Human Development Report 2013 - UNDP

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Technical appendix:explanatory note for projections exerciseThis technical appendix summarizes the two projection modelsdiscussed in chapter 4.Lutz and KC (2013) Model for demography,education and human developmentThe Lutz and KC (2013) Model is used to project demographictrends through to 2050. It is based on the premise that trends inpopulation growth are affected by improvements in educationquality and quantity. This Report employs a dataset covering120 countries, with their populations disaggregated by age, sexand education level.Lutz and KC’s multistate population modelling approachwas developed in the 1970s at the International Institutefor Applied Systems Analysis in Austria and is well acceptedamong technical demographers. The idea behind the projectionis straightforward: with a baseline year of 2000 (the latest yearfor which internationally comparable data are available formost countries) and assuming that education level remainsinvariant after a certain age, the proportion of women ages50–54 without any formal education in 2005 can be deriveddirectly from the proportion of women ages 45–49 without anyformal education in 2000.Given that the size of a birth cohort as it ages over time canchange only through mortality and migration, these proportionswould be constant only if no individual moved up to theprimary education category after age 15 and if mortality andmigration did not differ by education level. However, stronglinks exist between education level and mortality, fertilityand migration behaviour, so the approach must be adjustedto correct for these effects. The size of a birth cohort dependson the education level of women of childbearing age, where anegative relationship is traditionally observed. In projectingthese cohorts forward, differential survival rates, based on acomprehensive literature review and modelling exercises usingpast data, are applied to the education groups.In reality, the likelihood of an individual transitioning fromone education level to the next highest strongly depends onthe education level of his or her parents. But this educationalinheritance mechanism is not explicitly modelled here. Instead,assumptions regarding transition rates and their future developmentare statistically derived from the aggregate behaviourof education systems in the past. Since this expansion is partlythe result of the inheritance mechanism—the fact that manyparents desire that their children reach an education level atleast as high as their own—inheritance is implicitly reflectedin the projection, even though it is not formally part of themodel. Such an approach appears preferable because data onthe aggregate growth patterns of education systems, on whichassumptions for the future can be based, are much more readilyavailable than robust data on the microprocess of educationalinheritance.The procedure for each country can be summarized asfollows:• A baseline population distribution by five-year age groupcohorts, sex and education level is derived for 2000.• For each five-year time step, cohorts move to the next fiveyearage group.• Mortality rates specific to each age cohort, sex and educationgroup 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 orremoved from the population. In the projections presentedhere the migration assumptions correspond to those used inthe UN population projections.• Fertility rates, specific to each age, sex and education groupand to each period, are applied to determine the size of thenew 0–5 age group.• The new population distribution by age, sex and educationlevel is noted, and the above steps are repeated for the nextfive-year time step.The projection aims to yield a dataset with the populationdistributed by five-year age groups (from ages 15–20 to ages 100and older), by sex, and by four education levels over 50 yearsfrom 2000 (the base year) to 2050 in five-year intervals.Pardee Center for International Futures(2013) Model for prospects of humandevelopment and policy scenariosThis Report uses the International Futures Model for long-termhuman development projections based on closely interactingpolicy-related issues, including income, health, education, poverty,gender, social change (instability and risk) and environmentalsustainability. For more detailed information on howthe model was developed, see Pardee Center for InternationalFutures (2013) and the University of Denver Korbel Schoolwebsite (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 environmentalsubmodels for 183 countries interacting in the global system.The model was used in the 2011 Human Development Reportto project long-term environmental trend scenarios and evaluatetheir impact on human development.200 | HUMAN DevELoPMENt REPort 2013
Core features of the model pertinent to human developmentanalysis include:• A production function that sets parameters of productivityin four major categories: human resources, social capital,physical capital and knowledge.• A population model containing 22 age-sex cohorts in a structurerepresenting changes in fertility rates, with an extensivehealth model to compute mortality (and morbidity) across13 cause categories.• An equilibrium-seeking economic model across six sectors. Itdoes not assume that exact equilibrium will exist in any givenyear; rather, it uses inventories as buffer stocks and to provideprice signals so that the model converges to equilibrium overtime.• An education model representing formal education acrossprimary, secondary (separating lower and upper secondarylevels) and tertiary levels.• A health model drawing on both the World Health Organization’sGlobal Burden of Disease project for major causes ofdeath and disability and the Comparative Risk Assessmentapproach on relative risk to represent key drivers of healthsuch as malnutrition, obesity and smoking.• A sociopolitical model representing fiscal policy through taxingand spending decisions and other governance variables,including corruption levels and regime types.There are also models for international politics (focusingon trade, foreign investment, intergovernmental transfers andtechnology upgrade), infrastructure (focusing on level of accessto major infrastructure systems) and the environment (focusingon resource use, such as water and land, and carbon production).The agricultural and energy models are partial equilibriumsystems at the physical level, and their dynamics shape thefinancial sector representations in the economic model.The projection identifies aggressive but reasonable policy interventionsto construct an accelerated progress scenario, whichcombines interventions in a dozen clusters of policy initiatives(see table A1) and analyses their impact relative to the forecastsunder the base case scenario. The cost of inaction is the differencein outcomes between the two scenarios. The definition of“aggressive but reasonable” builds on the analysis of the PardeeCenter for International Futures series Patterns of PotentialHuman Progress and relies on cross-sectional functions relatingthe target variable to development level and using the functionitself or some number of standard deviations above it.Table A1Twelve clusters of policy intervention levers for comparative analysisPrimarily domestic levers1. DemographicsFertility ratesFemale labour force participation rates2. Savings and investmentSavings and investment rates3. Domestic transfersTransfers to unskilled households4. Human capitalEducation participation targets and education spendingHealth spending targets and targets on selected health risk factors5. Infrastructure capitalInfrastructure access6. Knowledge capitalResearch and developmentPrimarily international levers7. Social capital and governanceProbability of internal conflictGovernment revenues and corruptionDemocracy and inclusion8. TradeTrade barriersExport promotion9. Foreign investmentForeign direct investmentPortfolio flows10. Household transfersRemittances11. Intergovernmental transfersForeign aidFlows from international financial institutions12. TechnologyTechnology upgradeSource: Adapted from Pardee Center for International Futures (2013).Technical appendix | 201
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WNSEHuman DevelopmentReport 2013The
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Human Development Report 2013The Ri
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Human Development Report 2013 TeamD
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Finally, the Report also calls for
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Heather Simpson, Ben Slay, Mounir T
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3.6 India’s Supreme Court issues
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OverviewOne of the most heartening
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and sustainability are fully incorp
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Without investment in people, retur
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opportunity to reap the full benefi
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Woods institutions, the United Nati
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IntroductionWhen developed economie
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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 ofmankind
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BOX 1.1Fairness, macroeconomics and
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BOX 1.3Amartya Sen, Nobel Laureate
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FIGURE 1.1Income per capita is risi
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BOX 1.4Subjective indicators of wel
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FIGURE 1.4There is notable variatio
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FIGURE 1.6Most regions show declini
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Progress in humandevelopment achiev
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BOX 1.7Social competencies: human d
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TABLE 1.3Inequality and satisfactio
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Not all countries havethe precondit
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“When the music changes,so does t
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BOX 2.1The South’s integration wi
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FIGURE 2.1As a share of world merch
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BOX 2.2Acquisitions by the South of
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FIGURE 2.3Between 2000 and 2010, In
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FIGURE 2.4Export earnings per capit
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BOX 2.6Final assembly is about more
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Instead of having a centreof indust
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FIGURE 2.6Emerging market economies
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Developing countriestrade more amon
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“We cannot expect thatall nations
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TABLE 3.1Selected developing countr
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A common featureof countries thatha
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More important thangetting prices r
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BOX 3.5Eastern Europe and Central A
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States have to beconscious that the
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As countries develop,they tend to d
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Having weathered theAsian financial
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Providing publicservices that contr
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Advancing health requiresmore than
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Universal public healthand educatio
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• China. The Minimum Livelihood G
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“Each generation will reap whatth
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concerns will make for a complex en
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A greater emphasison education cans
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FIGURE 4.1Under the fast track scen
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Around the worldpeople are calling
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FIGURE 4.4Different environmental s
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FIGURE 4.5Education policies can al
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BOX 4.2China and Ghana: who benefit
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FIGURE 4.8countries thus converge t
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“Let us join hands to try tocreat
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Areas of globalinternational concer
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Addressing climatechange requires t
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International governanceis increasi
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BOX 5.2Jo Leinen, Member of the Eur
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facilitates reserve investments and
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Responsible sovereigntytakes the lo
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FIGURE 5.1Under the accelerated pro
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Good policymakingrequires greater f
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A fair and less unequalworld requir
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NotesOverview1 Atsmon and others 20
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25 Blinder 2006.26 UNIDO 2009.27 UN
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which is 61.7 deaths per 1,000 live
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ReferencesAbdurazakov, A., A. Minsa
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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 acknowledgementsThe Rep
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Key to HDI countries and ranks, 201
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