The 21st Century climate challenge

ences in national price levels. The GDP per capita(PPP US$) data for the HDI are providedby the World Bank (World Bank 2007b) for168 countries based on price data from the lastInternational Comparison Program (ICP surveysand GDP in local currency from nationalaccounts data. The last round of ICP surveysconducted between 1993 and 1996 covered118 countries. PPPs for these countries are estimateddirectly by extrapolating from the latestbenchmark results. For countries not includedin the ICP surveys, estimates are derivedthrough econometric regression. For countriesnot covered by the World Bank, PPP estimatesprovided by the Penn World Tables of the Universityof Pennsylvania (Heston, Summers andAten 2006) are used.Though much progress has been made inrecent decades, the current PPP data set suffersfrom several deficiencies, including lackof universal coverage, of timeliness of the dataand of uniformity in the quality of results fromdifferent regions and countries. Filling gaps incountry coverage with econometric regressionrequires strong assumptions, while extrapolationover time implies that the results becomeweaker as the distance lengthens between thereference survey year and the current year.The importance of PPPs in economic analysisunderlines the need for improvement in PPPdata. A new Millennium Round of the ICP hasbeen launched and promises much improvedPPP data for economic policy analysis. First resultsare expected to be published in late 2007or early 2008. For details on the ICP and thePPP methodology, see the ICP website at www.worldbank.org/data/icp.Comparisons over time and acrosseditions of the ReportThe HDI is an important tool for monitoringlong-term trends in human development. Tofacilitate trend analyses across countries, theHDI is calculated at five-year intervals for theperiod 1975–2005. These estimates, presentedin Table 2, are based on a consistent methodologyand on comparable trend data availablewhen the Report is prepared.As international data agencies continuallyimprove their data series, including updatinghistorical data periodically, the year to yearchanges in the HDI values and rankings acrosseditions of the Human Development Reportoften reflect revisions to data—both specificto a country and relative to other countries—rather than real changes in a country. In addition,occasional changes in country coveragecould also affect the HDI ranking of a country,even when consistent methodology is usedto calculate the HDI. As a result, a country’sHDI rank could drop considerably betweentwo consecutive Reports. But when comparable,revised data are used to reconstruct theHDI for recent years, the HDI rank and valuemay actually show an improvement.For these reasons HDI trend analysisshould not be based on data from different editionsof the Report. Table 2 provides up-to-dateHDI trend data based on consistent data andmethodology.HDI for high human developmentcountriesThe HDI in this Report is constructed to comparecountry achievements across the mostbasic dimensions of human development.Thus, the indicators chosen are not necessarilythose that best differentiate between richcountries. The indicators currently used in theindex yield very small differences among thetop HDI countries, and thus the top of theHDI ranking often reflects only very smalldifferences in these underlying indicators.For these high-income countries, an alternativeindex—the human poverty index (shownin Table 4)—can better reflect the extent ofhuman deprivation that still exists among thepopulations of these countries and can help directthe focus of public policies.For further discussions on the use and limitationsof the HDI and its component indicators,see http://hdr.undp.org/statistics.HUMAN DEVELOPMENT REPORT 2007/2008 227