H D I sluggish despite growth

By the Economist

Sri Lanka’s human development ranking among 177 nations of the world has been declining in recent years. In 2000 Sri Lanka’s position with respect to the Human Development Index (HDI) was the 77th. This was in fact an improvement from earlier years as it was in the 84th position in 1998. Since then the country ranking has fallen. Sri Lanka has lapsed to the 99th position in the latest HDI ranking of 2004. In fact the reversal is seen clearly in that we were in the 77th position in 2000; in the 96th position in 2002; somewhat better in the 93rd position in 2004 and fallen to its lowest position of being the 99th in a total of 177 nations.

It is indeed startling that the country’s HDI score too has fallen in the last three years. It is not only that we have dropped in our relative positioning with respect to other countries, but the HDI score has also fallen after 2003, when it was 0.75 to 0.743 in 2005. What is most surprising is that this has been so despite the boast of high rates of economic growth. During the period 2000-2004 the economy grew at an annual average of 5.5 percent and per capita incomes grew by over 4 per cent per year. We boasted that we had moved from a low income country to a middle income country during this time. Yet the human development performance fell. This is not because of a declining trend in social indicators but due to other countries performing better.

The Human Development Index is an alternate way of judging what a country’s economic and social position is. It attempts to correct several of the defects of judging countries on the basis of per capita income alone. Many social scientists consider it a superior measure to that of GDP. Most recently Joseph Stiglitz the winner of the Nobel Prize in Economics in 2001 and now a professor at Columbia University in New York said that: "Among the Economics profession there has been a strong sense for a long while that gross domestic product is not a good measure. It doesn't measure changes in well-being, it doesn't measure comparisons of well-being across countries". He added that "If you improve the quality of life, but it doesn't show up in more material consumption, it doesn't show up in GDP, and you'll be criticized".

In many senses, the HDI is a more comprehensive measure than per capita income. It measures the average achievements of a country in three important basic dimensions of human development. These are a long and healthy life, as measured by life expectancy at birth, knowledge, as measured by the adult literacy rate (with two-thirds weighting) and the combined primary, secondary, and tertiary gross enrolment ratio (with one-third weighting). A decent standard of living is also taken into account by including per capita income, as measured by the purchasing power parity (PPP) in US$. The PPP per capita income level attempts to adjust nominal per capita income to a common comparative value of goods and services that the income would buy. It is argued that by using the measures of life expectancy, literacy, education, and standard of living for countries worldwide it is a standard means of measuring well-being, especially child welfare.

The HDI is also used to determine and indicate whether a country is a developed, developing, or underdeveloped country and also to measure the impact of economic policies on the quality of life. Sri Lanka has for long years thought that its achievement on the HDI is a vindication of its economic and social welfare policies. We have prided ourselves on achieving a high HDI figure and position than the per capita incomes indicate. In fact several economists too have chosen the example of Sri Lanka’s achievement in human development as a vindication of their point of view that a country need not achieve high per capita incomes to improve their social well-being. Most prominent among these economists is the Nobel Prize winner Amartya Sen.

Despite the decrease in 2005 in comparison to that of 2004, over a longer period, the HDI score has in fact improved from .733 in 1997 to .745 in 2005. There is no denying the fact that the country has achieved considerable progress in social development during the sixty years after independence in 1948. There have been significant improvements in literacy and school enrolment, reduction in mortality rates and an increase in life expectancy and enhancement in amenities. Life expectancy at birth increased from around 55 years to 74 years.

There have been significant improvements in maternal mortality, infant mortality and under 5 mortality. Maternal mortality decreased from 560 to 100 per one hundred thousand live births in 2002, while infant mortality declined from 82 to 12 per thousand in 2004. Under 5 mortality declined to less than 19 per thousand.

Adult literacy increased from 57.8 per cent in 1945 to 92.5 per cent in 2004 with female literacy improving more sharply during this period from 43.8 per cent (1945) to 90.6 per cent and male literacy increasing from 70.1 per cent to 92.5 per cent. School enrolment of children between the ages of 5 - 19 years increased from 54.1 per cent (1945) to 75.2 in 2003 but declined to 71.5 in 2006. Primary net school enrolment rate was 97.5 in 2006 (Central Bank 2007). Female school enrolment, which lagged behind male school enrolment has caught up and is higher than male enrolment.

Although these attainments over the entire period are quite impressive, the economic strains of the country were responsible for a deceleration in their improvement. For instance a literacy level of 87.2 per cent that was attained in 1981 declined to 86.9 per cent in 1991 and has risen to 92.5 per cent in 2004. Similarly school enrolment that rose sharply to reach 70 per cent by 1981 increased only marginally to 73.4 per cent in 1991 and rose thereafter to reach 97.5 per cent in 2006. With the initial growth in school enrolment the expectation was that one hundred per cent school enrolment would be achieved. This remains a goal with the primary school enrolment at 97.5 per cent owing to pockets of acute poverty.

Although health indicators have improved, the morbidity pattern still discloses a high incidence of illnesses associated with poverty, poor housing and malnutrition. This bi-polar morbidity pattern is consistent with recent developments of income distribution, removal of food subsidies, high cost of basic food, and a continued high rate of unemployment.

The implication of the country’s performance on the Human Development Index (HDI) is that it has not kept pace with the progress of other nations. The country rank of 99 of 177 countries, falling from the 84th position in 1998 implies that our progress has been tardy and lagging behind other countries. Further, in the two years, 2004-2005, the HDI score as well as the ranking has fallen slightly.

Most countries in East Asia and South East Asia, such as Singapore, Malaysia and the Republic of Korea that were behind the achievements of Sri Lanka in the 1950s and 1960s, have overtaken the country. There is little doubt that despite the growth in GDP, the dire fiscal conditions are affecting public expenditure on health and education and the deteriorating conditions of the poor are affecting the quality of life and holding back social development.

There is not much point celebrating the country’s past achievements at a time when there is a set back and slower attainments in comparison with the rest of the world. The falling back in the HDI ranking is a clear indication of the country’s improvements being much less in comparison with those of other countries.