ANNEX II The Human Development Index

Table 1. HDI ranking of Armenia¹

HDI allows to define the country's place (its group and ranking) among others, to compare the country's HDI achievements as a whole and its components, to have a better idea of the situation in regard to human development.

HDI reflects achievements in the most basic human capacities - leading a long life (Life Expectancy Index), being knowledgeable (Education Index) and enjoying a decent standard of living (GDP Index). The HDI value ranges from 0 to 1, thus showing the distance that the country has already traveled towards the maximum possible value of 1. During the past ten years HDI has been evolving and this year its calculation has been significantly refined by new methodology (see technical note HDR 1999, p. 159) and improved data services. Because of these changes, this year's HDI is not comparable with those of the last years. The improvement in methodology² and data affect the HDI ranking of almost all countries. Thus, if a country ranks lower or higher, that does not necessarily mean that its state of HD has deteriorated or improved. At the same time, the link between economic prosperity and human development is neither automatic nor obvious³. Two countries with similar per capita income can have very different HDI values. For example, Argentina and Arab States, with rather close per capita income, respectively 10,300 USD and 10,120 USD, occupy the 39^th and 78^th places. Countries with similar HDI values can have very different income levels. For example, Turkey and Armenia with the same HDI value of 0.728 have respectively 6,350 and 2,360 real GDI per capita (PPP$), suggesting that some countries, with even less resources have been more successful in converting the income into human development.

Figure 1. The Dynamics of Armenia's HDI⁷

Figure 2. The Dynamics of Armenia's HDI Ranking

As it can be seen, Armenia has been displaying a positive trend since 1996 and has advanced to the 87^th place, which could be explained by certain economic growth and increase in the indices of adjusted per capita income (Figure 3). According to the calculations of Armenian experts, the HDI for 1998 is 0.738. Thanks to investment made in the past, human development indicators remain better than they would seem consistent with economic data. But a slow economic recovery put these achievements at risk.⁸

Figure 3. The Dynamics of HDI Components

Figure 4. HDI 1998 for Armenia (simple method)

Figure 5. HDI 1998 for Armenia (logarithmic method)

Figure 6. The Dynamics Gender Related HDI

Figure 7. Gender Related HDI (by simple and new logarithmic method)

Human Poverty Index (HPI)

Since the Human Poverty Index has been calculated for first time by Armenian independent experts, we would like to give a more detailed explanation on the index.

The Human Poverty Index for developing countries (HPI-1) concentrates on deprivations in three essential dimensions of life, already reflected in HDI:

i. a long and healthy life, P_1, reflects the percentage of people not expected to survive to the age of 40;

ii. knowledge, P_2, relates to being excluded from the world of reading and communication within the population of age 15 and above;

iii. distribution of wealth/economic share, P_3, including

P₃₁, the percentage of people lacking access to health services,

P₃₂, lack of safe water, and

P₃₃, the percentage of children under five who are moderately

or severely underweight.

P=[1/3(P₁ ³+P₂ ³+P₃ ³)]^1/3

However, it should be noted that the absence of a suitable indicator and lack of data prevent the HPI-1 from reflecting deprivation in social inclusion in developing countries.

Table 2. _ HPI for Armenia

Based on official statistics and calculated by Armenian experts

Calculated for 92 developing countries, the HPI reveals that human poverty ranges from a low of 2.6% in Barbados to a high of 65.5% in Niger. Several countries have a HPI-1 less than 10%, which implies that they have overcome severe levels of poverty⁶.

During the past decade, new versions of HDIs have been established, which are widely used to display various aspects of SHD and which allow comparisons among countries with regard to specific issues (Table 3).

Table 3. HDI, GDI, HPI-1, HPI-2-same dimensions, different measurments⁴

Armenian scientists introduced the Environment related index in the NHDR 1995, Armenia (also presented at the International Conference on Sustainable Human Development of Countries with Economies in Transition; April 1997, Minsk).

Table 4. The Impact of the Environmental Factor on Human Development Index

One criticism of HDI could be that is too individual-oriented. It has not yet found the means to express social dimensions though there is increasing interest toward social capital (interaction of people, bonds, norms, reciprocity, information exchange). After all, HDI with its dimensions, is a means of comparison, raising issues of global concern and refocusing the world's attention on human capital and its potential.

¹ Human Development Report. Oxford University Press, New York, 1999, page 159-163.

² The methodology of HDI calculations is presented in technical note, ibid p.135

³ Human Development Report. Oxford University Press, New York, 1999, page 129

4 Human Development Report, Oxford University Press, New York 1999 p. 127-table 4, p.129

5 Human Development Report, Oxford University Press, New York 1999 p. 127 _ table 4, p. 129

⁶ Human Development Report, Oxford University Press, New York 1999 p. 131

⁷Human Development Reports 1997,1998,1999. Oxford University Press, New York.

⁸ Transition 1999, "Human Development Report for Central and Eastern Europe and CIS, 1999" New York, USA