HDR 2003: The index versus the approach C. Rammanohar Reddy

The story every year with the Human Development Report of the United Nations Development Programme is that it attracts notice for a short while, only to be forgotten quickly. This will be the case in 2003 as well. The global ranking of countries according to their human development index (HDI), which is, in many ways, the centrepiece of the UNDP Report, has shown that India had slipped three places in 2001. Since India’s position has been steadily rising in the HDI list since 1990, the decline this year was the source of some embarrassment. It was a reminder that India’s development story today is not only about the accumulation of $ 80 billion of foreign exchange reserves, of booming information technology and of new growth areas such as business process outsourcing. It is a reminder also about low life expectancy, high adult illiteracy and discrimination in schooling of girls and boys in India. But we will be disappointed if we expect the 2003 Report to provoke some soul-searching that would result in a serious public debate of human development issues.

The brief and passing notice of the HDI rankings every year encapsulates, in many ways, the larger story of the very limited place the human development approach has come to occupy in national and international development policy. This is the story not just in India but in most countries. This may be an odd statement to make given the considerable notice the HDI and the HDR receive every year. The UNDP Report now enjoys a far greater standing in the international community than the World Bank’s much older annual World Development Report. Yet, for all the attention that the HDR gets and in spite of all the national and regional HDRs that are prepared in the world every year, the human development approach is still to make a concrete impact on development policy. A good example can be found at home. In recent years, much of the debate within the Government and outside has been only about how to accelerate growth of the Indian economy to 8 or 9 per cent a year, even as the basic social indicators in education and health are showing signs of regression.

There are three broad reasons for the failure of the human development approach to evolve into much more than an instrument in the hands of critics of the economic growth paradigm.

The first is that the human development approach has become a victim of the success of the HDI. When the first set of HDIs was prepared in 1990, it addressed a widespread unease with the use of per capita gross domestic product (GDP) as the sole yardstick to measure a nation’s progress. A single monetary measure of development, as contained in GDP per capita or its equivalent, does not distinguish between commodities and services of differing value to society. As Mahbub ul Haq, the Pakistani economist who was the driving force behind the publication of the HDR, once famously wrote, “any measure that values a gun several hundred times more than a bottle of milk is bound to raise serious questions about its relevance for human progress.” The HDI, a single composite measure of income and basic education and health standards, was the first serious attempt to assess development differently. The simplicity of the HDI, the transparency with which it was prepared and the reams of statistics on a number of economic and social indicators that accompanied the HDI lists ensured the global acceptability of the new index. However, the popularity of the HDI has not been translated into making the human development approach the centre of policy. With so much of the UNDP Report focussed on the HDI and its measurement, the country rankings have become more important than the processes that lead to where each country stands on the global list. There is a need, as some have said, to rescue the human development approach from the HDI.

The second reason is that the human development approach has been equated with only progress in education and health. The idea of human development has a long history, but as elaborated more recently in the work of Amartya Sen it is about enlarging the choices people have to lead useful lives. What is called the “capabilities approach” is difficult to concretise. Therefore, in the first instance it has been interpreted to mean the ability to live a healthy and productive life. Hence, the importance given to health and education in the UNDP discussions on human development and to their inclusion in the HDI. But human development is also about people’s participation, both as an instrument for enlarging people’s choices and as an end in itself. But the identification of human development with education and health has meant that its larger and more holistic nature is lost sight of. It becomes correspondingly more easy to incorporate a few stray elements of human development (i.e. education and health) into national economic programmes, or at least suggest that they have been addressed.

The third and most important reason for the failure of the human development approach to move out of global, national and regional reports is the inability to integrate economic growth policies into this alternative perspective. The UNDP-variant of the human development approach took some time to shake off the criticism that it was “anti-economic growth”. Such misplaced criticism was inevitable since initially the emphasis was on showing that a higher GDP per capita was not an end in itself but only the means. The early HDRs repeatedly drew attention to country experiences, which illustrated that there was no one-to-one correspondence between per capita GDP and human development levels. Sri Lanka and at that time China enjoyed reasonably high levels of human development even at low levels of per capita income. At the other end, there was Saudi Arabia where incomes were high but human development relatively low. Important as it was to draw attention to these contrasting experiences, they were wrongly interpreted to mean that economies could manage with low per capita incomes. The HDR later therefore had to argue that while human development need not await the generation of high per capita incomes, economic growth was needed to sustain human development. It now goes to some length to stress that economic growth is important — both for instrumental reasons and as a goal in itself. The 2003 edition, for instance, points out that there is a two-way relationship between human development and economic growth, which can be a virtuous or vicious circle. Investments in human development feed into faster growth, and a more rapid growth leads to higher levels of human development.

But all this still leaves unanswered the question, what kind of economic growth facilitates human development? The response used to be that what is required is broad-based, labour intensive and participatory growth. This, however, is devoid of policy content.

Increasingly, the talk is of using globalisation for human development, to correct the rules of global trade to drive economic growth or even for “adjustment with a human face”. These are suggestive of incorporating human development concerns into conventional economic growth strategies. But the human development perspective is the larger. Therefore, economic strategies should be suitably tailored and incorporated into the human development approach that facilitates the expansion of capabilities, not the other way round. It is not surprising then that while international organisations such as the World Bank and the International Monetary Fund, and national governments all now talk of human development, they do so in a very limited sense. For them, it only means highlighting the need to address education, health, housing, water, sanitation and other “social” concerns. This is neither new nor exceptional. Nor does it reflect a departure from the conventional emphasis on economic growth. “Human development issues” thus formulated can and have been accommodated within conventional economic policies without altering the underlying premises of a “growth first” approach.

It is perhaps too early to expect the idea of human development to be translated into effective and coherent policy programmes that would replace “economic growth first” approaches. While it has been 13 years since the first HDR report was published, this is a short period in a battle of ideas. The human development approach has succeeded in pointing out the inherent flaws in policies that emphasise only GDP growth. It has also become a valuable tool to highlight failures in the social sector. But if the human development approach is to lead anywhere in the formulation of alternative policy perspectives, its advocates — in academics, in civil society and in international organisations — have to look at taking it further than refinement of the human development index.