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Technical appendix: explanatory note for projections exercise This technical appendix summarizes the two projection models discussed in chapter 4. Lutz and KC (2013) Model for demography, education and human development The Lutz and KC (2013) Model is used to project demographic trends through to 2050. It is based on the premise that trends in population growth are affected by improvements in education quality and quantity. This Report employs a dataset covering 120 countries, with their populations disaggregated by age, sex and education level. Lutz and KC’s multistate population modelling approach was developed in the 1970s at the International Institute for Applied Systems Analysis in Austria and is well accepted among technical demographers. The idea behind the projection is straightforward: with a baseline year of 2000 (the latest year for which internationally comparable data are available for most countries) and assuming that education level remains invariant after a certain age, the proportion of women ages 50–54 without any formal education in 2005 can be derived directly from the proportion of women ages 45–49 without any formal education in 2000. Given that the size of a birth cohort as it ages over time can change only through mortality and migration, these proportions would be constant only if no individual moved up to the primary education category after age 15 and if mortality and migration did not differ by education level. However, strong links exist between education level and mortality, fertility and migration behaviour, so the approach must be adjusted to correct for these effects. The size of a birth cohort depends on the education level of women of childbearing age, where a negative relationship is traditionally observed. In projecting these cohorts forward, differential survival rates, based on a comprehensive literature review and modelling exercises using past data, are applied to the education groups. In reality, the likelihood of an individual transitioning from one education level to the next highest strongly depends on the education level of his or her parents. But this educational inheritance mechanism is not explicitly modelled here. Instead, assumptions regarding transition rates and their future development are statistically derived from the aggregate behaviour of education systems in the past. Since this expansion is partly the result of the inheritance mechanism—the fact that many parents desire that their children reach an education level at least as high as their own—inheritance is implicitly reflected in the projection, even though it is not formally part of the model. Such an approach appears preferable because data on the aggregate growth patterns of education systems, on which assumptions for the future can be based, are much more readily available than robust data on the microprocess of educational inheritance. The procedure for each country can be summarized as follows: • A baseline population distribution by five-year age group cohorts, sex and education level is derived for 2000. • For each five-year time step, cohorts move to the next fiveyear age group. • Mortality rates specific to each age cohort, sex and education group and to each period are applied. • Age- and sex-specific education transition rates are applied. • Age-, sex- and education-specific net migrants are added to or removed from the population. In the projections presented here the migration assumptions correspond to those used in the UN population projections. • Fertility rates, specific to each age, sex and education group and to each period, are applied to determine the size of the new 0–5 age group. • The new population distribution by age, sex and education level is noted, and the above steps are repeated for the next five-year time step. The projection aims to yield a dataset with the population distributed by five-year age groups (from ages 15–20 to ages 100 and older), by sex, and by four education levels over 50 years from 2000 (the base year) to 2050 in five-year intervals. Pardee Center for International Futures (2013) Model for prospects of human development and policy scenarios This Report uses the International Futures Model for long-term human development projections based on closely interacting policy-related issues, including income, health, education, poverty, gender, social change (instability and risk) and environmental sustainability. For more detailed information on how the model was developed, see Pardee Center for International Futures (2013) and the University of Denver Korbel School website (www.ifs.du.edu/introduction). The International Futures Model is a large-scale, long-term, integrated global modelling system that incorporates demographic, economic, education, health, energy, agricultural, sociopolitical, infrastructural, technological and environmental submodels for 183 countries interacting in the global system. The model was used in the 2011 Human <strong>Development</strong> Report to project long-term environmental trend scenarios and evaluate their impact on human development. 200 | HUMAN DevELoPMENt REPort 2013
Core features of the model pertinent to human development analysis include: • A production function that sets parameters of productivity in four major categories: human resources, social capital, physical capital and knowledge. • A population model containing 22 age-sex cohorts in a structure representing changes in fertility rates, with an extensive health model to compute mortality (and morbidity) across 13 cause categories. • An equilibrium-seeking economic model across six sectors. It does not assume that exact equilibrium will exist in any given year; rather, it uses inventories as buffer stocks and to provide price signals so that the model converges to equilibrium over time. • An education model representing formal education across primary, secondary (separating lower and upper secondary levels) and tertiary levels. • A health model drawing on both the World Health Organization’s Global Burden of Disease project for major causes of death and disability and the Comparative Risk Assessment approach on relative risk to represent key drivers of health such as malnutrition, obesity and smoking. • A sociopolitical model representing fiscal policy through taxing and spending decisions and other governance variables, including corruption levels and regime types. There are also models for international politics (focusing on trade, foreign investment, intergovernmental transfers and technology upgrade), infrastructure (focusing on level of access to major infrastructure systems) and the environment (focusing on resource use, such as water and land, and carbon production). The agricultural and energy models are partial equilibrium systems at the physical level, and their dynamics shape the financial sector representations in the economic model. The projection identifies aggressive but reasonable policy interventions to construct an accelerated progress scenario, which combines interventions in a dozen clusters of policy initiatives (see table A1) and analyses their impact relative to the forecasts under the base case scenario. The cost of inaction is the difference in outcomes between the two scenarios. The definition of “aggressive but reasonable” builds on the analysis of the Pardee Center for International Futures series Patterns of Potential Human Progress and relies on cross-sectional functions relating the target variable to development level and using the function itself or some number of standard deviations above it. Table A1 Twelve clusters of policy intervention levers for comparative analysis Primarily domestic levers 1. Demographics Fertility rates Female labour force participation rates 2. Savings and investment Savings and investment rates 3. Domestic transfers Transfers to unskilled households 4. Human capital Education participation targets and education spending Health spending targets and targets on selected health risk factors 5. Infrastructure capital Infrastructure access 6. Knowledge capital Research and development Primarily international levers 7. Social capital and governance Probability of internal conflict Government revenues and corruption Democracy and inclusion 8. Trade Trade barriers Export promotion 9. Foreign investment Foreign direct investment Portfolio flows 10. Household transfers Remittances 11. Intergovernmental transfers Foreign aid Flows from international financial institutions 12. Technology Technology upgrade Source: Adapted from Pardee Center for International Futures (2013). Technical appendix | 201
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W N S E Human Development Report 20
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Human Development Report 2013 The R
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Human Development Report 2013 Team
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Finally, the Report also calls for
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Musa, Thangaval Palanivel, Anuradha
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3.6 India’s Supreme Court issues
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Overview One of the most heartening
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Human Development Report also stres
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sudden opening but of gradual and s
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two scenarios for 2010-2050: a base
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messages and demands challenge gove
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Introduction When developed economi
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leading economies—Brazil, China a
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comparable access to information, e
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mobile phones: cellular banking is
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“The political problem of mankind
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Box 1.1 Fairness, macroeconomics an
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Box 1.3 Amartya Sen, Nobel Laureate
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Figure 1.1 Income per capita is ris
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Box 1.4 Subjective indicators of we
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Figure 1.4 There is notable variati
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Figure 1.6 Most regions show declin
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Progress in human development achie
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Box 1.7 Social competencies: human
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Table 1.3 Inequality and satisfacti
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Not all countries have the precondi
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“When the music changes, so does
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Box 2.1 The South’s integration w
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Figure 2.1 As a share of world merc
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Box 2.2 Acquisitions by the South o
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Figure 2.3 Between 2000 and 2010, I
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Figure 2.4 Export earnings per capi
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Box 2.6 Final assembly is about mor
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Instead of having a centre of indus
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Figure 2.6 Emerging market economie
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developing countries trade more amo
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“We cannot expect that all nation
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Table 3.1 Selected developing count
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A common feature of countries that
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More important than getting prices
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Box 3.5 Eastern Europe and Central
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states have to be conscious that th
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As countries develop, they tend to
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Having weathered the Asian financia
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providing public services that cont
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Advancing health requires more than
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Universal public health and educati
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• China. The Minimum Livelihood G
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“Each generation will reap what t
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concerns will make for a complex en
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A greater emphasis on education can
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Figure 4.1 Under the fast track sce
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Around the world people are calling
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Figure 4.4 Different environmental
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Figure 4.5 Education policies can a
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Box 4.2 China and Ghana: who benefi
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Figure 4.8 countries thus converge
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“Let us join hands to try to crea
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Areas of global international conce
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Addressing climate change requires
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International governance is increas
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Box 5.2 Jo Leinen, Member of the Eu
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facilitates reserve investments and
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esponsible sovereignty takes the lo
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Figure 5.1 Under the accelerated pr
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Good policymaking requires greater
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a fair and less unequal world requi
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Notes Overview 1 Atsmon and others
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25 Blinder 2006. 26 UNIDO 2009. 27
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which is 61.7 deaths per 1,000 live
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References Abdurazakov, A., A. Mins
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urban_world_cities_and_the_rise_of_
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Kamau, P., D. McCormick, and N. Pin
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Labor Administration. Geneva: Inter
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Statistical acknowledgements The Re
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Key to HDI countries and ranks, 201
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