Human Development Index - Ethiopia, Russia, and Switzerland - Assignment Example

Human Development Index - Ethiopia, Russia, and Switzerland The Human Development Index refers to a composite statistic that encompasses income, education, and life expectancy indices, which ranks states into very high, high, medium, and low human development tiers (Vander 61). The inequality-adjusted human development index was added in 2010, which was meant to calculate actual human development levels by accounting for inequality. Thus, the IHDI is viewed as the actual human development level, rather than the potential human development levels that are depicted by the HDI. A new measure of inequality was also integrated into the IHDI and HDI, which was the Gender Inequality Index. This index was introduced to account for the effects of disadvantages facing females in labor markets, education and health, increasing inequality on gender basis and reducing the actual IHDI and HDI. Finally, the human development report also includes the multi-poverty index since 2010, which complements the HDI and IHDI measures by considering how multiple deprivations overlap in income, education, and life expectancy (Vander 64). This paper will discuss human development trends in Ethiopia, Russia, and Switzerland using these indices, as well as examine how international capital and trade flows affect development in the three countries. Ethiopia, Russia, and Switzerland have stark differences with regards to the life expectancy index, despite the fact that they have all been rising consistently. Ethiopia’s life expectancy has rose from 43.9 in 1980 to 59.7 in 2013 with the most significant increasing happening between 2000 and 2013 (Ethiopia: HDR 2013 2). Russia’s life expectancy fluctuated during the 90s, unlike Ethiopia’s, although this improved from 2000 to the present. However, the rates of increase have been minimal with only a rise of 1.6 in the last two decades, compared to Ethiopia’s that has increased by 15.8 years in the same period. Switzerland’s life expectancy has increased moderately compared to the other two countries by 6.8 years (Switzerland: HDR 2013 2). With regards to education, which is calculated by the expected years of schooling, Ethiopia again has the highest increase in trend since 1980 with the expected years of schooling increasing by 6.3 years (Ethiopia: HDR 2013 2). This is in comparison to Russia that has seen an increase of 2.1 years and Switzerland with a rise of 3.3 years. However, Russia has the highest mean years of schooling rate at 4.6 years, compared to Ethiopia at 0.7 years and Switzerland at 1 year. With regards to the income index, calculated as GNI per capita, Ethiopia’s trend shows the highest increase of 102% in the last 18 years (Ethiopia: HDR 2013 2), followed by Switzerland at 36% and Russia at 15%. However, using HDI to measure human development masks human development distribution inequalities across the population at state level, regarding income, education, and life expectancy (Vander 61). This necessitates the adjustment of HDI for inequality through the inequality-adjusted HDI index, which discounts the average value of income, education, and life expectancy according to their inequality levels. The difference between HDI and IHDI represents the loss in human development potential as a percentage. Using the IHDI, Ethiopia’s impressive human development trend under HDI is put more into perspective as potential human development falls by 31.9%, of which losses due to inequalities due to life expectancy, education, and income were 35.4%, 38.3%, and 20.8% (Ethiopia: HDR 2013 3). This is in comparison to Switzerland’s drop in human development due to inequalities at 7%, of which losses due to inequality in life expectancy, education, and income was at 4.1%, 2%, and 14.3% (Switzerland: HDR 2013 3). Therefore, while Ethiopia has higher potential human development, Switzerland has significantly higher actual human development. IHDI values for Russia are not available due to lack of relevant data collected by UNDP. Using inequalities in economic activity, empowerment, and reproductive health based on gender also shows human development losses due to gender-based achievements. In this sub-index, Switzerland has a lower gender inequality, index value at 0.057, compared to Russia at 0.312, while UNDP does not provide data for Ethiopia’s gender inequality index. For Russia, maternity mortality ratio is at 34%, adolescent fertility rate and female representatives in elected posts are at 23.2% and 11.1% respectively (Russian Federation: HDR 2013 5), compared to Switzerland’s values at 8%, 3.9%, and 26.8%. In addition, the population of women with the least secondary education in Russia is at 2.7% more compared to men, while male participation in the labor force is 13.7% more compared to women, compared to Switzerland’s values at 1.5% and 14.4%. Finally, the multi-dimensional poverty index identifies various deprivations in the same household in standard living, health, and education. For Russia, the most recent figures that can be used to estimate MPI figures in 2003 showed that 1.3% of its population were in multi-dimensional poverty (Russian Federation: HDR 2013 6), compared to Ethiopia at 87.3. In addition, 0.8% of Russia’s population suffered multiple deprivations compared to Ethiopia at 6.8%, while 38.9% of Russia’s population suffered from average deprivation compared to 64.6% for Ethiopia (Ethiopia: HDR 2013 4). Finally, Russia’s MPI value was at 0.005, compared to Ethiopia’s MPI value at 0.546. Data for calculating the multi-dimensional poverty index for Switzerland is not provided by UNDP. Comparing the three countries with regards to their international trade flows, it is evident that Switzerland has the highest rank for Human Development Index and has the highest international trade flows with exports and imports for merchandise and goods accounting for 38.3% and 34.5% of GDP respectively (International capital flows and migration 1). In addition, exports and imports of services account for 16.4% and 7.8% of GDP. This shows that Switzerland has a positive trade balance. In comparison, Russia’s exports and imports of merchandise and goods account for 295% and 18.4% respectively, while exports and imports of services account for 3.3% and 5.4% of GDP respectively (International capital flows and migration 1). The effect of international trade flows on human development is most evident for Ethiopia, which has the lowest HDI rank for the three countries. Ethiopia’s exports and imports of goods and merchandise account for 7.4% and 27.9% of GDP, while exports of services are a negligible percentage of GDP and imports of service accounts for 2.5% of GDP (International capital flows and migration 1). This shows a negative balance of international trade for Ethiopia. Therefore, a positive international trade flow balance has a positive correlation with the human development index. Narula & Lall (p. 43) contend that there is little long-term benefit from international capital inflows on human development growth, arguing that countries develop human capital faster if they are less reliant on foreign capital due to the positive correlation between average growth and current-account surpluses. Data from UNDP shows that Switzerland’s net inflows of direct investment stands at 0.4, while net official development assistance received was -0.4 and private capital inflows were at -9 (International Trade Flows of Goods and Services 1). In comparison, Russia’s net inflows of direct investment stands at 2.8, while net official development assistance received was N/A, and private capital inflows were at -1.7 (International Trade Flows of Goods and Services 1). On the other hand, the lowest ranked country of the three, Ethiopia, had net inflows of direct investment stands at 1, while net official development assistance received was 11.9 and private capital inflows were at 2 (International Trade Flows of Goods and Services 1). From this data, it is clear that positive international capital flows, unlike international trade flows, are negatively correlated to human development. From the data, Ethiopia has very high international capital inflows and a negative international trade balance, which means they have minimal funds to improve their human development index. Russia’s moderate international capital inflows and international trade balance enhance its position as a medium HDI country, while Switzerland’s minimal international capital inflows and significantly positive international trade balance enhance its ability to improve human development. Works Cited Ethiopia: Human Development Report 2013. UNDP. 2013. Web. 11 May 2014 . International capital flows and migration. UNDP. 2011. Web. 11 May 2014 https://data.undp.org/dataset/Table-11-International-capital-flows-and-migration/3esk-n839 International Trade Flows of Goods and Services. UNDP. 2011. Web. 11 May 2014 https://data.undp.org/dataset/Table-10-International-trade-flows-of-goods-and-se/itri-v7qr Narula, Rajneesh & Lall, Sanjaya. Understanding FDI-Assisted Economic Development. London: Routledge, 2006. Print. Russian Federation: Human Development Report 2013. UNDP. 2013. Web. 11 May 2014 http://hdr.undp.org/sites/default/files/Country-Profiles/RUS.pdf. Switzerland: Human Development Report 2013. UNDP. 2013. Web. 11 May 2014 http://hdr.undp.org/sites/default/files/Country-Profiles/CHE.pdf. Vander, Zanden J. W. Human Development. New York: Knopf: distributed by Random House, 2012. Print. Read More