Inter-Country Human Development

• International Income Gaps
• Income and Wellbeing
• New Indicators (the UNDP Human Development Index)

International Income Gaps

• traditionally a meter / indicator in comparison between countries

Positive view:

• growth: has been good, what about future?
• 500 years of success behind now
• 50 last years have been phenomenal!
• poverty avoided increasingly
• developing countries: SE-Asia has been growing +7% years, ie. doubling every 10 years, for the last 30 years
• OECD ('the rich countries club') has grown only 2% even in good times

Negative view:

• the income gap is still widening:

LOW	1:1	(380)
MIDDLE	6,5:1	(2480)
HIGH	61:1	(23090)

• 1960: 1:11

1970: 1:38
1985: 1:52
1993: 1:61

What to do to reverse this?

• a matter of growth rates
• ARGUE: what does the gap matter as long as absolute incomes grow?
• counter: it's a cause for immigration, for example
• do these comparison reflect well-being in the countries?

->

Income and Wellbeing

Economists: GNP/capita is the best single indicator

Argue:

• change rates don't reflect the real purchasing power
• -> international trade does not tell you what people can by
• => Puchasing Power Parity (PPP)

1st correction: gap is not so wide

Further drawbacks:

• registers only monetary transactions on markets
• -> ignores work within family, community etc.
• UNDP: 2/3 of women's work never enters into GNP calculations, 1/4 of man's
• no difference in goods and bads, i.e. education / napal bombs
• environmental issues and natural resources are not a part of income
• damage (use) is not valued, only repair projects
• no value for leisure, even if someone stops working 'cause prefers leisure!
• no value for participating in decision making...

Defense:

• economists: "no choice", GNP/cap is the best single meter.
• dev. countries: income is necessary for other goals

New Indicators - UNDP Human Development Index

1990: UNDP Human Development approach:

• W.A. Levis: Nobel Prize 1980
• A.K. Sen

Income: not a goal in itself but a way to reach other things

• essense: widening choice

• functionings
• living conditions to reach: literacy, adequant housing, participation, avoiding death, ....
• capabilities
• set of possibilities/availabilities: good health, income, social and natural environment, ...

Practice:

• deprivation (and proverty) are lack of choice / opportunities
• also: lack of buffers, cope with temporary problems, risks
• example: people want to live a long life -> life expectancy

Correlation of GNP and life expectancy (as an example):

• dots show a curve -> there is correlation,
• lot of exceptions:
• China, Sri Lanka, Kerala (high female literacy) in India and Greece high above the curve
  (president of world bank: educate a woman so you'll educate a family)
• Angola, Congo, S Africa and India, Arab countries and Gabon (oil) low below
• conclusion: income does matter but also other capabilities have to be considered as well!

HDI-indicators (composite)

1. Life Expectancy (...)
2. Education (literacy, school going)
3. Income (PPP/capita, discounted high-income effect!)

• HDI weights transparent and open for discussion
• distinctions (intra-country regional) possible
• dramatic differences in country ratings compared to PPP (or GNP)
• Hong Kong -16
• Costa Rica +23 (good social policy)
• Gabon -46 (oil)

was also really interesting to get such a clear picture explaining why and how monetary transactions don't cover  that much of wellfare and life. he drew a picture comparing the dutch and indian economies telling how little of the life in india is valued in money and how much in netherlands -> economic stats based on money don't show much.

i guess that's also why economic growth can be so fast in the east. the economy is there already, it just hasn't been counted in terms of money before. when it is registered as money more and more people there have more choices, ie. can decide to buy something else instead of eating the rice from own fields, can travel etc. is this the essense - money is a way of .. abstracting the value out of things to be used more flexibly? that's what they tought in school if i remember correctly.]