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Fundamentals of Economics

Human Development Index

The Human Development Index (HDI)

The Human Development Index (HDI) is a composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development. The HDI was first developed by Pakistani economist Mahbub ul Haq in 1990 and is currently maintained by the United Nations Development Programme (UNDP). The HDI is a more holistic measure of a country's development compared to measures that focus solely on economic indicators like Gross Domestic Product (GDP).

Calculation

The HDI is calculated as the geometric mean of three components:

  • Life expectancy at birth measures the average number of years a newborn infant can expect to live.
  • Expected years of schooling measures the number of years of education that a child of school entrance age can expect to receive if prevailing patterns of age-specific enrolment rates persist throughout the child's life.
  • Gross national income (GNI) per capita measures the average income of a country's citizens.

The HDI ranges from 0 to 1, with 1 being the highest possible score. Countries are grouped into four tiers of human development based on their HDI score: very high, high, medium, and low. As of 2020, Norway had the highest HDI score of 0.957, while Niger had the lowest score of 0.394.

Criticisms

The HDI has been criticized for not considering other factors that contribute to a country's development, such as inequality, gender disparities, and environmental sustainability. However, it remains a widely used measure of human development and has helped to shift the focus of development policies from economic growth to more comprehensive measures of well-being.

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