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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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