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Home Economic Development Human Poverty Index (HPI) as a Measure of Economic Growth

 

Human Poverty Index (HPI) as a Measure of Economic Growth:

 

In order to assess the stage of development or poverty attained by any country a new measure has been introduced by UNDP in 1997. This measure is not satisfied with the dollar-a-day criteria of world bank, (poverty line). Therefore, UNDP substitutes a measure of human poverty for the Bank's income poverty. The measure is similar to HDI.

 

The human poverty index (HPI) believes that human poverty should be measured in terms of three key deprivations of life (over 30% of people of LDCs are unlikely to live beyond 40 years of age), of basic education     (as measured by the percentage of adults who are illiterate, with an emphasis on education deprivation for girls), and of overall economic provisioning (measured by the percentage of people without access to health services and safe water plus the percentage of children under 5 who are under-weight).

 

Using a complex formula to calculate HPI for 78 poor countries, the 1997 report ranked these countries from the lowest to the highest HPI and found that these rankings could differ from W.B.

 

Income poverty rankings and UNDP's own HDI rankings. Since the PI value indicates the proportion of population adversely affected by the three key deprivations (survival, knowledge and economic provisions), a low HPI is good (i.e., a smaller percentage of population is deprived), while a higher HPI reflects a greater deprivation. According to this report the HPI index value was 66% in case of Niger, the highest value, while it was 6.6% in case of Singapore.

 

Millennium Development Goals (MDGs):

 

Goal 1: Eradicate extreme poverty and hunger.

 

Target: Reduce by half the proportion of people living on less than a $ day.

 

Target: Reduce by half the proportion of people who suffer from hunger.

 

Goal 2: Achieve universal primary education.

 

Target: Ensure that all boys and girls complete primary school.

 

Goal 3: Promote gender equality and empower women.

 

Target: Eliminate gender disparities in primary and secondary education preferably by 2005, and at all levels by 2015.

 

Goal 4: Reduce child mortality.

 

Target: Reduce by 2/3 the mortality rate among children under five.

 

Goal 5: Improve maternal health.

 

Target: Reduce by three quarter the maternal arterial mortality ratio.

 

Goal 6: Combat HIV/AIDS, malaria and other diseases.

 

Target: Halt and begin to reverse the spread of HIV/AIDS.

 

Target: Halt and begin to reverse the incidence of malaria and other major diseases.

 

Goal 7: Ensure Environmental sustainability.

 

Target: Integrate the principles of sustainable development into country policies and programs; reverse loss of environmental resources.

 

Target: Reduce by half the proportion of people without sustainable access to safe drinking water.

 

Target: Achieve significant improvement in lives of at least 100 million slum dwellers, by 2020.

 

Goal 8: Develop a global partnership for development.

 

Target: Develop further an open trading and financial system that is rule-based, predictable and non-discriminatory, includes a commitment to good governance, development and poverty reduction-nationally and internationally.

 

Target: Address the LDCs special needs. This includes tariff free and quota free access for their exports; enhanced debt relief for heavily indebted poor countries; cancellation of official bilateral debt; and more generous official development assistance for countries committed to poverty reduction.

 

Target: Address the special needs of land locked and small island developing states.

 

Target: Deal comprehensively with developing countries debt problem through national and international measures to make debt sustainable in long run.

 

Target: In cooperation with developing countries, develop decent and productive work for youth.

 

Target: In connection with pharmaceutical companies, provide access to affordable essential drugs in developing countries.

 

Target: In cooperation with the private sector, make available the benefits of new technologies, especially information and communication technologies.

 

Income Convergence and Income Divergence:

 

The situation where the gap between per capita incomes of the countries goes on to widen is called Divergence in per capita real GDP. On the other hand, where the gap between per capita incomes of the countries goes on to shrink is called convergence in per capita real GDP.

 

Prof. Angus Maddison in his book "Monitoring the World Economy From 1820-1992" writes:

 

Gap between per capita GDP between DCs and UDCs goes on to diverge, rather converge. As in 1820 the average per capita GDP of Europe was $1292, while it was $550 in Asia. The statistics for Europe and Asia were respectively $2110 and $580 in 1870. In 1929, they were $4385 and $858 for Europe and Asia. In 1973, they were $12289 and $1801 both for Europe and Asia. While they were $17387 and $3252 for Europe and Asia for the year 1992.

 

These statistics reveal that the difference between per capita real outputs of rich and poor countries is becoming unequal. However, in case of China, Korea, Chili, Singapore, Taiwan and Malaysia the Gap in respect of per capita incomes is declining. It means that the per capita incomes of these countries are increasing, and they are going close to the incomes of the rich.

 

It has also been found that the countries which are converging their number is increasing relatively more as compared with those which are diverging. Charles Jones writes further that from 1980 the average per capita increase in incomes of the UDCs was 3.7% while it was just 2% in case of DCs, if we give weightage to growth rate on the ground of size of population. This situation represents the situation of India and China where in the presence of population of 1.2 bn and 1 bn the per capita real GDP increased. But Jones also admits that from 1980 to 1993 the growth rate of at least half of UDCs remained negative. In such state of affairs, the incomes of the world were diverging, even at individual level their incomes increased.

Relevant Articles:

Why Economic Development

Lorenz Curve and GINI-Coefficient

Economic Development Vs Economic Growth
Different Definitions of Economic Development
Measurement of Economic Development By Traditional Approach
Approaches to Economic Development/Measurement of Economic Development in Terms of Quality of Life
Physical Quantity of Life Index (PQLI)
Growth of GNP Versus Basic Needs Approach
Human Development Index (HDI)
Good Governance and Humane Governance Index
Measurement of Humane Governance/Good Governance
Measurement of Economic Development with Combining GDP and Life Expectancy
Growth Versus Distribution
Re-Distribution with Growth (RWG)
International Inequalities
New/Modern Economic View of Development
Human Poverty Index (HPI) as a Measure of Economic Growth
 

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Indifference Curve Analysis of Consumer's Equilibrium
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