Human Development Index

HDI is a measure of human development in an economy/country. The growth of an economy can be measured using various indicators s.a. GDP growth rate, IIP, etc. The real purpose of growth is to improve the lives/standard of living of the citizens of a country. The benefits of economic prosperity should trickle down to the masses in terms of better opportunities for income, employment and education. All the indicators mentioned above do not directly measure this welfare as they only indicate the monetary aspect of it. Therefore, we need an indicator like Human Development Index (HDI) which can be used to measure human development and rank countries accordingly.


HDI considers three dimensions:

• Life expectancy at birth, a measure of health and longevity
• Knowledge and education gauged using adult literacy ratio, primary, secondary and tertiary gross enrollment numbers (with one-third weighting)
• Standard of living measured using natural log of par capita GDP at PPP.

Is HDI doing a really good job of gauging the non-monetary aspects? Is something missing? Take a close look at the three dimensions mentioned above and think..........