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Human development and Losers

By Murtaza Haider
March 21 2013




This century will likely belong to Africa and Africans. Those counting the GDP growth rates will end up mis-measuring our lives. They may also fail to see the rise of a billion-plus Africans who have made the greatest stride in human development in the recent past.

Walk through any bookstore in the west and you will see shelves stocked with books about the rise of the new middle class in developing economies, mainly the BRIC economies – Brazil, Russia, India, and China. The self-anointed management gurus are out in full force advising business leaders to focus on BRIC or other similarly acronymised economies in the developing world. They tell us that the economic powerbase is moving away from the West and is shifting to the East. Do you have a Chindia strategy, they ask.

Those trumpeting the success of BRIC economies may be right in the short-run, but wrong in the long-run. By the end of this century, BRIC economies are likely to be the brick and mortar economies of yester years. It will be the middle class in Africa that is going to post the highest gains in human (and economic) development. Think Rwanda, not Russia.

The recently released Human Development Report (HDR) titled The Rise of the South: Human Progress in a Diverse World, highlights the fast changing development landscape in the South. Unlike GDP, which measures (or mis-measures as Professors Joseph Stiglitz, Amartya Sen, and others believe) economic output and ignores income inequalities, the Human Development Index (HDI) is an aggregate measure of health, education, and economic wellbeing. The Report acknowledges the recent success of the countries in the South that have made significant progress in uplifting the socio-economic prospects of their people. India and China are thus duly recognised for bringing hundreds of millions out of abject poverty.

Citing forecasts by 2020, the report notes that “the combined economic output of three leading developing countries alone — Brazil, China and India — will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States.” Indeed these are signs of significant changes in the not-so-distant future.

The latest issue of The Economist also acknowlesges the shift to the South and highlights the ‘success stories’ in a graph (see below). The graph however is misleading since it shows South Korea, Iran, China, Chile and the rest as the real success stories. The problem lies with the way the editors chose to define success. Using the same, but unmassaged, data I generated the graph of successful economies, which puts the African states at the top.

Rwanda not Russia

While it is true that in the near future, the so-called BRIC economies will be responsible for a large chunk of economic growth in the world, it may, however, not be the case in the long-run. By the end of the century, the growth will come from the least likely sources of economic prosperity, i.e., low-income countries such as Rwanda, Mali, and Niger, to name a few.

The graph below shows the difference in human development index between 1990 and 2012. The countries reporting the highest gains in human development since 1990 are also one of the poorest in the world today. With the exception of Iran in the following graph, countries registering over 30 per cent increase in human development since 1990 were ranked amongst the lowest in human development in the 2013 report.

Eyeballing the names of the countries in the graph below reveals another phenomenon: some countries reporting the highest gain in human development continue to be embroiled in armed conflicts. Rwanda, Mali, Myanmar, Mozambique, Yemen, and Afghanistan have reported one of the highest gains in human development since 1990, yet these countries are still in the midst of serious political turmoil resulting in ubiquitous voilence.

Imagine their potential when these countries are able to resolve their internal conflicts and realign their priorities for growth.

Source: Human Development Report, 2013. Calculations by the author.Source: Human Development Report, 2013. Calculations by the author.

The 2013 HDR builds on the thesis forwarded by earlier editions of the same report and a point made cogently by Pofessors Stiglitz, Sen, and Fitoussi that measuring the progress in economic productivity alone leads to ‘mis-measuring our lives.’ The HDR also notes that “economic growth alone does not automatically translate into human development progress.”

A key feaure of the 2013 report is, therefore the focus on equity. The human development indices are offered with raw data and for inequality adjusted data as well, which shows that countries with economic inequalities, such as the United States, see a decline in their ranking for human development after accounting for internal income inequalities. The Report in fact, advocates for new institutions for global governance “to promote a fairer, more equal world.”

How is Pakistan faring in Human Development?

A sobering image of Pakistan appears when one considers Pakistan’s record for human development since early 80s. The above graph revealed that both India and Bangladesh have experienced a faster progress than Pakistan in human development since 1990. The graph below reveals that Pakistan has also lagged behind the rest of South Asia in human development. The gap between Pakistan and the rest of South Asia widened during the 90s. It narrowed only slightly between 2000 and 2005, and has widened since then.

Source: Human Development Report, UNDPSource: Human Development Report, UNDP

The latest UN’s Human Development Report maintains its special link with Pakistan. The HDR was conceived and developed by another Pakistani economist, Dr. Mehboobul Haq, who working closely with his collaborators, Amartya Sen and Frances Stewart, pioneered these reports and a new way to think about human development. The 2013 report’s lead author, Khalid Malik, is a New York based Pakistani economist who had a long association with the UNDP. Mr. Malik is an authority on human development and has, in the past, worked at the Pakistan Institute of Development Economics in Islamabad.

Pakistan can use a development professional to steer the nation out of the governance gridlock. And while it appears that Pakistan currently needs a swift consensus on an interim set-up, it also greatly needs people like Khalid Malik.

Originally published by Dawn Pakistan



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