Development Indices that Matter

Development Indices that Matter


In a previous article (Economic Growth not a Panacea),  it was argued that prospertiy cannot be measured by economic growth alone. Infact if there is Negative Economic Growth, it can impoverish people and create disparity in wealth distribution. Furthermore it can undermine the future of the generations to come. Such growth has been classified into Jobless, Voiceless, Ruthless, Rootless and Futureless growth by the UNDP.

In many resource rich yet under-develop countries, infrastructure projects are considered the most efficient way to enhance the economy and quality of life. Although infrastructure projects do have thier place but it should not be forgotten that the real resource of a country is its people. Unless investment is made on populace, any amount of resources can only take it so far. Or in other words, skilled, educated and disciplined workforce can survive but a resouce rich unskilled population cannot. Unless of course a country is willing to give up its sovernity.

As Hassan Nisar, a leading Pakistani analyst points out ” Pakistani’s don’t need pristine buildings for their schools, our kids can sit on rugs in the open. What they desperately need is good teachers”

Therefore it is imperative to look into indexes that guage the human development of a country. One such index is the UNDP Human Development Index or HDI. This index is formulated on composite data that includes not only income but also education and life expectancy.

The human development index was formulated in the 90s by a Pakistani Economist Mahbub ul Haq. According to Haq, the purpose of the index was to shift the focus of development economics from national income accounting to people-centered policies.

Mahbub ul Haq’s formulation of the HDI came from the observation of  Pakistan’s economic growth during the boom years in the 1960s. It was noted by Haq that the growth created a huge disparity in wealth and did little to uplift the poor conditions of the masses.  In a book later published by Haq, it was revealed that an oligarchy of only 22 families in Pakistan, controlled the country’s economy. Together these families had amassed 67% of industrial assets and owned 87% of the Banking and Finance services.

It is unfortunate, that Haq’s own country chose to ignore his call that transformed the thought pattern of many nations of revisiting economic growth . Today, Pakistan seems fixated with the GDP  and any growth in this index is reported with gleeful ignorance.

The Human Development Index is measured across the world by the UNDP  and is published annually in the  “HDR” report. The last published report shows HDI for Pakistan to be 0.538 in 2014 that has seen a gradual improvement from the original figure of 0.353 in 1980. However,  it is still a low value compared to other countries. Pakistan ranks 147 among the 188 countries that are surveyed. Given the abundant resources in Pakistan (Gas, Coal, Minerals and Hydel  energy) and its food surplus,  this figure is strikingly poor.

Politicians in Pakistan,  are content with growth in GDP while ignoring the soaring rates of illiteracy, crime and poor records  of health  and well being. It is no wonder that even today,  the wealth of the country still remains in a few hands as was identified by Mahbub ul Haq, almost fifty years ago.

Another index that may not be as relevant for Pakistan as it is for the developed world is the ecological footprint. After the enforcement of Kyoto protocol in 2005, global conciousness for averting climate change has increased. Although this change is welcoming, however using CO2 emission/ Carbon footprint as the sole gauge for drafting environmentally  friendly policies  is wrong. A more wholistic index is the ecological footprint.

This index- developed by William Rees – showed that in the year 2010, the overall human footprint was one and a half times the available biocapacity. Or in other words, the resources (from water, fuel,  wood to crops) that the world replenishes in 18 months are being consumed by humans in just 1 year.

The data shows that some countries are worse than the others.  The eco-footprint  of most  under -developed countries (low and middle income ) is less than their available biocapacity or in other words,  they are living within thier natural means. On the other hand energy hungry economies have a much higher eco-footprint than their available biocapacity. The UK has a footprint that is nearly four times its available biocapacity. Similarly Belgium and Netherlands have a footprint that is nearly six times their biocapacity.

In the 1970s, a world that had only a few decades ago witnessed the horrors of war, began to develop a consciousness. People wanted the concept of sustainability at the heart of not only economy but also their environment. On the economic front, a ground breaking book “Limits to growth” was published. Similarly during the same time, MK Hubbard professed his “Peak Oil” Theory.  EF Schumaker came out with “Small is Beautiful: A Study of Economics As If People Mattered” that had a huge impact. On the environmental front,  activism gathered pace and Green Peace was born.

A summary of the message of the  book Limits to Growth can be seen in this presentation videos

The economy of tomorrow has to be one that is organic and intertwined with the environment. We cannot compromise sustainability in the long run for short term gains.

The indices measured herein (HDI and Eco-footprint) should be the ones that are discussed in the parliaments and used in formulating policies rather than their outdated counterparts  (GDP and Carbon footprint)