Introduction
HDI is commonly known as the measure of economic development in a given country. However, this measure utilizes the combination of education, health and income (Kelley, 1991). The HDI is based on single numerical statistics that show the development of each country in relation to values between zero and 1. According to HDI, a country is considered developed if it accrues a higher value. The development of education in the country is based on the mean of years among adults aged 25 years and the expected schooling duration of children at the time of schooling age. On the other hand, life expectancy is used to determine the level of health in a country using a standard of 20 and 83 as minimum and maximum years respectively. Income is measured as a wealth component and provides insight into the country’s economic progress.
For example, HDI uses $100 and $ 87,478 as minimum and maximum income standards respectively. In this respect, wealth as a component of standard living is based on GNI per capita (PPP). Despite the HDI making critical progress in analyzing economic development in countries, there are serious disadvantages associated with the measure. This paper discusses the limitations of using HDI in reviewing countries economic progress.
Limitations
HDI is ineffective when used to measure education. For example, an indication that two thirds of American population is literate raises critical questions. Considering that one third of the population is only derived from a Gross Enrollment Index in primary, secondary and tertiary institutions. Therefore, this means that to get a maximum measure of education in a country, one has to assume that the entire population is made up of students (Klugman, RodrĂguez & Choi, 2011). Therefore, this assumption is absurd and does not account for graduation and school drop-out rates. In addition, the HDI does not account for the actual human values perceived by the populace. In this regard, some section of the population would regard secondary objects like vehicles and property more valuable than books.
The HDI use of GNI is a deliberate move to initiate a bias against the principles of GDP (Klugman, RodrĂguez & Choi, 2011). In this respect, an equal measure bounding the values between zero and one cannot be used for conclusive measurement. Precisely, this is because the GDP per capita is not static in any country as it grows with years. However, the HDI assumes that GDP per capita does not grow especially in developing countries. In this context, HDI portrays an incorrect position about wealthy countries by assuming their GDP per capita is on constant growth. For example, the United States economic superiority is exaggerated when HDI is applied, ignoring the country’s lower performance in recent times.
HDI uses the age of 83 years as the maximum life expectancy age. Therefore, this contradicts the current improvement in life expectancy over the last 20 years. In fact, 85 years is now considered the optimal age. Therefore, HDI life expectancy scale would consider the value of 85 years, the immortality age.
From a logical perspective, HDI does not improve and evolve with time. The measure is based on a static position that the county’s optimal achievement is the value of 10 irrespective of any economic development. The fact that HDI excludes important elements of economic and social life is absurd. It is a fact that factors such as corruption, poverty, crime play a critical part in determining a country’s economic development (Klugman, RodrĂguez & Choi, 2011).
Benefits
Using HDI as a measure of economic development has its own advantages. For example, HDI is based on three measures that are easy to collect and evaluate in terms of availability of data. Moreover, the reliability of data related to education, life expectancy and income are easy to obtain from government libraries and databases. Using the measures of life expectancy and education is necessary for evaluating how successful governments have been able to implement policies. Although HDI may fail to capture the actual position of the country’s economic development, it remains an important element in predicting a country’s potential in improving citizens’ living standards.
Conclusion
Understanding a country’s position in respect to economic development is vital to the government and the respective population. In this regard, using HDI to evaluate the country’s performance in vital areas of the economy is necessary. As indicated earlier, HDI is instrumental in evaluating the government performance in implementing policies especially in health and education. On the other hand, the limitations attributed to the use of HDI raises important issues on how economic development should be measured. Therefore, an effective tool of measurement that utilizes important aspects of the economy should be used.
From the HDI evaluation, it is evident that the exclusion of GDP per capita does not guarantee an accurate measurement of economic development. However, HDI can be used by governments to make plans and policies in regard to improving citizens’ welfare. More importantly, an evaluation on HDI forms a fundamental research foundation for scholars to study on new economic measurement methods.
References
Kelley, A. C. (1991). The human development index: handle with care. Population and Development Review, 315-324. Web.
Klugman, J., RodrĂguez, F & Choi, H. J. (2011). The HDI 2010: New controversies, old critiques. The Journal of Economic Inequality, 9(2), 249-288. Web.