8/10

Developmental Economics Project

Part A
This report has been completed and submitted by Vedant Munjal (2020A4PS0509P), Divyam Verma (2017A2PS0701P) and
Aditya Verma (2020A4PS0214P)

In the forthcoming analysis, we study India and China in the developing countries segment, and
Japan and France in the developed countries segment.

New HDI (2010 – present)

Introduction
In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI.
The following three indices are used:
(𝐿𝑖𝑓𝑒 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦 𝑎𝑡 𝑏𝑖𝑟𝑡ℎ−20)
1. Life Expectancy Index (LEI)= (85−20)

LEI is 1 when Life expectancy at birth is 85 and 0 when Life expectancy at birth is 20.
𝑀𝑌𝑆𝐼+𝐸𝑌𝑆𝐼
2. Education Index (EI) = 2
𝑀𝑌𝑆
2.1 Mean Years of Schooling Index (MYSI)= 15

Fifteen is the projected maximum of this indicator for 2025.

𝐸𝑌𝑆
2.2 Expected Years of Schooling Index (EYSI)=
18

Eighteen is equivalent to achieving a master's degree in most countries.

ln(𝐺𝑁𝐼𝑝𝑐)−ln(100)
3. Income Index (II)= ln(75,000)−ln (100)

II is 1 when GNI per capita is $75,000 and 0 when GNI per capita is $100.
3
Finally, the HDI is the geometric mean of the previous three normalized indices = √(𝐿𝐸𝐼 ∗ 𝐸𝐼 ∗ 𝐼𝐼)

Calculation of new HDI

As an example, let’s calculate the HDI for India in 2019 (latest year for which statistically reliable data
was tabulated). For the rest of the countries, the calculated indices are tabulated at the end of this
section.
(𝐿𝑖𝑓𝑒 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦 𝑎𝑡 𝑏𝑖𝑟𝑡ℎ−20) (69.7−20)
1. Life Expectancy Index (LEI)= (85−20)
= (85−20) = 𝟎. 𝟕𝟔𝟒𝟔
𝑀𝑌𝑆 6.5
2.1 Mean Years of Schooling Index (MYSI)= 15 = 15 = 0.4333
𝐸𝑌𝑆 12.2
2.2 Expected Years of Schooling Index (EYSI)= 18 = 18 = 0.6777
𝑀𝑌𝑆𝐼+𝐸𝑌𝑆𝐼 0.4333+0.6777
2. Education Index (EI) = 2
= 3
= 𝟎. 𝟓𝟓𝟓𝟓
ln(𝐺𝑁𝐼𝑝𝑐)−ln(100) ln(6681)−ln(100)
3. Income Index (II)= ln(75,000)−ln(100) = ln(75,000)−ln(100) = 𝟎. 𝟔𝟑𝟒𝟕

3
Finally, the HDI is the geometric mean of these three normalized indices= √(𝐿𝐸𝐼 ∗ 𝐸𝐼 ∗ 𝐼𝐼) =
3
√(0.7646 ∗ 0.5555 ∗ 0.6347) = 0.6460

1
 Life Expected Mean Gross national
expectancy years of years of income (GNI) Life
Education Income
Country at birth schooling schooling per capita Expectancy New HDI
Index (EI) Index (II)
(years) (years) (years) (PPP $) SDG Index (LEI)
SDG3 SDG 4.3 SDG 4.6 8.5

India 69.7 12.2 6.5 6,681 0.7646 0.5556 0.6347 0.6460

China 76.9 14 8.1 16,057 0.8754 0.6589 0.7672 0.7620

France 82.7 15.6 11.5 47,173 0.9646 0.8167 0.9299 0.9015

Japan 84.6 15.2 12.9 42,932 0.9938 0.8522 0.9157 0.9188

Old HDI (upto 2009)

Introduction
The Human Development Index (HDI) then represents the uniformly weighted sum with 1⁄3
contributed by each of the following factor indices:
𝐿𝑖𝑓𝑒 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦 𝑎𝑡 𝑏𝑖𝑟𝑡ℎ−25
1. Life Expectancy Index=
85−25
2 1
2. Education Index= 3 ∗ (𝐴𝑑𝑢𝑙𝑡 𝐿𝑖𝑡𝑒𝑟𝑎𝑐𝑦 𝐼𝑛𝑑𝑒𝑥) + 3 ∗ (𝐺𝑟𝑜𝑠𝑠 𝐸𝑛𝑟𝑜𝑙𝑙𝑚𝑒𝑛𝑡 𝐼𝑛𝑑𝑒𝑥)
ALR
2.1 Adult Literacy Index (ALI) = 100
CGER
2.2 Gross Enrollment Index (GEI)=
100
ln(𝐺𝑁𝐼𝑝𝑐)−ln(100)
3. GDP=
ln(40,000)−ln (100)

𝐿𝐸𝐼+𝐸𝐼+𝐼𝐼
Finally, the HDI is the arithmetic mean of the previous three normalized indices = 3

Calculation of old HDI

For the calculation of old HDI, multiple parameters are required. However, some parameters (like
tertiary gross enrolment rate, secondary gross enrolment rate, primary gross enrolment rate, adult
literacy rate, among others) aren’t reported with great accuracy at regular intervals, especially post
2007, which was the last calculated year of old HDI in the UNDP 2009 report. Hence, all shown
calculations will be of the year 2007. If further information is desired, we will be happy to present an
excel sheet with the required statistics and sources to substantiate this reasoning.

Keeping this in mind, we calculate the old HDI for countries with data from 2007. Let’s see India as an
example.
𝐿𝑖𝑓𝑒 𝐸𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦 𝑎𝑡 𝑏𝑖𝑟𝑡ℎ−25 63.4−25
1. Life Expectancy Index= 85−25
= 85−25 = 𝟎. 𝟔𝟑𝟗
ALR 66
2.1 Adult Literacy Index (ALI) = 100 = 100 = 0.66
CGER 61
2.2 Gross Enrollment Index (GEI)= 100 = 100 = 0.61
2 1 2
2. Education Index= 3 ∗ (𝐴𝑑𝑢𝑙𝑡 𝐿𝑖𝑡𝑒𝑟𝑎𝑐𝑦 𝐼𝑛𝑑𝑒𝑥) + 3 ∗ (𝐺𝑟𝑜𝑠𝑠 𝐸𝑛𝑟𝑜𝑙𝑙𝑚𝑒𝑛𝑡 𝐼𝑛𝑑𝑒𝑥) = 3 ∗
1
0.66 + 3 ∗ 0.61 = 0.643
ln(𝐺𝑁𝐼𝑝𝑐)−ln(100) ln(2,753)−ln(100)
3. GDP= = = 𝟎. 𝟓𝟓𝟑
ln(40,000)−ln (100) ln(40,000)−ln (100)

2
 Finally, the HDI is the arithmetic mean of the previous three normalized indices =
𝐿𝐸𝐼+𝐸𝐼+𝐼𝐼 0.553+0.643+0.639
3
= 3
= 0.612

Combined
Adult GDP per
Life gross Life
literacy rate capita Education
Country expectancy at enrolment expectancy GDP index HDI index
(% aged 15 (PPP index
birth (years) ratio in index
and above) US$)
education (%)

India 63.4 66 61 2,753 0.639 0.643 0.553 0.612

China 72.9 93.3 68.7 5,383 0.799 0.851 0.665 0.772
Japan 99 82.7 86.6 33,632 0.961 0.949 0.971 0.96

France 99 81 95.4 33,674 0.933 0.978 0.971 0.961

GDP per capita (current US$)

The GDP per capita in current US$ in the past 20 years in intervals of 5 years has been tabulated and
plotted below.
GDP per capita (current US$)

Year India China Japan France Show calculation as how you arrive at the number

2000 443.3142 959.3725 39169.36 22364.03

2005 714.861 1753.418 37812.9 34760.19

2010 1357.564 4550.453 44968.16 40638.34

2015 1605.605 8016.431 34960.64 36638.18

2020 1927.708 10434.78 40193.25 39030.36

GDP per capita (current US$)

50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
1995 2000 2005 2010 2015 2020 2025

India China Japan France

3
GDP per capita, PPP (current international $)
The GDP per capita, PPP in current US$ in the past 20 years in intervals of 5 years has been tabulated
and plotted below.

GDP per capita, PPP (current international $)

Year India China Japan France Show calculation as how you arrive at the number

2000 2095.647 2920.561 27287.27 26090.63447

2005 2953.109 5053.946 32169.87 30498.57688

2010 4236.744 9253.765 35335.37 35902.90311

2015 5464.859 12897.5 40898.81 40849.99738

2020 6503.948 17210.76 42390.38 46983.04192

GDP per capita, PPP (current

international $)
50000

40000

30000

20000

10000

0
1995 2000 2005 2010 2015 2020 2025

India China Japan France

Provide references of sources to give accountability.