? ttow many trained numerical control experts does a country need'? What experiences have other countries had? If an expensive training program is put in place, will its graduates be technologically obsolescent'? How much training should be provided by the state and how much by the private sector? Meso policies have been suggested by the World Bank in C6te d'Ivoire to reduce government expenditure while helping to preserve the living standards of vulnerable groups during adjustment. Again, the UNDP report's policy suggestions are too general to be of very much
HUMAN DEVELOPMENT REVISITED help. For example, it does not address how the g o v e r n m e n t can redirect expenditures away from costly hospitals toward primary health care without completely losing the support of the medical establishment. Nor does it examine how to target subsidies to the poor when the poor are exceedingly hard to identify and tend to change in composition and location over time. Experience has shown that it is very difficult to include the most vulnerable in the targeting net. For example, the oft-cited targeted food stamp program in Sri Lanka was not an overwhelming success. Edirisinghe (1987), in an exhaustive study of that program, c o m m e n t e d that while many of the intended beneficiaries received transfers, about 30% of the households in the poorest half of the population did not appear to have received as much of the benefits as a similar percentage in the upper half of the population appeared to enjoy. He concluded that attempts to limit transfers to the most needy have been only partially successful.
6. F I N A L R E M A R K S Returning to the question posed in the introduction: does the new U N D P report take us any
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further in our understanding of human development? Perhaps this is too harsh a standard for j u d g e m e n t since the U N D P does not claim to provide new research. Rather, the report should be judged in terms of its ability to refocus current threads of debate, to synthesize human development ideas, and to help further d e v e l o p m e n t efforts. O n these grounds the report does rather well. The mere fact that a group of U N D P staff members have taken the initiative to inject research and current thinking into what is mainly a funding organization can only help that organization to raise its own awareness of successful d e v e l o p m e n t strategies and thus help it to do its job better. A small, in-house team is better able to do this than a group of outsiders. O n e can legitimately quibble, however, with the report's lack of detailed analysis about earlier approaches such as basic needs, and its failure to discuss how this new effort differs. Without this historical analysis, and knowing the fads that wax and wane in the United Nations, there is a danger that human resource d e v e l o p m e n t as now defined will end up on the scrap heap of history. Meanwhile, finance ministers will continue to give short shrift to human d e v e l o p m e n t as shorter-term issues dominate.
NOTES 1. UNese - - a statement that appeals to all, appears profound at first sight, but on careful dissection is meaningless. For example: "'an urgent task for the international community is to restore a favorable external environment in the 1990s and to assist in the implementation of essential human goods" (UNDP, 1990, p. 78). Presumably+ by the 2000s we shall have an urgent, urgent task. And how much is this statement worth now: "'major world powers should be urged to promote peaceful developments in the Third World by defusing regional tensions particularly in the Middle East"?
2. These are meant to be somewhere between macro and micro policies. 3. The logarithm of real GDP per capita was used to reflect the diminishing returns of transforming income into human capital, i.e., people do not need excessive financial resources to ensure a decent standard of living.
REFERENCES Bhalla, S., and P. Glewwc, "'Growth and equity in developing countries: A re-interpretation of the Sri Lankan experience," Mimco (Washington, DC: World Bank, June 1986). Edirisinghe, N., "'The food stamp scheme in Sri Lanka: Costs, benefits and options for modification," IFPRI Research Report No. 58 (Washington, DC: International Food Policy Research Institute, 1987). Hopkins, M., and T. Jogaratnam, "'The socio-cconomic dimensions of poverty in Sri Lanka and policy implications," Mimeo (Washington, DC: USAID, March 1990).
McGranahan, D. V., and P. Pizarro, Measurement and Analysis of Socio-Economic Development (Geneva: UNRISD0 t985). Morris, M. D., Measuring the Condition of the World's Poor: The Physical Quality o] Life Index (New York: Pergamon, 1979). UNDP, Human Development Report 1990 (New York: Oxford University Press. 1990). World Bank, World Development Report 1990: Poverty (New York: Oxford University Press, 1990).