Human Development, Sustainability and Global Prosperity

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Human Development, Sustainability and Global Prosperity

Is Human Development aligned with Sustainable Progress?

Human Development is about:

Improving the lives of people rather than assuming that economic growth will automatically lead to greater wellbeing.
Giving people more freedom to live lives.
Freedom of choice and more opportunities is central.
Here, Income growth is seen as a means to development, rather than an end in itself.
4 Pillars: Equity, Sustainability, Productivity, Empowerment.

Approaches to Human Development
Income Approach	Oldest approaches to human development. Human development is seen as being linked to income. The level of income reflects the level of freedom an individual enjoys. Higher the level of income, the higher is the level of human development.
Welfare Approach	This approach looks at human beings as beneficiaries or targets of all development activities. It argues for higher government expenditure on education, health, social secondary and amenities. People are not participants in development but only passive recipients. The government is responsible for increasing levels of human development by maximising expenditure on welfare.
Basic Needs Approach	This approach was initially proposed by the International Labour Organisation (ILO). Six basic needs i.e.: health, education, food, water supply, sanitation, and housing. The question of human choices is ignored, and the emphasis is on the provision of basic needs of defined sections.
Capability Approach	This approach is associated with Prof. Amartya Sen. Building human capabilities in the areas of health, education and access to resources is the key to increasing human development.

Significance of UNDP’s Human Development Report (HDR)

HDR is an annual report published by United Nations Development Programme
The human development approach was developed by the economist Mahbub Ul Haq and is anchored in the Nobel laureate Amartya Sen’s work on human capabilities.
Theme of 2020 report: The next frontier – Human development and the Anthropocene.
It has 5 indices-

Human Development Index (HDI)
HDI adjusted for inequality.
Gender Development Index (GDI).
Gender Inequality Index (GII).
Multidimensional Poverty Index (MPI)

Evolution of UNDP’s Human Development Index (HDI)

HDI- It is a tool used to measure a country’s overall achievement in its social and economic dimensions based on the health of people, their level of education attainment and their standard of living.
For the first time, UNDP introduced a new metric called the Planetary Pressures-adjusted HDI, or PHDI.
PHDI reflects the impact caused by each country’s per-capita carbon emissions and its material footprint.
The PHDI measures the HDI for pressures on the planet to reflect a concern for intergenerational inequality.
India dropped two ranks, standing at 131 out of 189 countries in the 2020 report. India is placed in the medium human development group.

Life expectancy at birth – 69 years.
Expected Years of Schooling – 12.2 years.
Mean Years of Schooling – 6.5 years.
Per-capita GNI $6,829.

Human Development Cost of Inequality: Inequality-adjusted HDI (IHDI)

HDI doesn’t show the inequalities in the country. For this, we need inequality-adjusted HDI.
The difference between the IHDI and HDI is the human development cost of inequality – the overall loss to human development due to inequality.
This leads to better understanding of inequalities across populations.

Gender Development Index (GDI) and its Groupings

The GDI measures gender gaps in human development achievements by accounting for disparities between women and men—using the same component indicators as in the HDI– health, knowledge and living standards.
The GDI is the ratio of the HDIs for females and males.
Gender Development Index groups: Countries are divided into five groups by absolute deviation from gender parity in HDI values.
Group 1: countries with high equality in HDI [Norway, Ireland, Sweden].
Group 2: comprises countries with medium to high equality in HDI [Germany, Switzerland, Hong Kong, Myanmar].
Group 3: comprises countries with medium equality in HDI [Korea, UAE, Nepal, Congo, Zimbabwe]
Group 4: comprises countries with medium to low equality in HDI [Turkey, Bahrain, Maldives, Bhutan, Bangladesh]
Group 5: comprises countries with low equality in HDI [Saudi Arabia, Iran, India, Lebanon, Pakistan]

Comparing Gender Indices in Human Development: GII, GGG, and GPI

GENDER INEQUALITY INDEX	GLOBAL GENDER GAP INDEX	GENDER PARITY INDEX
By: UNDP	WEF	UNESCO
Uses 3 dimensions- Reproductive Health, Empowerment Labour Market Participation	4 dimensions- Economy, Education, Health, Political Representation.	Ratio of girls to boys in primary, secondary, tertiary education
India Rank: 123	Top: Ireland; India: 112/153; Bottom: Yemen.

What insights does the Multidimensional Poverty Index Offer into Human Development Progress?

The Multidimensional Poverty Index (MPI) identifies multiple deprivations at the household and individual level in health, education and standard of living.
It uses micro data from household surveys.
It reflects both the incidence of multidimensional deprivation (a headcount of those in multidimensional poverty) and its intensity (the average deprivation score experienced by poor people)
NITI Aayog is the Nodal agency for the MPI.
Global MPI is an international measure of MPI covering 107 developing countries and was first developed in 2010 by Oxford Poverty and Human Development Initiative (OPHI) and United Nations Development Programme (UNDP).
India is 62nd among 107 countries with an MPI score of 0.123 and 27.91% headcount ratio, based on the NFHS 4 (2015/16) data. India lifted as many as 270 million people out of multidimensional poverty between 2005-06 and 2015-16.
Neighbouring countries: Sri Lanka (25th), Bhutan (68th), Nepal (65th), Bangladesh (58th), China (30th), Myanmar (69th) and Pakistan (73rd)

How does the World Happiness Report contribute to understanding Human Development?

United Nation Sustainable Development Solutions Network (UNSDSN) releases the World Happiness Report.

Theme:

World Happiness Report 2020-focuses on the Environment social, urban, and natural (Environments for happiness, with special attention to the social environment, happiness in urban and rural areas, and the natural environment, including links between happiness and sustainable development).
The World Happiness Report 2020 for the first time ranks cities around the world by their subjective well-being and digs more deeply into how the social, urban and natural environments combine to affect our happiness.

India previously ranked at 140 dropped to 144. Finland – world’s happiest country.
India is a new entrant to the bottom-fifteen group.
The World Happiness Report is a landmark survey of the state of global happiness that ranks 156 countries by how happy their citizens perceive themselves to be.
6 variables taken into consideration are:

WORLD BANK- HUMAN CAPITAL PROJECT

As part of the World Development Report (WDR), the World Bank has launched a Human Capital Project (HCP). It aims to advocate, measure, and analyse to raise awareness and increase demand for interventions to build human capital.
There are 3 components of HCP-

Human Capital Index (HCI),
Measurement and research to inform policy action.
Countries Engagement.

GDP PER CAPITA

SOCIAL SUPPORT
HEALTHY LIFE EXPECTANCY
FREEDOM
GENEROSITY
ABSENCE OF CORRUPTION

Is the World Bank’s Human Capital Project Contributing to Human Development?

The HCI has been constructed for 157 countries.
It claims to seek to measure the amount of human capital that a child born today can expect to attain by age 18.
The HCI has three components-

Survival-as measured by under-5 mortality rates
Expected years of Quality-Adjusted School– which combines information on the quantity and quality of education
Health environment– Using two parameters of adult survival rates and the rate of stunting for children under age 5.

HUMAN CAPITAL INDEX	HUMAN DEVELOPMENT INDEX
By World Bank	By UNDP
HCI uses survival rates and stunting rate as measure of health, and quality-adjusted learning	HDI uses life expectancy and merely years of schooling as measure of education.
HCI excludes per capita income	The HDI uses per capita income.

India’s Progress in Human Capital Index, 2020

India has been ranked at 116th. However, India’s score increased to 0.49 from 0.44 in 2018.
It includes health and education data for 174 countries up to March 2020, providing a pre-pandemic baseline on the health and education of children.

	GROSS HAPPINESS INDEX	PHYSICAL QUALITY OF LIFE INDEX
What it measures	Measures economic and moral progress as an alternative to GDP measurement.	It measures the quality of life or well-being of a country based on 3 variables- Basic literacy rate, infant mortality, and life expectancy at age one.
History	It is constructed based upon a methodology known as the Alkire-Foster method.	PQLI was developed in the mid-1970s by Morris David Morris. It was created due to dissatisfaction with the use of GNP as an indicator of development.
Indicators	33 indicators categorized under nine domains including psychological well-being, standard of living, good governance, health, community vitality, cultural diversity, time use, and ecological resilience.	Consider only the physical variables – adult literacy, life expectancy at birth and infant survival rate. All equally weighted on a 0 to 100 scale.

NOTE: Madhya Pradesh became the first state in India to have a ‘Happiness Department’ that will work as a knowledge resource center on the subject of happiness.

Balancing Sustainable Growth with Human Development

Sustainable Development defined by the BRUNDTLAND COMMISSION in its report OUR COMMON FUTURE (1987) is Development which meets the needs of the present without compromising the ability of future generations to meet their own needs.
Core pillars of Sustainable Development are- (Fig.)
EMISSIONS GAP REPORT, 2020: Despite a brief dip in carbon dioxide emissions caused by the COVID-19 pandemic, the world is still heading for a temperature rise in excess of 3°C this century – far beyond the Paris Agreement goals of limiting global warming to well below 2°C and pursuing 1.5°C.

SOCIAL SUSTAINABILITY(INCLUSION)
ECONOMIC SUSTAINABILITY(GROWTH)
ENVIRONMENTAL SUSTAINABILITY(HARMONY WITH NATURE)
SUSTAINABLE DEVELOPMENT

Are the Sustainable Development Goals (SDGs) aligned with Human Development Principles?

The United Nations (UN) launched the 2030 Agenda for Sustainable Development and SDGs.
This set of goals replaces the Millennium Development Goals (MDGs) which were coming to an end in 2015.There are 17 goals and 169 specific targets to be achieved by 2030.
SDGs are not legally binding.

NITI Aayog’s SDG Index and Its Implications for Human Development in India

The SDG Index aims to promote healthy competition among states and Union Territories (UTs) by evaluating their progress in social, economic and environmental terms which will help India achieve the UN SDG goals by 2030.
Based on their performances, states and UTs were given scores ranging from 0 to 100. States and UTs were classified into four categories, namely Achiever, Front Runner, Performer and Aspirant.
India has become the first country in the world to measure the goals at a sub-national level.

SSDN’s SDG Index and Human Development Metrics

The Sustainable Development Report 2020 presents the SDG Index for all UN member states.
Prepared the Sustainable Development Solutions Network (SDSN).
The SDG index frames the implementation of 17 SDG goals among UN member states.
Ranking: China > Brazil > Russia > Maldives > Sri Lanka > Nepal > Bangladesh > India > Pakistan.

Paris Agreement (COP21) and Human Development Goals

The Paris Agreement was adopted in 2015; entered into force in 2016; legally binding.
Goal: to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
Rich nations to maintain a $100bn a year funding pledge beyond 2020.
Countries submit their plans for climate action known as nationally determined contributions (NDCs).

Introduced as a part of 2019 HDI Report.
It captures how social beliefs can obstruct gender equality along four dimensions: Political, Educational, Economic, and Physical integrity.
The GSNI ranges from 0 to 1. Higher GSNI values indicate higher bias against gender equality.
It is constructed based on responses to seven questions from the World Values Survey.

Human Development Perspectives in Socio-Economic Concepts

POVERTY:

Poverty Line: The conventional approach to measuring poverty is to specify a minimum expenditure (or income) required to purchase a basket of goods and services necessary to satisfy basic human needs and this minimum expenditure is called the poverty line.

The World Bank defines a person as extremely poor if she is living on less than 1.90 international dollars a day, which are adjusted for inflation as well as price differences between countries.

Did Human Development influence the decline in poverty rates as seen in Census 2011 Data?

The proportion of people living below poverty line (BPL) has come down from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12 — a decline of 15.3 percentage points
In urban areas, the poverty rate fell 9.8 percentage points to 13.7 percent from 37.2 per cent, while in rural areas 16.3 percentage points to 25.7 percent from 42 per cent.

Poverty and Inequality Dynamics through Human Development Perspectives

Alagh Committee (1979)
Lakdawala Committee (1993)
Tendulkar Committee (2009)
Rangarajan Committee

Absolute Poverty	Absolute poverty is a condition where household income is below a necessary level to maintain basic living standards (food, shelter, housing). This condition makes it possible to compare between different countries and also over time.
Relative Poverty	Relative poverty is a condition where household income is a certain percentage below median incomes. For example, the threshold for relative poverty could be set at 50% of median incomes (or 60%).
Poverty Headcount Ratio	The World Bank’s International Poverty Line (IPL) stands at a person living daily on US$1.90 (PPP exchange rate). So, a person who spends less than an absolute amount ‘US$1.90’ a day is considered ‘below IPL line’ → classified as poor.
Poverty Gap Ratio	The Poverty Gap Ratio is the gap by which mean consumption of the poor below poverty line falls short of the poverty line. It indicates the depth of poverty; the more the PGR, the worse is the condition of the poor. While the number of poor people indicates the spread of poverty, PGR indicates the depth.
Poverty Trap	A situation where an unemployed getting unemployment allowance is not encouraged to seek work/employment because his/her after-tax earnings as employed is less than the benefits as unemployed, also known as the unemployment trap.
Palma Ratio	The Palma ratio is a measure of inequality. It is the ratio of the richest 10% of the population’s share of gross national income (GNI) divided by the poorest 40% ‘s share. It measures inequality similar to the Gini coefficient.
Kuznets Curve	In economics, a Kuznets curve graphs the hypothesis that as an economy develops, market forces first increase and then decrease economic inequality. The hypothesis was first advanced by economist Simon Kuznets in the 1950s and ’60s.
Gini Coefficient	An inequality indicator in an economy. The coefficient varies from ‘zero’ to ‘one’. A ‘zero’ Gini coefficient indicates a situation of perfect equality (i.e., every household earning the same level of income) while a ‘one’ signifies a situation of absolute inequality (i.e., a single household earning the entire income in an economy).
Lorenz Curve	A graph showing the degree of inequality in income and wealth in a given population or an economy. It is a rigorous way to measure income inequality.

Various Types of Unemployment in India

Cyclical Unemployment:	It is a result of the business cycle, where unemployment rises during recessions and declines with economic growth. Cyclical unemployment figures in India are negligible. It is a phenomenon that is mostly found in capitalist economies.
Technological Unemployment:	It is the loss of jobs due to changes in technology. In 2016, World Bank data predicted that the proportion of jobs threatened by automation in India is 69% year-on-year.
Disguised Unemployment:	It is a phenomenon wherein more people are employed than actually needed. It is primarily traced in the agricultural and the unorganised sectors of India.
Seasonal Unemployment:	It is an unemployment that occurs during certain seasons of the year. Agricultural labourers in India rarely have work throughout the year.
Structural Unemployment:	It is a category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market. Many people in India do not get jobs due to lack of requisite skills and due to poor education level, it becomes difficult to train them.
Frictional Unemployment:	The Frictional Unemployment also called as Search Unemployment, refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs. In other words, an employee requires time for searching a new job or shifting from the existing to a new job, this inevitable time delay causes frictional unemployment. It is often considered as voluntary unemployment because it is not caused due to the shortage of jobs, but in fact, the workers themselves quit their jobs in search of better opportunities.

Unemployment Trap: Implications from a Human Development view

It is a situation when unemployment benefits discourage the unemployed from going to work. People find the opportunity cost of going to work too high when one can simply enjoy the benefits by doing nothing.
While the purpose of social security and welfare systems is to provide relief to the unemployed, they end up providing them with an incentive not to return to work. An unemployment trap arises when the opportunity cost of going to work is higher than the income received, discouraging people from returning to work and being productive.

How does Employment Elasticity reflect Human Development Progression?

It is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth.
The employment elasticity indicates the ability of an economy to generate employment opportunities for its population as per cent of its growth (development) process.

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Updated on March 13, 2024

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