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Box 1.1 Fairness, macroeconomics and human development The rising income inequality in the United States and some European countries highlights fairness in how incomes are distributed and who benefits from growth. These concerns are entering the mainstream political discourse in developed countries, though with limited impact on policies so far. Unemployment in developed countries is at its highest level in years, and a large share of the workforce has had no significant increase in real wages over the last few decades, while the richest deciles have seen a substantial increase in income. Increasing inequality has been accompanied by demands by many of the better- off for smaller government and fiscal restraint: the well-off have not only benefited disproportionately from earlier growth, but also appear committed to protecting their gains. It is surprising that in democracies, despite considerable pressure from civil society, government agendas are dominated by austerity programmes rather than social protection programmes. The call for austerity measures is not limited to countries in the euro area. The United Kingdom plans to reduce public investment by about 2% of GDP under the current austerity programme. This call for austerity comes when public investment is at a historic low. For instance, net public investment in the United Kingdom for fiscal year 2011/2012 is less than 2% of GDP. A continued push for reduced government and social expenditures may well worsen the prospects for recovery and growth. Macroeconomic policies can have large consequences for human development. Cutting social spending to reduce public debt can have long-term effects. If economies keep contracting, successive rounds of debt reduction will do little to further debt sustainability. Cutting spending reduces aggregate demand, which, coupled with high income inequality, makes it challenging to revive the economy and put people back to work. In the quest for full employment, reduced aggregate demand has to be compensated for. In the United States (and other industrialized countries) this was achieved through low interest rates, which, along with new financial instruments and lax regulation, caused a bubble that eventually led to the current financial crisis. Countries in the euro area, constrained in their use of policy instruments, cannot use monetary policies to devalue (or inflate) their way out of a crisis. Source: Atkinson 2011, 2012; Block 2013; HM Treasury 2010; Nayyar 2012; Sen 2012; Stiglitz 2012. Box 1.2 Short-term cuts have long-term consequences: rising fertility rates in Africa Why did fertility rates rise between 1970 and 1990 in many Sub-Saharan African countries despite falling in every other region The evolution of fertility rates appears to be associated with social expenditure cuts, particularly in education, made as part of structural adjustment programmes in the 1980s. Cuts in education not only limit human capabilities, but also affect the age structure of the population years later because of their impact on birth rates. Countries with lower levels of education, especially countries where girls lack secondary education, tend to have higher fertility rates. Almost universally, women with higher levels of education have fewer children. This effect is particularly strong in countries that are early in their demographic transition and still have high overall fertility rates. Education reduces fertility rates by enhancing information, changing the incentives for behaviour and empowering people to better pursue their own preferences. In the 1980s, Sub-Saharan Africa saw a partial reversal in the progress towards demographic transition, with real expenditure per capita on education falling nearly 50% on average. Between 1980 and 1986, enrolment in primary education dropped from 79% to 73% for the region as a whole (falling in 16 countries and rising in 17). The reduced education expenditures had a negative impact on female education, causing average female combined primary and secondary gross enrolment rates to increase more slowly than in the period before the structural adjustment programmes. Source: Lutz and KC 2013; Rose 1995. combined. Even where fiscal consolidation is necessary, it need not involve cuts in welfare services. Consolidation through enhanced efficiency and reduced subsidies on fossil fuels, for instance, could leave social spending relatively unaffected. 11 The countries of the South have shown greater resilience in the face of the current global economic crisis. After transitory setbacks following the 2008 crisis, African and Latin American countries have resumed their upward trajectories of human development and growth. This is partly because they have been more pragmatic, taking countercyclical measures and postponing debt reduction for more appropriate times. Continuing demand from the South has also helped sustain many developing country exports, offsetting the effects of sluggish economic activity in the North. 12 At the same time, many developing countries continue to invest in long-term human development. They recognize a clear positive correlation between past public investment in social and physical infrastructure and progress 22 | HUMAN DevELOPMENT REPORT 2013
on the Human Development Index (HDI). 13 Governments in the South have also appreciated that sustainable progress must be based on social integration. Brazil and India, for example, have supported aspects of human development underappreciated in past development models by introducing cash transfer programmes and right-to-work programmes. Overall, over the past few decades, many countries of the South have made substantial strides in HDI performance, not only boosting economic growth and reducing poverty, but also making large gains in health and education (discussed in greater detail later in the chapter). This broad-based achievement is notable because income growth does not necessarily translate into gains in other aspects of human development. Growth may generate resources to invest in health and education, but the link is not automatic. Moreover, growth may have little impact on other important human development priorities such as participation and empowerment. Now more than ever, indicators are needed to capture these dimensions as well as the environmental sustainability of development pathways. Progress of nations Every Human Development Report has monitored human progress, notably through the HDI, a composite measure that includes indicators along three dimensions: life expectancy, educational attainment, and command over the resources needed for a decent living. Other indices have delved into inequality, poverty and gender deficits. HDI values for 2012 are presented in statistical table 1. The HDI in 2012 reveals much progress. Over the past decades, countries across the world have been converging towards higher levels of human development. The pace of progress on the HDI has been fastest in countries in the low and medium human development categories. This is good news. Yet progress requires more than average improvement in HDI value. It will be neither desirable nor sustainable if increases in HDI value are accompanied by rising in equality in income, unsustainable patterns of consumption, high military spending and low social cohesion (box 1.3). In 2012, the global average HDI value was 0.694; Sub-Saharan Africa had the lowest HDI value (0.475), followed by South Asia (0.558). Among developing regions, Europe and Central Asia had the highest HDI value (0.771), followed by Latin America and the Caribbean (0.741). There are large differences across HDI groups and regions in the components of the HDI— life expectancy, mean years of schooling and income. Average gross national income (GNI) per capita in very high HDI countries is more than 20 times that in low HDI countries (table 1.1). Life expectancy in very high HDI countries is a third higher than in low HDI countries, while average years of schooling among adults over 25 are nearly three times greater in very high HDI countries than in low HDI countries. However, expected years of schooling, which better reflect changing education opportunities in developing countries, present a much more hopeful picture: the average incoming elementary school student in a low HDI country is expected to complete 8.5 years of school, about equal to the current years of schooling among adults in high HDI countries (8.8 years). Overall, most low HDI countries have achieved or are advancing towards full enrolment in elementary school and more than 50% enrolment in secondary school. There are large disparities in achievements within HDI groups and regions. One way of assessing disparities within country groups is to compare the ratio of the highest to the lowest HDI values among countries in the group. This ratio is highest in Sub-Saharan Africa, followed by the Arab States, South Asia, and Latin America and the Caribbean. In Sub-Saharan Africa, most of the disparity arises from substantial differences in income per capita (with a ratio of 70.1 14 ) and mean years of schooling (with a ratio of 7.8). In South Asia, the disparities also arise primarily from differences in income per capita, with a ratio of 10.7, and mean years of schooling (with a ratio of 4.0). In the Arab States, and to a lesser extent Latin America and the Caribbean, the main driver is differences in income per capita. Overall, the last decade has seen greater convergence in HDI values, involving accelerated human development among countries with lower HDI values. All HDI groups and There is a clear positive correlation between past public investment in social and physical infrastructure and progress on the Human Development Index Chapter 1 The state of human development | 23
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Page 3 and 4: Human Development Report 2013 The R
Page 5 and 6: Human Development Report 2013 Team
Page 7 and 8: Finally, the Report also calls for
Page 9 and 10: Musa, Thangaval Palanivel, Anuradha
Page 11 and 12: 3.6 India’s Supreme Court issues
Page 13 and 14: Overview One of the most heartening
Page 15 and 16: Human Development Report also stres
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Page 19 and 20: two scenarios for 2010-2050: a base
Page 21 and 22: messages and demands challenge gove
Page 23 and 24: Introduction When developed economi
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Page 36 and 37: Box 1.3 Amartya Sen, Nobel Laureate
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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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Human Development Report 2013 The R
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Statistical acknowledgements The Re
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Key to HDI countries and ranks, 201
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E N S W - United Nations Development Programme

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