LECTURE 4:

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APPROACHES TO ECONOMIC
DEVELOPMENT

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(PART 2)
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 Content of Lecture 4

Approaches to economic development (Part 2)

4. Composite Index based development (Socio-

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economic Wellbeing)

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◦ Physical Quality of Life Index (POLI)- Already Done
◦ Human Development Index (HDI)

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Fourth: Composite Index based development
First: Physical Quality of Life Index (PQLI)
◦ Developed by Morris David Morris (Morris, 1978)

Indicator 1: Life Expectancy at age one

Indicator 2: Infant Mortality Rate (IMR)
Indicator 3: Literacy Levels

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𝐿𝑖𝑓𝑒 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦 𝑎𝑡 𝑎𝑔𝑒 𝑜𝑛𝑒 + 𝐼𝑛𝑓𝑎𝑛𝑡 𝑀𝑜𝑟𝑎𝑙𝑖𝑡𝑦 + 𝐿𝑖𝑡𝑒𝑟𝑎𝑐𝑦 𝑅𝑎𝑡𝑒
𝑃𝑄𝐿𝐼 = 𝑠𝑐𝑜𝑟𝑒𝑠 𝑜𝑓 [ ]
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◦ It is the average of three rating (indicators), giving equal weight to each and so

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represents an average index of quality of life

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 Merits of PQLI
1. PQLI is relatively neutral- ‘It measures results, not
inputs’ (Morris, 1978).

2. It ‘incorporates distributional considerations by using

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three indicators that reflect distributional

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characteristics’ (Todaro, 1989, pp. 112)

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3. It Is a simple measure with easily availability of data

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and can be used to make intercountry comparisons
(Todaro, 1989)

4. PQLI avoids all ethnocentric bias. Eg., Race.

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 Demerits of PQLI
1. Since there is some amount of overlapping between Indicator 1 and 2, so
the index has drawn flak. These two indicators impact each other mutually,

2. It ‘lack of a rationale for giving equal weight to each of the indicators used in
forming the index and the possibility that measures such as life expectancy

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and infant mortality are both reflecting similar phenomena’ (Todaro, 1989)

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Fourth: Composite Index based development
Second: Human Development Index (HDI)
◦ Published in 1990’s Human Development Report (HDR), produced by the HDR
Office of the United Nations Development Programme (UNDP, 1990)

◦ Project director - Mahbub ul Haq (Pakistan Economist)

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◦ Panel of consultants- Gustav Ranis (Yale University) , Amartya K Sen, Frances
Stewart, Keith Griffin, Meghnad Desai (LSE), Aziz Khan, Paul Streeten, Shlomo Angel,

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Pietro Garau and Mahesh Patel

◦ Modifications in HDI

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 HDI - Dimensions
◦Dimensions of HDI (Revised)

1. Life expectancy at birth, as an index of population health and longevity

2. Knowledge and education, as measured by the Expected years of schooling

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and Mean years of schooling

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3. A decent standard of living, as measured by GNI per capita

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 2019 HDI Ranking….Top 10

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Source: Retrieved from http://www.hdr.undp.org/en/content/2019-human-
development-index-ranking, accessed on 24th June 2020 8
 Is Human Development linked to
Economic Growth?
Economic Growth and HD in Developing Countries, 1970-2016

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Economic
Growth

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HDI
Source: Naqvi (2015) collected from World Development Indicator (2016), HDR, and World
Development Report

Yes, as High (low) levels of HDI is associated with High (low) Levels of
GDP
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 Limitations of HDI
◦ Not a comprehensive measure of human
development. It only focuses on three dimensions of
capabilities.

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◦ Like any average country measure, the HDI does not

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account for variations in human development within

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the country.

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◦ Countries with the same HDI may be very different in
how human development is distributed, either from
region to region, or from social group to social group.
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 Bibliography
◦ Meier, G. M., & Baldwin, R. E. (1957). Economic Development: Theory, History, Policy. John
Wiley and Sons.
◦ Meier, G. M., & Seers, D. (1984). Pioneers in development. The World Bank.
◦ Naqvi, S. N. H. (2015). Economics of Development: Toward Inclusive Growth. SAGE
Publications.
◦ Morris, M. D. (1978). A physical quality of life index. Urban Ecology, 3(3), 225-240.

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◦ Morris, M. D. (1979). Measuring the conditions of the world's poor: The physical quality of

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life: Pergamon Press.
◦ UNDP. (1990). Human Development Report 1990: Concept and Measurement of Human
Development. O. U. Press. http://www.hdr.undp.org/en/reports/global/hdr1990

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◦ UNDP. (2019). Human Development Report 2019: Beyond income, beyond averages,

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beyond today: Inequalities in human development in the 21st century.

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◦ World Bank Group. (2017). World development indicators 2017. World Bank.
◦ World Bank Group. (2015). World Development Report 2015 : Mind, Society, and Behavior.
Washington, DC Ray, D. (2012). Development Economics (19 ed.). Oxford University Press.
◦ Thirlwall, A. (2009). Growth & Development: With Special Reference to Developing
Economies (8 ed.). Palgrace Macmilan.
◦ Todaro, M. P., & Smith, S. C. (2015). Economic Development (12 ed.). Pearson.
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