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Human Development and Economic Growth. African Economic Development Feb 1 st 2007 – Renata Serra. Human Development. The ultimate aim of development Enlarge people’s capabilities and freedoms so they can lead longer, better and healthier lives

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Human development and economic growth

Human Development and Economic Growth

African Economic Development

Feb 1st 2007 – Renata Serra


Human development
Human Development

  • The ultimate aim of development

  • Enlarge people’s capabilities and freedoms so they can lead longer, better and healthier lives

  • Language is often enshrined in a human rights framework

    • Right to education

    • Right to good health

    • Etc.


The human development report and index
The Human Development Report and Index

  • The HDR was launched in 1990 by UNDP with the goals of:

    • Putting people back at the center of the development process

    • Going beyond income to assess people’s long-term well-being

  • The HDI is a summary measure of human development: it measures the average achievements in a country in three basic dimensions:

    • A long and healthy life: life expectancy at birth

    • Knowledge: adult literacy rate (with two-thirds weight) and the combined primary, secondary and tertiary gross enrolment ratio (with one-third weight)

    • A decent standard of living: GDP per capita (PPP US$)



Hdi gives more info than income alone
HDI gives more info than income alone:

  • Higher income may not translate into better human development (left panel)

  • Income may not be necessary for improved development (right panel)


Uneven human development
Uneven human development

  • Development has been uneven: progress for some but many have been left behind

  • 20 countries have experienced declines in HDI since 1990


The pros and cons of the hdi
The pros and cons of the HDI

  • Advantages of HDI:

    • Ready calculability and possibility of quick comparison over time and space

    • Effectiveness in conveying the main message (dimensions of development may not be closely correlated)

  • Problems with HDI:

    • Simplifies notions of development

    • Uses arbitrary components and weights

      • Why not including access to water? Why the weight associated with education isn’t greater?


Human development and economic growth1
Human development and economic growth

  • HD and EG affect each other

    Q1: What are the channels through which HD affects EG?

    Q2: What are the channels through which EG affects HD?


From eg to hd
From EG to HD

  • Higher EG leads to greater HD ceteris paribus

    • Botswana vs Sudan

  • Patterns of growth and its distributive effects

    • Lower inequality leads to higher HD

  • Intra-household distribution of resources and decision-making

    • Women’s control of income leads to greater HD

  • Level and distribution of public sector expenditures: PEx/GDP and HDEx/PEx

    • Kenya vs Malawi

  • Effectiveness in service delivery (efficient use of public resources)

    • Low corruption and wastages is good, but also choosing the sector and intervention with the highest returns


From hd to eg
From HD to EG

  • Education increases: earnings; labor productivity; adoption of technology in agriculture; firm’s technology, etc.

  • Health and nutrition increases: productivity, returns to schooling in children; etc.

  • Human capital is a fundamental factor in new growth theories (R&D)

  • HD lowers macro inequality and facilitates growth

  • Investment in HD affects factor endowment, boosts manufacturing exports and growth

  • Education lowers fertility rates and increases per-capita growth


Hd and eg trajectories
HD and EG trajectories

  • Evidence seems to show that HD should be emphasized from the start

  • EG lopsided strategy inevitably plunges a country into a vicious cycle

  • See http://hdr.undp.org/hdr2006/statistics/ for the most recent HD data and interactive information


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