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Employment-adjusted Human Development Index

Employment-adjusted Human Development Index Purpose - The current HDI has a limited capacity to reflect the human condition and country rankings in an accurate way. In addition, the main critiques on the HDI suggest that it uses very few or perhaps the wrong indicators in measuring human development levels in countries. This paper aims to investigate whether the inclusion of employment as a criterion in the HDI would yield a different ranking of nations. Design/methodology/approach - In this study, estimates of the proposed Employment-adjusted Human Development Index (E-HDI) are provided for seventy-seven countries for the 2000-2007 period, and comparisons are made both for changes in the human development index (HDI) and rankings over time in each country and for differences between the E-HDI and the UNDP's HDI across countries. Findings - The experience of a relatively large number of 77 sample countries has offered promising results for the path to improve the current status of the HDI, and hence, to overcome its weakness in terms of ranking of countries. The additional indicator, i.e. employment, improves the explanatory power of the HDI and makes significant contributions to its reliability. Research limitations/implications - The major limitation of the present study has been the lack of data for a number of the human development indicators for the rest of the countries in the world. Practical implications - The employment-adjusted index has great potential to make the HDI more operational. Social implications ­ By means of E-HDI, the human development performance of the countries can be better evaluated and compared with other countries by using additional information obtained from the employment position of their citizens. Originality/value ­ This will be the first paper in the literature that incorporates employment into the HDI.. Keywords: Human Development Index, Employment, Development, Basic Needs, Human Security JEL: O15, O57 DOI: 10.2478/v10033-012-0020-8 1. Introduction The Basic Needs approach was a predictable consequence of studies on earlier views on development. The attainment of development had previously been evaluated in terms of growth maximization and industrialization in the early 1950's. Emphasis on employment as a new primary development objective evolved with time (Stewart, 1985). * Hakan Mihci, Hacettepe University E-mail: hakan@hacettepe.edu.tr Mehmet Tolga Taner, Uskudar University E-mail: mehmettolga.taner@uskudar.edu.tr Bulent Sezen, Gebze Institute of Technology E-mail: bsezen@gyte.edu.tr November2012 Knowledge Decent standard of living Real GDP per capita (PPP in US$) Human Security DIMENSIONS Long and healthy life Life expectancy at birth INDICATORS Adult Literacy Rate Combined Enrolment Ratio Total Unemployment Rate (% of labour force) DIMENSION INDICES Longevity index Educational Attainment index GDP index Employment index Employment-adjusted Human Development Index (E-HDI) Figure 1: Employment-adjusted Human Development Index (E-HDI) The basic requirements which are accepted as indicators of a decent life style include accessibility to certain goods and services. These fundamentals are acknowledged as essential criteria by the Basic Needs approach to development. Although defined differently in different studies, Basic Needs has always included guaranteeing such basic fundamentals as access to safe food (adequate nutrition) and water, and universal provision of health and education services with shelter, clothing and nonmaterial needs such as employment, participation, protection and political liberty. If any of these needs are absent or in a critically short supply, the problem of underdevelopment comes onto the scene (Ghosh 1984; Hicks and Streeten 1979; ILO 1976; UNDP 1994). All attempts to achieve the expectation of fundamental human needs and development arise from the premise that development should be concerned with the elimination of absolute deprivation as a first priority. For centuries, the constitutional rhetoric and aspirations of every leader and public figure in the developing and developed world have set forth these basic conditions as a fundamental right. It should also be mentioned that the basic needs approach seems to be consistent with Amartya Sen (1983)'s notion of "entitlement" and "capabilities". It should be emphasized that the Basic Needs approach to development, while not a strategy, simply prioritizes the order of development techniques. Simply stated, the objectives themselves, and not the methods of implementation to arrive at these objectives, are the more important focus of the approach. (Stewart, 1995). The Basic Needs approach prescribes a clear set of goals which address planning purposes and policy makers. These goals set the improvement of the quality of life of the indiviual as their main focus. Therefore, health, education, employment and a commensurate income can be seen as a measure of achieving lifelong goals. The search for an additional dimension for the composite index of socio-economic progress, namely the human development index (HDI), began in the early 1990's soon after it was introduced by the United Nations Development Programme. For it to be widely accepted and used, it is crucial that the HDI includes only the most important and a limited number of accessible variables for all nations, in order to keep it simple and manageable. The selection of these dimensions highly depends on how the society regards and defines an acceptable composite. On the other hand, employment could be considered as a vector to raise personal income, which in turn secures the access of individuals to more goods and services. Therefore, it is our recommendation that employment or decent work should be regarded as one of the most important dimensions of human development. Hence, adding the employment dimension under the label of "human security" to the HDI will yield a more comprehensive measure of human development that captures more of people's needs for improving their way of life. It is important to note that the employment data of many countries are readily available in contrast to variables from social, cultural and political dimensions. SEE Journal As shown in Figure 1, in addition to the three essential choices of leading a long and healthy life, acquiring knowledge, having access to resources needed for a decent standard of living; and having security needed for a sustainable life are included in the measure of the EHDI. In today's world, employment can be recognized as a fundamental human right. It brings personal economic freedom. Additionally, providing and implementing strategies for meaningful and productive work for young generations is one of the main targets of the Millennium Development Goals. Thus, the capacity to develop and satisfy the job needs of its citizens must be among the major goals of every nation in the coming decades. Employment can be further considered a physical need. It constitutes the essential basis for peace, social justice, food security and human development. In this context, securing full employment levels can be considered one of the primary objectives of every nation. Moreover, rising employment levels is also beneficial in fostering economic growth and attaining sustainable development. In short, employment could be regarded as one of the most critical indicators of human development. Economies functioning at a full employment level, and thus, high levels of gross domestic product (GDP) show radical improvements in terms of human development. In other words, employment is positively related to the HDI. Its generation is particularly significant for economic growth and poverty reduction. Raising the employment level has been the major objective of the International Labor Organization since the early 1970s due to the fact that employment is not only considered an objective in itself but also a moderator to achieve various objectives, such as high levels of income, production and recognition. Therefore, one should argue that the employment-adjusted index has a great potential to make the HDI more operational. evolve with time; however, current HDI components fail to yield significantly perceiveable overall annual increases to affect the HDI value. This drawback lowers the sensitivity of the HDI towards annual changes. Nonetheless, employment is a dynamic and fluctuating dimension which reflects the real life circumstances of the individual, similar to health, education and access to resources. It also shows considerable variation across countries. The unemployment rate, although it has not yet been included in the sub-indices of the HDI, is a strong indicator of social inclusion and quality-of-life through the efficient use of human resources (Taner et al. 2011). In addition, Panigrahi and Sivramkrishna (2002), Osberg and Sharpe (2003) and Cherchye et al. (2008) have presented their concerns with the problems in HDI rankings in their publications. Furthermore, Wolff et al. (2009) and Taner et al. (2010), in their analyses, have suggested, and substantiated with statistics, that countries have been misclassified by the HDI. Hence, this paper empirically investigates whether the inclusion of employment as a criterion in the HDI would yield a different ranking of nations. It is further argued that the HDI could be appropriately modified by simply incorporating an employment dimension to the current index. This Employment-adjusted Human Development Index is denoted as the E-HDI. Due to the limited availability of data for other countries, the sample addresses the situation in only seventy-seven countries. 3. Method Formerly, the HDI had been based on three subindices and four indicators: a longevity index (LEI), as measured by life expectancy at birth; an educational attainment index, as measured by a combination of adult literacy (two-thirds weighting) and combined (i.e. primary, secondary and tertiary) enrolment (one-third weighting) ratios (EI); and standard of living, as measured by GDP index -real GDP per capita measured by purchasing power parity in US$- (GDPI). To calibrate the dimensions, the UNDP has assigned minimum and maximum values (goalposts) for each underlying subindex. Performance in each sub-index is then calculated and expressed as a value between 0-1. In the UNDP's approach, these three sub-indices are assigned equal weightings as follows: HDI = (LEI + EI + GDPI)/3 2. The Rationale of the Study The current HDI has a limited capacity to reflect the human condition and country rankings in an accurate way. In addition, the main critiques of the HDI suggest that it uses very few or perhaps the wrong indicators in measuring the human development levels of countries. This is mainly due to the fact that two of the current components used for calculating the HDI are not dynamic. It is true that the HDI value is developed to November2012 . themselves for the years between 2000 and 20071. Scaled values of the sub-indices are shown in Table 1, 2 and 4-8. The countries consisted mainly European Union (EU), OECD, Asian, and Central and South American countries. The limitation of the sample size was due to the lack of unemployment data for the rest of the countries for most of the years under study. Another limitation of the study is that statistical analysis has not been possible for the most recent data covered by the 2010 and 2011 Human Development Reports, since the UNDP has opted to change both education and income indicators and the method of calculating HDI in these reports. As indicated above, the HDI has included only a limited number of indicators to keep it simple and manageable. This simple HDI algorithm has been used for many years and calculated from regularly available data to produce a meaningful value that can be used to compare and rank countries across the world. In the present approach, the four indices in the E-HDI represent a different set of indicators for assessing the aggregate level of human development with equal weighting in the following way: E-HDI = (LEI + EI + GDPI + EMPI)/4, or 5. Descriptive Statistical Analysis E-HDI = (3*HDI + EMPI)/4 where EMPI is the new included index, i.e. employment index. The unemployment rate is the starting point for the EMPI sub-index of the human security component. This, together with the risk of losing one's job, combined with being unable to find a new job quickly, is taken as a measure of what drives worker insecurity. The EMPI is likewise calculated via basic algebra for each country as shown below: EMPI = 1 ­ Total Unemployment Rate The proposed sub-index of EMPI covers all individuals of normal working age (above 15) including both the employed and the unemployed. In addition, the four subindices address conceptually different aspects of human development, which although correlated do not predetermine one another. The equal weights allow easy comparison over time and across countries. The assessment of change in E-HDI over the years for all the countries is tabulated through using statistical tables. From E-HDI values, comparisons of achievements between countries at a given year or for a particular country for different periods can also be made. Like the HDI, the E-HDI captures both trends over time within countries and allows cross-country comparisons of the level of human development at particular points in time. This section presents the main findings of descriptive statistical analysis. In the first sub-section, the main trends for all countries in the sample are thoroughly reviewed, focusing on the HDI, E-HDI values and the rankings together with basic changes in these indicators throughout the period under investigation. Consequently, the analysis is detailed through dividing the sample of 77 countries into two main categories under the titles of OECD and developing countries. While the first category consists of the 30 countries presented at the top of the statistical tables, the remaining 47 countries are covered by the developing country category. 5.1. General Evaluation The sample consists of 38 European, 16 Asian, 10 South American, 9 Central and North American, 2 Oceanian and 2 African countries. Of the 38 European countries, from the latest available data it is found that 22 are very highly employment-adjusted developed (EAD) where the absolute values of the E-HDI exceed a threshold level of 0.900, 15 are highly EAD (the values of the E-HDI are between 0.800 and 0.900) and only Macedonia is moderately EAD (the values of the E-HDI are between 0.700 and 0.800). Both of the Oceanian countries are very highly EAD. Of the 16 Asian countries, 7 are very highly employment-adjusted developed (EAD), 4 are highly EAD and 5 are moderately EAD. Of the 10 South American countries, 9 are highly EAD and only Bolivia is moderately EAD. Of the 9 Central and North American countries, 2 are very highly employment-adjusted 4. Data In this study, a total of 77 highly developed, developed and developing economies are taken as the research sample; re-ranked and re-classified among The data for the HDI and its components is taken from UNDP's Human Development Reports from 2002 to 2009. SEE Journal Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba Ecuador Panama Romania LEI 0,90 0,89 0,90 0,90 0,86 0,91 0,90 0,93 0,89 0,89 0,88 0,87 0,89 0,85 0,89 0,88 0,89 0,87 0,88 0,89 0,88 0,89 0,83 0,84 0,83 0,77 0,81 0,80 0,79 0,75 0,76 0,8 0,91 0,9 0,76 0,78 0,79 0,81 0,76 0,84 0,81 0,76 0,68 0,73 0,85 0,75 0,82 0,75 GDPI 0,95 0,95 0,93 0,94 0,95 0,92 0,94 0,93 0,93 0,92 0,92 0,97 0,88 0,94 0,93 0,91 0,94 1 0,88 0,91 0,92 0,85 0,86 0,86 0,82 0,8 0,75 0,79 0,75 0,71 0,77 0,55 0,92 0,89 0,71 0,71 0,75 0,8 0,68 0,76 0,73 0,61 0,74 0,72 0,64 0,58 0,68 0,69 EMPI 0,986 0,966 0,937 0,932 0,957 0,953 0,98 0,953 0,974 0,905 0,902 0,96 0,859 0,953 0,953 0,945 0,93 0,974 0,94 0,893 0,925 0,886 0,959 0,96 0,911 0,935 0,839 0,812 0,978 0,936 0,864 0,892 0,951 0,912 0,856 0,836 0,97 0,85 0,837 0,917 0,839 0,969 0,902 0,979 0,946 0,91 0,865 0,929 EI 0,96 0,98 0,99 0,98 0,96 0,99 0,94 0,93 0,99 0,99 0,99 0,98 0,97 0,98 0,96 0,99 0,99 0,9 0,99 0,94 0,97 0,92 0,95 0,94 0,89 0,93 0,94 0,91 0,84 0,77 0,95 0,89 0,83 0,91 0,93 0,93 0,8 0,92 0,9 0,9 0,88 0,8 0,92 0,92 0,9 0,87 0,86 0,88 E-HDI 0,949 0,9465 0,93925 0,938 0,93175 0,94325 0,94 0,93575 0,946 0,92625 0,923 0,945 0,89975 0,93075 0,93325 0,93125 0,9375 0,936 0,9225 0,90825 0,92375 0,8865 0,89975 0,9 0,86275 0,85875 0,83475 0,828 0,8395 0,7915 0,836 0,783 0,90275 0,903 0,814 0,814 0,8275 0,845 0,79425 0,85425 0,81475 0,78475 0,8105 0,83725 0,834 0,7775 0,80625 0,81225 HDI HDI-E-HDI R(HDI) R(E-HDI) R(HDI-E-HDI) 0,936 -0,013 7 1 6 0,942 -0,0045 1 2 -1 0,939 -0,00025 4 7 -3 0,94 0,002 3 8 -5 0,925 -0,00675 16 13 3 0,941 -0,00225 2 5 -3 0,928 -0,012 11 6 5 0,933 -0,00275 9 11 -2 0,935 -0,011 8 3 5 0,928 0,00175 11 16 -5 0,93 0,007 10 18 -8 0,939 -0,006 4 4 0 0,913 0,01325 20 25 -5 0,926 -0,00475 14 15 -1 0,926 -0,00725 14 12 2 0,928 -0,00325 11 14 -3 0,939 0,0015 4 9 -5 0,925 -0,011 16 10 6 0,917 -0,0055 19 19 0 0,913 0,00475 20 20 0 0,925 0,00125 16 17 -1 0,896 0,0095 22 28 -6 0,888 -0,01175 24 25 -1 0,885 -0,015 26 24 2 0,885 0,02225 26 29 -3 0,883 0,02425 29 29 0 0,88 0,04525 32 39 -7 0,882 0,054 31 42 -11 0,8 -0,0395 44 35 9 0,742 -0,0495 61 52 9 0,826 -0,01 39 38 1 0,748 -0,035 58 58 0 0,888 -0,01475 24 22 2 0,896 -0,007 22 21 1 0,8 -0,014 44 46 -2 0,808 -0,006 42 46 -4 0,782 -0,0455 49 43 6 0,844 -0,001 34 34 0 0,779 -0,01525 51 51 0 0,831 -0,02325 37 33 4 0,809 -0,00575 41 45 -4 0,726 -0,05875 67 55 12 0,781 -0,0295 50 49 1 0,788 -0,04925 47 37 10 0,795 -0,039 46 40 6 0,732 -0,0455 64 59 5 0,787 -0,01925 48 50 -2 0,775 -0,03725 52 48 4 November2012 EI 0,84 0,92 0,91 0,83 0,92 0,88 0,88 0,9 0,87 0,88 0,8 0,8 0,74 0,65 0,86 0,87 0,88 0,91 0,87 0,85 0,91 0,79 0,62 0,74 0,7 0,8 0,85 0,91 0,83 E-HDI 0,822 0,7835 0,8285 0,7835 0,8385 0,709 0,88825 0,75675 0,76375 0,90025 0,7555 0,71875 0,8555 n/a n/a n/a 0,70675 0,7585 n/a 0,786 0,787 0,74725 0,7075 0,765 n/a 0,76025 0,85975 n/a n/a HDI HDI-E-HDI R(HDI) R(E-HDI) R(HDI-E-HDI) 0,805 -0,017 43 44 -1 0,748 -0,0355 58 56 2 0,835 0,0065 35 41 -6 0,74 -0,0435 62 56 6 0,831 -0,0075 36 36 0 0,695 -0,014 71 68 3 0,875 -0,01325 33 27 6 0,701 -0,05575 70 64 6 0,712 -0,05175 68 61 7 0,883 -0,01725 29 23 6 0,733 -0,0225 63 65 -2 0,653 -0,06575 74 67 7 0,813 -0,0425 40 32 8 0,635 n/a 77 n/a n/a 0,772 n/a 54 n/a n/a 0,885 n/a 26 n/a n/a 0,667 -0,03975 73 70 3 0,727 -0,0315 65 63 2 0,747 n/a 60 n/a n/a 0,772 -0,014 53 54 -1 0,754 -0,033 56 53 3 0,684 -0,06325 72 66 6 0,642 -0,0655 75 69 6 0,706 -0,059 69 60 9 0,638 n/a 76 n/a n/a 0,727 -0,03325 65 62 3 0,831 -0,02875 36 30 6 0,75 n/a 57 n/a n/a 0,757 n/a 55 n/a n/a Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil LEI 0,82 0,72 0,8 0,75 0,82 0,45 0,88 0,69 0,71 0,88 0,8 0,62 0,85 0,72 0,8 0,88 0,71 0,73 0,73 0,77 0,74 0,69 0,7 0,75 0,68 0,7 0,81 0,66 0,71 GDPI 0,75 0,61 0,79 0,63 0,75 0,76 0,86 0,51 0,55 0,89 0,59 0,53 0,84 0,53 0,66 0,91 0,41 0,53 0,65 0,69 0,61 0,57 0,6 0,64 0,53 0,68 0,84 0,68 0,72 EMPI 0,878 0,884 0,814 0,924 0,864 0,746 0,933 0,927 0,925 0,951 0,832 0,925 0,992 n/a n/a n/a 0,827 0,864 n/a 0,834 0,888 0,939 0,91 0,93 n/a 0,861 0,939 n/a n/a EMPI, E-HDI, R(E-HDI): Authors' own calculations HDI-E-HDI=Numerical difference between the two indices R(HDI)=Rank of a country in terms of its HDI R(E-HDI)=Rank of a country in terms of its E-HDI R(HDI-E-HDI)=Difference between the HDI ranking and E-HDI rank of a country Source: UNDP (2002); ILO Table 1: Employment- adjusted Human Development Index (E-HDI): 2000 SEE Journal R(HDI-E-HDI) 1 0 -1 -3 -3 -4 4 3 2 -7 -1 0 -10 5 3 -1 -2 0 3 -2 -3 -1 3 1 3 1 1 -3 5 3 2 2 4 0 3 6 6 n/a -1 3 -2 6 4 8 12 7 0 0 Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba Ecuador Panama Romania LEI 0,95 0,93 0,94 0,93 0,91 0,93 0,95 0,96 0,91 0,93 0,91 0,90 0,93 0,89 0,92 0,91 0,91 0,91 0,92 0,94 0,91 0,90 0,90 0,89 0,86 0,81 0,84 0,83 0,85 0,78 0,799 0,777 0,953 0,928 0,788 0,78 0,819 0,831 0,802 0,891 0,85 0,799 0,686 0,733 0,891 0,833 0,842 0,792 GDPI 0,981 1 0,977 0,982 1 0,986 1 0,971 0,994 0,971 0,975 1 0,96 0,983 0,989 0,978 0,977 1 0,936 0,954 0,975 0,944 0,92 0,906 0,916 0,874 0,847 0,885 0,826 0,812 0,887 0,641 1 0,93 0,851 0,863 0,819 0,828 0,788 0,823 0,847 0,665 0,833 0,782 0,706 0,719 0,79 0,804 EMPI 0,97 0,974 0,958 0,939 0,94 0,938 0,966 0,96 0,972 0,926 0,936 0,942 0,887 0,967 0,962 0,944 0,93 0,949 0,959 0,933 0,925 0,923 0,968 0,924 0,956 0,922 0,929 0,905 0,96 0,906 0,953 0,867 0,96 0,927 0,94 0,957 0,968 n/a 0,931 0,929 0,904 0,96 0,939 0,99 0,982 0,939 0,932 0,936 EI 0,98 0,989 0,993 0,991 0,985 0,974 0,936 0,949 0,985 0,978 0,993 0,968 0,975 0,993 0,962 0,957 0,974 0,975 0,993 0,965 0,954 0,981 0,988 0,929 0,938 0,96 0,952 0,928 0,886 0,828 0,964 0,916 0,879 0,947 0,961 0,968 0,851 0,947 0,93 0,919 0,916 0,851 0,933 0,961 0,993 0,866 0,888 0,915 E-HDI 0,96925 0,972 0,967 0,95975 0,959 0,957 0,96175 0,96025 0,96625 0,952 0,953 0,953 0,93775 0,9575 0,957 0,94625 0,94725 0,9575 0,95175 0,94675 0,94175 0,9375 0,945 0,913 0,9165 0,89025 0,8925 0,88625 0,8805 0,83125 0,90075 0,80025 0,948 0,933 0,885 0,892 0,86425 n/a 0,86275 0,8905 0,87925 0,81875 0,84775 0,8665 0,893 0,83925 0,863 0,86175 HDI HDI-E-HDI 0,969 -0,00025 0,971 -0,001 0,97 0,003 0,966 0,00625 0,965 0,006 0,963 0,006 0,96 -0,00175 0,96 -0,00025 0,964 -0,00225 0,961 0,009 0,959 0,006 0,956 0,003 0,955 0,01725 0,955 -0,0025 0,955 -0,002 0,947 0,00075 0,953 0,00575 0,96 0,0025 0,95 -0,00175 0,951 0,00425 0,947 0,00525 0,942 0,0045 0,937 -0,008 0,909 -0,004 0,903 -0,0135 0,879 -0,01125 0,88 -0,0125 0,88 -0,00625 0,854 -0,0265 0,806 -0,02525 0,883 -0,01775 0,778 -0,02225 0,944 -0,004 0,935 0,002 0,866 -0,019 0,87 -0,022 0,829 -0,03525 0,866 n/a 0,84 -0,02275 0,878 -0,0125 0,871 -0,00825 0,772 -0,04675 0,817 -0,03075 0,826 -0,0405 0,863 -0,03 0,806 -0,03325 0,84 -0,023 0,837 -0,02475 R(HDI) 3 1 2 4 5 7 9 9 6 8 12 13 14 14 14 20 17 9 19 18 20 24 25 29 30 37 34 34 45 57 33 62 22 26 41 40 50 41 46 38 39 64 53 51 44 57 46 48 R(E-HDI) 2 1 3 7 8 11 5 6 4 15 13 13 24 9 11 21 19 9 16 20 23 25 22 28 27 36 33 37 40 54 31 60 18 26 38 34 44 n/a 47 35 41 58 49 43 32 50 46 48 November2012 E-HDI 0,8635 0,83075 0,8825 0,8065 0,87575 0,705 0,91025 0,7805 0,76375 0,82275 n/a 0,78425 n/a 0,762 0,77575 0,94825 0,716 0,75975 0,838 0,8275 0,79525 0,7775 0,75525 0,79475 0,79175 0,79375 0,9045 0,835 0,83925 HDI HDI-E-HDI 0,837 -0,0265 0,796 -0,03475 0,88 -0,0025 0,761 -0,0455 0,865 -0,01075 0,683 -0,022 0,902 -0,00825 0,72 -0,0605 0,71 -0,05375 0,914 0,09125 0,818 n/a 0,729 -0,05525 0,916 n/a 0,699 -0,063 0,817 0,04125 0,944 -0,00425 0,688 -0,028 0,71 -0,04975 0,806 -0,032 0,807 -0,0205 0,751 -0,04425 0,734 -0,0435 0,703 -0,05225 0,747 -0,04775 0,732 -0,05975 0,777 -0,01675 0,895 -0,0095 0,804 -0,031 0,813 -0,02625 R(HDI) 48 61 34 65 43 77 31 71 72 28 52 70 27 75 53 22 76 72 57 56 66 68 74 67 69 63 32 60 55 R(E-HDI) 45 55 39 59 42 74 29 66 69 57 n/a 65 n/a 70 68 17 73 71 52 56 61 67 72 62 64 63 30 53 51 R(HDI-E-HDI) 3 6 -5 6 1 3 2 5 3 -29 n/a 5 n/a 5 -15 5 3 1 5 0 5 1 2 5 5 0 2 7 4 Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil LEI 0,737 0,72 0,827 0,778 0,852 0,442 0,91 0,722 0,71 0,91 0,858 0,673 0,875 0,795 0,819 0,92 0,691 0,711 0,8 0,795 0,777 0,758 0,749 0,771 0,783 0,79 0,843 0,666 0,787 GDPI 0,911 0,707 0,885 0,633 0,788 0,765 0,908 0,541 0,5 0,92 0,71 0,624 1 0,542 0,753 1 0,478 0,532 0,728 0,743 0,589 0,603 0,664 0,678 0,607 0,702 0,95 0,782 0,761 EMPI 0,945 0,936 0,89 0,944 0,908 0,77 0,936 0,96 0,927 0,961 n/a 0,948 n/a 0,951 0,651 0,96 0,799 0,908 0,933 0,891 0,927 0,909 0,911 0,936 0,971 0,844 0,932 0,927 0,918 EI 0,861 0,96 0,928 0,871 0,955 0,843 0,887 0,899 0,918 0,91 0,886 0,892 0,872 0,76 0,88 0,913 0,896 0,888 0,891 0,881 0,888 0,84 0,697 0,794 0,806 0,839 0,893 0,965 0,891 EMPI, E-HDI, R(E-HDI): Authors' own calculations. Source: UNDP (2009); ILO Table 2: Employment-adjusted Human Development Index (E-HDI): 2007 SEE Journal Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba HDI GROWTH RATE 2000-2007 (% change) 3,526 3,079 3,301 2,766 4,324 2,338 3,448 2,894 3,102 3,556 3,118 1,810 4,600 3,132 3,132 2,047 1,491 3,784 3,599 4,162 2,378 5,134 5,518 2,712 2,034 -0,453 0,000 -0,227 6,750 8,625 6,901 4,011 6,306 4,353 8,250 7,673 6,010 2,607 7,831 5,656 7,664 6,336 4,609 4,822 8,553 R-HDI 2000 7 1 4 3 16 2 11 9 8 11 10 4 20 14 14 11 4 16 19 20 16 22 24 26 26 29 32 31 44 61 39 58 24 22 44 42 49 34 51 37 41 67 50 47 46 CHANGE IN HDI RANK R-HDI 2007 2000-2007 3 4 1 0 2 2 4 -1 5 11 7 -5 9 2 9 0 6 2 8 3 12 -2 13 -9 14 6 14 0 14 0 20 -9 17 -13 9 7 19 0 18 2 20 -4 24 -2 25 -1 29 -3 30 -4 37 -8 34 -2 34 -3 45 -1 57 4 33 6 62 -4 22 2 26 -4 41 3 40 2 50 -1 41 -7 46 5 38 -1 39 2 64 3 53 -3 51 -4 44 2 E-HDI GROWTH RATE 2000-2007 (% change) 2,134 2,694 2,954 2,319 2,925 1,458 2,314 2,618 2,141 2,780 3,250 0,847 4,223 2,874 2,545 1,611 1,040 2,297 3,171 4,239 1,949 5,753 5,029 1,444 6,230 3,668 6,918 7,035 4,884 5,022 7,745 2,203 5,012 3,322 8,722 9,582 4,441 3,609** 8,624 4,243 7,917 4,333 4,596 3,494 7,074 R-E-HDI 2000 1 2 7 8 13 5 6 11 3 16 18 4 25 15 12 14 9 10 19 20 17 28 25 24 29 29 39 42 35 52 38 58 22 21 46 46 43 34 51 33 45 55 49 37 40 CHANGE IN E-HDI RANK R-E-HDI 20002007 2007 2 -1 1 1 3 4 7 1 8 5 11 -6 5 1 6 5 4 -1 15 1 13 5 13 -9 24 1 9 6 11 1 21 -7 19 -10 9 1 16 3 20 0 23 -6 25 3 22 3 28 -4 27 2 36 -7 33 6 37 5 40 -5 54 -2 31 7 60 -2 18 4 26 -5 38 8 34 12 44 -1 37**** -3****** 47 4 35 -2 41 4 58 -3 49 0 43 -6 32 8 November2012 E-HDI GROWTH RATE 2000-2007 (% change) 7,942 7,039 6,094 5,049 6,031 6,518 2,936 4,442 -0,564 2,477 3,138 0,000 -8,609 8,041** 9,113 6,867** 6,722* 1,571 4,721* 1,309 0,165 5,375* 5,280 1,048 4,048 6,749 3,889 6,957* 4,406 5,205 4,505* 3,739* CHANGE IN E-HDI RANK R-E-HDI 20002007 2007 50 9 46 4 48 0 45 -1 55 1 39 2 59 -3 42 -6 74 -6 29 -2 66 -2 69 -8 57 -34 57**** 8****** 65 2 28**** 4****** 70 7***** 68 -17***** 17 10***** 73 -3 71 -8 52 6***** 56 -2 61 -8 67 -1 72 -3 62 -2 64 11***** 63 30 53 51 -1 0 4***** 3***** Ecuador Panama Romania Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil HDI GROWTH RATE 2000-2007 (% change) 10,109 6,734 8,000 3,975 6,417 5,389 2,838 4,091 -1,727 3,086 2,710 -0,281 3,511 11,596 11,639 12,669 10,079 5,829 6,667 3,148 -2,338 7,898 4,534 -0,398 7,310 9,502 5,807 14,734 6,878 7,702 7,200 7,398 R-HDI 2000 64 48 52 43 58 35 62 36 71 33 70 68 29 63 74 40 77 54 26 73 65 60 53 56 72 75 69 76 65 36 57 55 CHANGE IN HDI RANK R-HDI 2007 2000-2007 57 7 46 2 48 4 48 -5 61 -3 34 1 65 -3 43 -7 77 -6 31 2 71 -1 72 -4 28 1 52 11 70 4 27 13 75 2 53 1 22 4 76 -3 72 -7 57 3 56 -3 66 -10 68 4 74 1 67 2 69 7 63 32 60 55 2 4 -3 0 R-E-HDI 2000 59 50 48 44 56 41 56 36 68 27 64 61 23 65 67 32 77*** 51*** 27*** 70 63 58*** 54 53 66 69 60 75*** 62 30 57*** 54*** *Growth between 2001 and 2007 **Growth between 2000 and 2006 ***E-HDI Ranking in 2001 ****E-HDI Ranking in 2006 *****Change in E-HDI Ranking between 2001 and 2007 ****** Change in E-HDI Ranking between 2000 and 2006 Table 3: Employment-adjusted Human Development Index (E-HDI) Trends: 2000-2007 SEE Journal developed (EAD), 3 are highly EAD and 4 are moderately EAD. The two African countries are moderately EAD (See Table 2). During the period under study, 10 countries (i.e. Turkey, Ukraine, Bulgaria, Georgia Colombia, Albania, Paraguay, China and Ecuador) were promoted to being highly EAD from being moderately EAD. Likewise, 8 countries (i.e. Malta, Kuwait, Bahrain, Spain, Greece, Korean Republic, Czech Republic and Estonia) were elevated to being very highly EAD from highly EAD. Only Cyprus declined in its status from being very highly to highly EAD (See Tables 1 and 2). The analysis shows that the E-HDI and HDI have classified some countries in different categories in terms of human development. In 2007, while Bahrain and Estonia are highly developed countries according to the HDI, they are found to be very highly developed according to the E-HDI. While Ukraine, China, Paraguay and Georgia are moderately developed countries according to the HDI, they are found to be highly developed according to the E-HDI. Similarly, while Tajikistan, Nicaragua, South Africa are low developed countries according to the HDI where the absolute values are lower than 0.700, they are found to be moderately developed according to the E-HDI. Likewise, while Macedonia is highly developed according to the HDI, it is found to be moderately developed according to the E-HDI. Similarly, Cyprus is very highly developed according to the HDI, and is found to be only highly developed according to the E-HDI. Furthermore, there has been very small fluctuation in the E-HDIs of Uzbekistan, Kyrgyzstan, United States and South Africa with an E-HDI growth rate of less than 1%. High E-HDI growth rates of more than 7.5% were experienced by Lithuania, Latvia, Estonia, Croatia, Ecuador, Bolivia, Chile and Albania. Only Cyprus and South Africa have experienced negative E-HDI growth rates during the period under investigation (See Table 3). According to the present calculations, while Hungary, Slovakia, Uzbekistan and Phillipines experienced negative HDI growth rates during the analysis period, the E-HDI growth rates of these countries are found to be positive. Lastly, out of 77 countries, the E-HDI of only 22 countries was found to be greater than their HDIs. 5.2. Analysis of OECD Countries The sample included 30 OECD countries, most of which are highly developed and developed countries. Norway has led OECD countries for six years. According to both the HDI and E-HDI, it has always ranked within the top two countries. Nineteen OECD countries consistenly had an E-HDI score greater than 0.900, whereas only five countries (i.e. Hungary, Poland, Slovakia, Mexico and Turkey) among OECD countries consistently had an E-HDI score of less than 0.900. The relatively less developed nine countries (Greece, the Republic of Korea, Portugal, Czech Republic, Hungary, Poland, Slovakia, Mexico and Turkey) constitute a "low category" with respect to the E-HDI, by ranking always below the other 20 OECD countries. Five countries (i.e. Hungary, Poland, Slovakia, Mexico and Turkey) always ranked in the last five among OECD countries. Being the least developed OECD country, the E-HDI of Turkey has become greater than 0.800 only after 2005/6. This positive trend can be related to the significant rise in its employment rate alongside per capita growth in GDP and improvement in educational attainment figures (See Table 2 and 8). The other cluster of OECD countries which could be categorized as "middle" ranked always between the 13rd and 22th among the 30 OECD countries. These six countries are New Zealand, Italy, Germany, France, Finland and Spain. The "High" E-HDI category included Iceland, Norway, Australia, Canada, Ireland, Sweden, Switzerland and Japan since these countries always ranked in the top 11 OECD countries during the analysis period. Switzerland and Austria have had mostly stable rankings during the analysis period, whereas the most unstable rankings were observed for Ireland and Denmark. Furthermore, Ireland and the Unites States had a similar range of rankings. Likewise, Finland and New Zealand has had the same range of rankings between the 13th and 18th. The United Kingdom experienced a drastic fall in its 2007 rankings. Likewise, Luxembourg had a drastic fall in its 2005/6 rankings. Between 2005/6 and 2007, the E-HDI decreased only for Spain and the UK (See Table 2 and 8). Between 2004 and 2005, the E-HDI only decreased for Portugal (See Table 7 and 8). This trend can be associated with the signs of the global economic crisis for these countries. As is well known, Spain, Portugal and UK were adversely affected from the recent economic crisis, which manifested itself through declines in GDP, and especially a drastic rise in unemployment rates2. These three countries are among those which heavily suffered from the recent financial crises. According to Reinhart and Rogoff (2009), November2012 . Singapore, Israel and Hong Kong) countries. According to the E-HDI and HDI statistics, Kuwait began classed as very highly developed (i.e. HDI and E-HDI values exceeded 0.900) in 2004 and 2007 respectively, mainly due to its high per capita income level originating from the export revenues of oil products4. Additionally, the E-HDI and HDI statistics also depicted Malta as a very highly developed country with respect to human development in 2007 (See Table 2 and 7). The countries with the highest HDI growth rate between 2000 and 2007 were Honduras (14.734%), Kuwait (12.669%), Bolivia (11.639%), Albania (11.596%), Ecuador (10.109%) and Nicaragua (10.079%). The country with the lowest HDI growth rate was found to be Uzbekistan (-2.338%). In 2000, there was no developing country in the sample which had an HDI higher than its E-HDI. Argentina's HDI exceeded its E-HDI during the 2001-2004 period. For all years under study, Israel and Macedonia had HDIs higher than E-HDIs. In 2001, Lithuania's E-HDI was equal to its HDI. Bahrain, Romania, Indonesia, Trinidad and Ukraine have had mostly stable rankings during the analysis period. Controversially, developing countries like Macedonia, Cyprus and Cuba have had the most fluctuating rankings in their E-HDI. The countries with the highest E-HDI growth rates during the analysis period were found to be Lithuania (9.582%), Bolivia (9.113%), Latvia (8.722%), Bulgaria (8.624%) and Albania (8.041%). The country with the lowest E-HDI growth rate was found to be Cyprus. In fact, Cyprus had a negative growth rate during the analysis period (-8.609%). Furthermore, the biggest gains in E-HDI rankings between 2000 and 2007 were realised by Lithuania (+12), Honduras (+11), Singapore (+10), Ecuador (+9), Latvia (+8), Cuba (+8), Albania (+8), Estonia (+7) and Nicaragua (+7). The biggest drops in E-HDI rankings in this period were experienced by Cyprus (-34), Macedonia (-17), Phillipines (-8) and Kyrgyzstan (-8) (See Table 3). Depending on the comparison between HDI and EHDI rankings, it can be argued that at the beginning of the analysis period (in 2000), the current HDI underestimated the rankings of China (+12), Belarus (+10) The highest E-HDI value (0.972) was achieved by Norway in 2007. Spain, the Republic of Korea and Portugal reached 0.900 in 2000, Italy in 1999, Greece in 2002, and the Czech Republic in 2005/6. Among OECD countries, highest loss of rankings (-8) was experienced by Denmark during 2000-2001, whereas the highest gain in ranking (+7) was achieved by Belgium during the same period (See Table 1 and 4). The Highest annual increase in E-HDI was achieved by Turkey with 3.0% between 2005/6-2007 (See Table 2 and 8). Similarly, the highest annual decrease in the E-HDI was again achieved by Turkey, with -1.6% during the 20002001 period (See Table 1 and 4) owing to the most destructive crisis that the country ever experienced in its economic history. Consequently, severe unemployment problems deteriorated the human development performance of the country. None of the OECD countries enjoyed continuous increases in its ranking. However, 13 OECD countries (i.e. Ireland, Japan, Finland, Spain, Denmark, Austria, United Kingdom, New Zealand, Italy, Greece, the Republic of Korea, Hungary and Poland) had a rising E-HDI trend during the analysis period. Ireland succeeded in increasing its ranking from 2000 through 2005/6. Nevertheless, the global economic crisis jeopardized this trend and negatively affected its performance in terms of human development (See Table 1, 2, 4, 5, 6, 7 and 8)3. The E-HDI is greater than the HDI during the whole period for eight OECD countries, namely the Republic of Korea, New Zealand, Portugal, Turkey, Iceland, Japan, Mexico, Switzerland and Denmark. These countries had been underestimated by the HDI in terms of their human development levels. The addition of the employment factor to the HDI had significant effects on the values of the relatively less developed countries, such as Turkey, Mexico, the Republic of Korea and Portugal. Furthermore, Canada, France, Finland, Spain, Belgium and Italy had higher HDIs than E-HDIs for all years except 2005/6, which could be considered the starting period of the recent global economic crisis. 5.3. Analysis of Developing Countries In addition to 30 OECD countries, the sample also consisted of 44 developing and 3 highly developed (i.e. severe financial crises have adverse and lasting effects on output and unemployment. 3 To examine the effects of the current economic crisis on the basic fundamentals of the Irish economy, see for example Lane (2011), Hardiman (2010) and Kelly (2010). According to Wikipedia, Kuwait is a small economy with crude oil reserves of about 96 billion barrels which constitute nearly nine per cent of the total world oil reserves. In turn, oil accounts for about half of GDP, and 90 per cent of export revenues (http://en.wikipedia.org/wiki/Economy_of_Kuwait). SEE Journal Employment-adjusted Human Developmen Index H nt and El Salvad (+9), whereas Slovakia, Lithuania an a dor nd Croatia were o C overestimated by +6, +4 an +4 ranking d nd gs, respectively (T r Table 1). For th following ye the highest he ear, negative diffe n erence betwee the rankings of HDI an en nd EHDI were obs E served for Bela arus (-11), Kuw (-10), Chin wait na (-9), Malaysia (-9) and Cuba (-9). Macedo ( a onia gained 15 1 places (Table 4 p 4). In 2002, h however, the highest negat tive difference es between the rankings of the HDI an E-HDI wer b nd re observed for M o Macedonia (-17 Argentina (- and Bulgar 7), -8) ria (-7). Cuba, Kuwait and Malaysia gained +9, +8 and +8 ( + places, respec p ctively (Table 5). In 2005- the highest -6, difference bet d tween the ran nkings of the HDI and E-HD DI was observed for Macedonia (-18). Cuba g w a gained 6 place es. The rankings of Cyprus, M T Moldova, Malta, Russia an nd Georgia remained the same (Table 7). G minal year of t analysis p the period (in 2007 7), At the term addition of th unemploym a he ment factor t the HDI ha to as caused Cyprus and Macedonia to lose (-29) and (-15 c 5) places, respect p tively. On the o other hand, Cu and Belaru uba us have gained + and +8 p h +12 places, respect tively (Table 8). 8 This brief desc T criptive analys indicates that addition of sis o the unemployment factor to the HDI affec t o cted Macedonia the most am t mong develop ping countrie This effec es. ct remained mos stable after 2001. r stly r overcome some of its weakness ses. Above a the all, dimensio of the curr on rent index cou be enriche with uld ed the E-HD An additiona indicator ob DI. al bviously improves the explanato power of the HDI an makes sign ory f nd nificant contribut tions to its reliability. Mo oreover, the human developm ment performa ance of count tries could be better e evaluated and compared with othe countries by using d er y additiona information obtained fro the emplo al n om oyment situations of their citize ens. ever, it should be mentioned that the p d present Howe study co ould further be ameliorated through ass b d signing each co omponent a weighting d depending o any on predetermined criteria rather than assigning these on an e r focus on this fie eld. arbitrary basis. Future research may f jor t een A maj limitation of the present study has be the lack of d data for a num mber of the h human develo opment indicator for the rest of the countries in the world. Future rs o . work will hopefully ad ddress these g gaps and perm the mit ment of mo ore comprehe ensive and r reliable developm measurement of the various compo v onents of the HDI as a better data sources are identified and data accessed. eless, we bel lieve that th current re he esearch, Neverthe despite it exploratory nature, provid significant insight ts des on evalua ating and rank king countries over the last d decade. 6. Conclusion 6 n This pape on the H er Human Development Inde ex represents a first attempt to construct a measure of r o human develo h opment for 7 countries based on th 77 he framework developed incor f rporating the human securit ty component. A new index on human development, the Ec n HDI, is defined as the average of the scaled value of th H d he four compone f ents: income, human secur rity, health an nd education. W e While sub-indic ces of incom health an me, nd education ar e re taken fr rom the UN NDP's Huma an Development Reports, the t D total unemplo oyment rate ha as been pointed to and used as an indicator of huma b d an security, i.e. the new propose sub-index. In doing so, th s ed he current study searches for whether the inclusion of an c a employment indicator into t existing HDI would resu e the ult in different r i rankings of c countries. Add ditionally, it is disputed that the HDI could be appropria d d ately altered via v integrating an employmen dimension to the curren i n nt nt index. i iences of a re elatively large number of 77 7 The experi sample countr offer prom s ries mising results for the path to t improve the c i current status of the HDI, and hence, to s t http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png South East European Journal of Economics and Business de Gruyter

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Publisher
de Gruyter
Copyright
Copyright © 2012 by the
ISSN
1840-118X
DOI
10.2478/v10033-012-0020-8
Publisher site
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Abstract

Purpose - The current HDI has a limited capacity to reflect the human condition and country rankings in an accurate way. In addition, the main critiques on the HDI suggest that it uses very few or perhaps the wrong indicators in measuring human development levels in countries. This paper aims to investigate whether the inclusion of employment as a criterion in the HDI would yield a different ranking of nations. Design/methodology/approach - In this study, estimates of the proposed Employment-adjusted Human Development Index (E-HDI) are provided for seventy-seven countries for the 2000-2007 period, and comparisons are made both for changes in the human development index (HDI) and rankings over time in each country and for differences between the E-HDI and the UNDP's HDI across countries. Findings - The experience of a relatively large number of 77 sample countries has offered promising results for the path to improve the current status of the HDI, and hence, to overcome its weakness in terms of ranking of countries. The additional indicator, i.e. employment, improves the explanatory power of the HDI and makes significant contributions to its reliability. Research limitations/implications - The major limitation of the present study has been the lack of data for a number of the human development indicators for the rest of the countries in the world. Practical implications - The employment-adjusted index has great potential to make the HDI more operational. Social implications ­ By means of E-HDI, the human development performance of the countries can be better evaluated and compared with other countries by using additional information obtained from the employment position of their citizens. Originality/value ­ This will be the first paper in the literature that incorporates employment into the HDI.. Keywords: Human Development Index, Employment, Development, Basic Needs, Human Security JEL: O15, O57 DOI: 10.2478/v10033-012-0020-8 1. Introduction The Basic Needs approach was a predictable consequence of studies on earlier views on development. The attainment of development had previously been evaluated in terms of growth maximization and industrialization in the early 1950's. Emphasis on employment as a new primary development objective evolved with time (Stewart, 1985). * Hakan Mihci, Hacettepe University E-mail: hakan@hacettepe.edu.tr Mehmet Tolga Taner, Uskudar University E-mail: mehmettolga.taner@uskudar.edu.tr Bulent Sezen, Gebze Institute of Technology E-mail: bsezen@gyte.edu.tr November2012 Knowledge Decent standard of living Real GDP per capita (PPP in US$) Human Security DIMENSIONS Long and healthy life Life expectancy at birth INDICATORS Adult Literacy Rate Combined Enrolment Ratio Total Unemployment Rate (% of labour force) DIMENSION INDICES Longevity index Educational Attainment index GDP index Employment index Employment-adjusted Human Development Index (E-HDI) Figure 1: Employment-adjusted Human Development Index (E-HDI) The basic requirements which are accepted as indicators of a decent life style include accessibility to certain goods and services. These fundamentals are acknowledged as essential criteria by the Basic Needs approach to development. Although defined differently in different studies, Basic Needs has always included guaranteeing such basic fundamentals as access to safe food (adequate nutrition) and water, and universal provision of health and education services with shelter, clothing and nonmaterial needs such as employment, participation, protection and political liberty. If any of these needs are absent or in a critically short supply, the problem of underdevelopment comes onto the scene (Ghosh 1984; Hicks and Streeten 1979; ILO 1976; UNDP 1994). All attempts to achieve the expectation of fundamental human needs and development arise from the premise that development should be concerned with the elimination of absolute deprivation as a first priority. For centuries, the constitutional rhetoric and aspirations of every leader and public figure in the developing and developed world have set forth these basic conditions as a fundamental right. It should also be mentioned that the basic needs approach seems to be consistent with Amartya Sen (1983)'s notion of "entitlement" and "capabilities". It should be emphasized that the Basic Needs approach to development, while not a strategy, simply prioritizes the order of development techniques. Simply stated, the objectives themselves, and not the methods of implementation to arrive at these objectives, are the more important focus of the approach. (Stewart, 1995). The Basic Needs approach prescribes a clear set of goals which address planning purposes and policy makers. These goals set the improvement of the quality of life of the indiviual as their main focus. Therefore, health, education, employment and a commensurate income can be seen as a measure of achieving lifelong goals. The search for an additional dimension for the composite index of socio-economic progress, namely the human development index (HDI), began in the early 1990's soon after it was introduced by the United Nations Development Programme. For it to be widely accepted and used, it is crucial that the HDI includes only the most important and a limited number of accessible variables for all nations, in order to keep it simple and manageable. The selection of these dimensions highly depends on how the society regards and defines an acceptable composite. On the other hand, employment could be considered as a vector to raise personal income, which in turn secures the access of individuals to more goods and services. Therefore, it is our recommendation that employment or decent work should be regarded as one of the most important dimensions of human development. Hence, adding the employment dimension under the label of "human security" to the HDI will yield a more comprehensive measure of human development that captures more of people's needs for improving their way of life. It is important to note that the employment data of many countries are readily available in contrast to variables from social, cultural and political dimensions. SEE Journal As shown in Figure 1, in addition to the three essential choices of leading a long and healthy life, acquiring knowledge, having access to resources needed for a decent standard of living; and having security needed for a sustainable life are included in the measure of the EHDI. In today's world, employment can be recognized as a fundamental human right. It brings personal economic freedom. Additionally, providing and implementing strategies for meaningful and productive work for young generations is one of the main targets of the Millennium Development Goals. Thus, the capacity to develop and satisfy the job needs of its citizens must be among the major goals of every nation in the coming decades. Employment can be further considered a physical need. It constitutes the essential basis for peace, social justice, food security and human development. In this context, securing full employment levels can be considered one of the primary objectives of every nation. Moreover, rising employment levels is also beneficial in fostering economic growth and attaining sustainable development. In short, employment could be regarded as one of the most critical indicators of human development. Economies functioning at a full employment level, and thus, high levels of gross domestic product (GDP) show radical improvements in terms of human development. In other words, employment is positively related to the HDI. Its generation is particularly significant for economic growth and poverty reduction. Raising the employment level has been the major objective of the International Labor Organization since the early 1970s due to the fact that employment is not only considered an objective in itself but also a moderator to achieve various objectives, such as high levels of income, production and recognition. Therefore, one should argue that the employment-adjusted index has a great potential to make the HDI more operational. evolve with time; however, current HDI components fail to yield significantly perceiveable overall annual increases to affect the HDI value. This drawback lowers the sensitivity of the HDI towards annual changes. Nonetheless, employment is a dynamic and fluctuating dimension which reflects the real life circumstances of the individual, similar to health, education and access to resources. It also shows considerable variation across countries. The unemployment rate, although it has not yet been included in the sub-indices of the HDI, is a strong indicator of social inclusion and quality-of-life through the efficient use of human resources (Taner et al. 2011). In addition, Panigrahi and Sivramkrishna (2002), Osberg and Sharpe (2003) and Cherchye et al. (2008) have presented their concerns with the problems in HDI rankings in their publications. Furthermore, Wolff et al. (2009) and Taner et al. (2010), in their analyses, have suggested, and substantiated with statistics, that countries have been misclassified by the HDI. Hence, this paper empirically investigates whether the inclusion of employment as a criterion in the HDI would yield a different ranking of nations. It is further argued that the HDI could be appropriately modified by simply incorporating an employment dimension to the current index. This Employment-adjusted Human Development Index is denoted as the E-HDI. Due to the limited availability of data for other countries, the sample addresses the situation in only seventy-seven countries. 3. Method Formerly, the HDI had been based on three subindices and four indicators: a longevity index (LEI), as measured by life expectancy at birth; an educational attainment index, as measured by a combination of adult literacy (two-thirds weighting) and combined (i.e. primary, secondary and tertiary) enrolment (one-third weighting) ratios (EI); and standard of living, as measured by GDP index -real GDP per capita measured by purchasing power parity in US$- (GDPI). To calibrate the dimensions, the UNDP has assigned minimum and maximum values (goalposts) for each underlying subindex. Performance in each sub-index is then calculated and expressed as a value between 0-1. In the UNDP's approach, these three sub-indices are assigned equal weightings as follows: HDI = (LEI + EI + GDPI)/3 2. The Rationale of the Study The current HDI has a limited capacity to reflect the human condition and country rankings in an accurate way. In addition, the main critiques of the HDI suggest that it uses very few or perhaps the wrong indicators in measuring the human development levels of countries. This is mainly due to the fact that two of the current components used for calculating the HDI are not dynamic. It is true that the HDI value is developed to November2012 . themselves for the years between 2000 and 20071. Scaled values of the sub-indices are shown in Table 1, 2 and 4-8. The countries consisted mainly European Union (EU), OECD, Asian, and Central and South American countries. The limitation of the sample size was due to the lack of unemployment data for the rest of the countries for most of the years under study. Another limitation of the study is that statistical analysis has not been possible for the most recent data covered by the 2010 and 2011 Human Development Reports, since the UNDP has opted to change both education and income indicators and the method of calculating HDI in these reports. As indicated above, the HDI has included only a limited number of indicators to keep it simple and manageable. This simple HDI algorithm has been used for many years and calculated from regularly available data to produce a meaningful value that can be used to compare and rank countries across the world. In the present approach, the four indices in the E-HDI represent a different set of indicators for assessing the aggregate level of human development with equal weighting in the following way: E-HDI = (LEI + EI + GDPI + EMPI)/4, or 5. Descriptive Statistical Analysis E-HDI = (3*HDI + EMPI)/4 where EMPI is the new included index, i.e. employment index. The unemployment rate is the starting point for the EMPI sub-index of the human security component. This, together with the risk of losing one's job, combined with being unable to find a new job quickly, is taken as a measure of what drives worker insecurity. The EMPI is likewise calculated via basic algebra for each country as shown below: EMPI = 1 ­ Total Unemployment Rate The proposed sub-index of EMPI covers all individuals of normal working age (above 15) including both the employed and the unemployed. In addition, the four subindices address conceptually different aspects of human development, which although correlated do not predetermine one another. The equal weights allow easy comparison over time and across countries. The assessment of change in E-HDI over the years for all the countries is tabulated through using statistical tables. From E-HDI values, comparisons of achievements between countries at a given year or for a particular country for different periods can also be made. Like the HDI, the E-HDI captures both trends over time within countries and allows cross-country comparisons of the level of human development at particular points in time. This section presents the main findings of descriptive statistical analysis. In the first sub-section, the main trends for all countries in the sample are thoroughly reviewed, focusing on the HDI, E-HDI values and the rankings together with basic changes in these indicators throughout the period under investigation. Consequently, the analysis is detailed through dividing the sample of 77 countries into two main categories under the titles of OECD and developing countries. While the first category consists of the 30 countries presented at the top of the statistical tables, the remaining 47 countries are covered by the developing country category. 5.1. General Evaluation The sample consists of 38 European, 16 Asian, 10 South American, 9 Central and North American, 2 Oceanian and 2 African countries. Of the 38 European countries, from the latest available data it is found that 22 are very highly employment-adjusted developed (EAD) where the absolute values of the E-HDI exceed a threshold level of 0.900, 15 are highly EAD (the values of the E-HDI are between 0.800 and 0.900) and only Macedonia is moderately EAD (the values of the E-HDI are between 0.700 and 0.800). Both of the Oceanian countries are very highly EAD. Of the 16 Asian countries, 7 are very highly employment-adjusted developed (EAD), 4 are highly EAD and 5 are moderately EAD. Of the 10 South American countries, 9 are highly EAD and only Bolivia is moderately EAD. Of the 9 Central and North American countries, 2 are very highly employment-adjusted 4. Data In this study, a total of 77 highly developed, developed and developing economies are taken as the research sample; re-ranked and re-classified among The data for the HDI and its components is taken from UNDP's Human Development Reports from 2002 to 2009. SEE Journal Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba Ecuador Panama Romania LEI 0,90 0,89 0,90 0,90 0,86 0,91 0,90 0,93 0,89 0,89 0,88 0,87 0,89 0,85 0,89 0,88 0,89 0,87 0,88 0,89 0,88 0,89 0,83 0,84 0,83 0,77 0,81 0,80 0,79 0,75 0,76 0,8 0,91 0,9 0,76 0,78 0,79 0,81 0,76 0,84 0,81 0,76 0,68 0,73 0,85 0,75 0,82 0,75 GDPI 0,95 0,95 0,93 0,94 0,95 0,92 0,94 0,93 0,93 0,92 0,92 0,97 0,88 0,94 0,93 0,91 0,94 1 0,88 0,91 0,92 0,85 0,86 0,86 0,82 0,8 0,75 0,79 0,75 0,71 0,77 0,55 0,92 0,89 0,71 0,71 0,75 0,8 0,68 0,76 0,73 0,61 0,74 0,72 0,64 0,58 0,68 0,69 EMPI 0,986 0,966 0,937 0,932 0,957 0,953 0,98 0,953 0,974 0,905 0,902 0,96 0,859 0,953 0,953 0,945 0,93 0,974 0,94 0,893 0,925 0,886 0,959 0,96 0,911 0,935 0,839 0,812 0,978 0,936 0,864 0,892 0,951 0,912 0,856 0,836 0,97 0,85 0,837 0,917 0,839 0,969 0,902 0,979 0,946 0,91 0,865 0,929 EI 0,96 0,98 0,99 0,98 0,96 0,99 0,94 0,93 0,99 0,99 0,99 0,98 0,97 0,98 0,96 0,99 0,99 0,9 0,99 0,94 0,97 0,92 0,95 0,94 0,89 0,93 0,94 0,91 0,84 0,77 0,95 0,89 0,83 0,91 0,93 0,93 0,8 0,92 0,9 0,9 0,88 0,8 0,92 0,92 0,9 0,87 0,86 0,88 E-HDI 0,949 0,9465 0,93925 0,938 0,93175 0,94325 0,94 0,93575 0,946 0,92625 0,923 0,945 0,89975 0,93075 0,93325 0,93125 0,9375 0,936 0,9225 0,90825 0,92375 0,8865 0,89975 0,9 0,86275 0,85875 0,83475 0,828 0,8395 0,7915 0,836 0,783 0,90275 0,903 0,814 0,814 0,8275 0,845 0,79425 0,85425 0,81475 0,78475 0,8105 0,83725 0,834 0,7775 0,80625 0,81225 HDI HDI-E-HDI R(HDI) R(E-HDI) R(HDI-E-HDI) 0,936 -0,013 7 1 6 0,942 -0,0045 1 2 -1 0,939 -0,00025 4 7 -3 0,94 0,002 3 8 -5 0,925 -0,00675 16 13 3 0,941 -0,00225 2 5 -3 0,928 -0,012 11 6 5 0,933 -0,00275 9 11 -2 0,935 -0,011 8 3 5 0,928 0,00175 11 16 -5 0,93 0,007 10 18 -8 0,939 -0,006 4 4 0 0,913 0,01325 20 25 -5 0,926 -0,00475 14 15 -1 0,926 -0,00725 14 12 2 0,928 -0,00325 11 14 -3 0,939 0,0015 4 9 -5 0,925 -0,011 16 10 6 0,917 -0,0055 19 19 0 0,913 0,00475 20 20 0 0,925 0,00125 16 17 -1 0,896 0,0095 22 28 -6 0,888 -0,01175 24 25 -1 0,885 -0,015 26 24 2 0,885 0,02225 26 29 -3 0,883 0,02425 29 29 0 0,88 0,04525 32 39 -7 0,882 0,054 31 42 -11 0,8 -0,0395 44 35 9 0,742 -0,0495 61 52 9 0,826 -0,01 39 38 1 0,748 -0,035 58 58 0 0,888 -0,01475 24 22 2 0,896 -0,007 22 21 1 0,8 -0,014 44 46 -2 0,808 -0,006 42 46 -4 0,782 -0,0455 49 43 6 0,844 -0,001 34 34 0 0,779 -0,01525 51 51 0 0,831 -0,02325 37 33 4 0,809 -0,00575 41 45 -4 0,726 -0,05875 67 55 12 0,781 -0,0295 50 49 1 0,788 -0,04925 47 37 10 0,795 -0,039 46 40 6 0,732 -0,0455 64 59 5 0,787 -0,01925 48 50 -2 0,775 -0,03725 52 48 4 November2012 EI 0,84 0,92 0,91 0,83 0,92 0,88 0,88 0,9 0,87 0,88 0,8 0,8 0,74 0,65 0,86 0,87 0,88 0,91 0,87 0,85 0,91 0,79 0,62 0,74 0,7 0,8 0,85 0,91 0,83 E-HDI 0,822 0,7835 0,8285 0,7835 0,8385 0,709 0,88825 0,75675 0,76375 0,90025 0,7555 0,71875 0,8555 n/a n/a n/a 0,70675 0,7585 n/a 0,786 0,787 0,74725 0,7075 0,765 n/a 0,76025 0,85975 n/a n/a HDI HDI-E-HDI R(HDI) R(E-HDI) R(HDI-E-HDI) 0,805 -0,017 43 44 -1 0,748 -0,0355 58 56 2 0,835 0,0065 35 41 -6 0,74 -0,0435 62 56 6 0,831 -0,0075 36 36 0 0,695 -0,014 71 68 3 0,875 -0,01325 33 27 6 0,701 -0,05575 70 64 6 0,712 -0,05175 68 61 7 0,883 -0,01725 29 23 6 0,733 -0,0225 63 65 -2 0,653 -0,06575 74 67 7 0,813 -0,0425 40 32 8 0,635 n/a 77 n/a n/a 0,772 n/a 54 n/a n/a 0,885 n/a 26 n/a n/a 0,667 -0,03975 73 70 3 0,727 -0,0315 65 63 2 0,747 n/a 60 n/a n/a 0,772 -0,014 53 54 -1 0,754 -0,033 56 53 3 0,684 -0,06325 72 66 6 0,642 -0,0655 75 69 6 0,706 -0,059 69 60 9 0,638 n/a 76 n/a n/a 0,727 -0,03325 65 62 3 0,831 -0,02875 36 30 6 0,75 n/a 57 n/a n/a 0,757 n/a 55 n/a n/a Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil LEI 0,82 0,72 0,8 0,75 0,82 0,45 0,88 0,69 0,71 0,88 0,8 0,62 0,85 0,72 0,8 0,88 0,71 0,73 0,73 0,77 0,74 0,69 0,7 0,75 0,68 0,7 0,81 0,66 0,71 GDPI 0,75 0,61 0,79 0,63 0,75 0,76 0,86 0,51 0,55 0,89 0,59 0,53 0,84 0,53 0,66 0,91 0,41 0,53 0,65 0,69 0,61 0,57 0,6 0,64 0,53 0,68 0,84 0,68 0,72 EMPI 0,878 0,884 0,814 0,924 0,864 0,746 0,933 0,927 0,925 0,951 0,832 0,925 0,992 n/a n/a n/a 0,827 0,864 n/a 0,834 0,888 0,939 0,91 0,93 n/a 0,861 0,939 n/a n/a EMPI, E-HDI, R(E-HDI): Authors' own calculations HDI-E-HDI=Numerical difference between the two indices R(HDI)=Rank of a country in terms of its HDI R(E-HDI)=Rank of a country in terms of its E-HDI R(HDI-E-HDI)=Difference between the HDI ranking and E-HDI rank of a country Source: UNDP (2002); ILO Table 1: Employment- adjusted Human Development Index (E-HDI): 2000 SEE Journal R(HDI-E-HDI) 1 0 -1 -3 -3 -4 4 3 2 -7 -1 0 -10 5 3 -1 -2 0 3 -2 -3 -1 3 1 3 1 1 -3 5 3 2 2 4 0 3 6 6 n/a -1 3 -2 6 4 8 12 7 0 0 Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba Ecuador Panama Romania LEI 0,95 0,93 0,94 0,93 0,91 0,93 0,95 0,96 0,91 0,93 0,91 0,90 0,93 0,89 0,92 0,91 0,91 0,91 0,92 0,94 0,91 0,90 0,90 0,89 0,86 0,81 0,84 0,83 0,85 0,78 0,799 0,777 0,953 0,928 0,788 0,78 0,819 0,831 0,802 0,891 0,85 0,799 0,686 0,733 0,891 0,833 0,842 0,792 GDPI 0,981 1 0,977 0,982 1 0,986 1 0,971 0,994 0,971 0,975 1 0,96 0,983 0,989 0,978 0,977 1 0,936 0,954 0,975 0,944 0,92 0,906 0,916 0,874 0,847 0,885 0,826 0,812 0,887 0,641 1 0,93 0,851 0,863 0,819 0,828 0,788 0,823 0,847 0,665 0,833 0,782 0,706 0,719 0,79 0,804 EMPI 0,97 0,974 0,958 0,939 0,94 0,938 0,966 0,96 0,972 0,926 0,936 0,942 0,887 0,967 0,962 0,944 0,93 0,949 0,959 0,933 0,925 0,923 0,968 0,924 0,956 0,922 0,929 0,905 0,96 0,906 0,953 0,867 0,96 0,927 0,94 0,957 0,968 n/a 0,931 0,929 0,904 0,96 0,939 0,99 0,982 0,939 0,932 0,936 EI 0,98 0,989 0,993 0,991 0,985 0,974 0,936 0,949 0,985 0,978 0,993 0,968 0,975 0,993 0,962 0,957 0,974 0,975 0,993 0,965 0,954 0,981 0,988 0,929 0,938 0,96 0,952 0,928 0,886 0,828 0,964 0,916 0,879 0,947 0,961 0,968 0,851 0,947 0,93 0,919 0,916 0,851 0,933 0,961 0,993 0,866 0,888 0,915 E-HDI 0,96925 0,972 0,967 0,95975 0,959 0,957 0,96175 0,96025 0,96625 0,952 0,953 0,953 0,93775 0,9575 0,957 0,94625 0,94725 0,9575 0,95175 0,94675 0,94175 0,9375 0,945 0,913 0,9165 0,89025 0,8925 0,88625 0,8805 0,83125 0,90075 0,80025 0,948 0,933 0,885 0,892 0,86425 n/a 0,86275 0,8905 0,87925 0,81875 0,84775 0,8665 0,893 0,83925 0,863 0,86175 HDI HDI-E-HDI 0,969 -0,00025 0,971 -0,001 0,97 0,003 0,966 0,00625 0,965 0,006 0,963 0,006 0,96 -0,00175 0,96 -0,00025 0,964 -0,00225 0,961 0,009 0,959 0,006 0,956 0,003 0,955 0,01725 0,955 -0,0025 0,955 -0,002 0,947 0,00075 0,953 0,00575 0,96 0,0025 0,95 -0,00175 0,951 0,00425 0,947 0,00525 0,942 0,0045 0,937 -0,008 0,909 -0,004 0,903 -0,0135 0,879 -0,01125 0,88 -0,0125 0,88 -0,00625 0,854 -0,0265 0,806 -0,02525 0,883 -0,01775 0,778 -0,02225 0,944 -0,004 0,935 0,002 0,866 -0,019 0,87 -0,022 0,829 -0,03525 0,866 n/a 0,84 -0,02275 0,878 -0,0125 0,871 -0,00825 0,772 -0,04675 0,817 -0,03075 0,826 -0,0405 0,863 -0,03 0,806 -0,03325 0,84 -0,023 0,837 -0,02475 R(HDI) 3 1 2 4 5 7 9 9 6 8 12 13 14 14 14 20 17 9 19 18 20 24 25 29 30 37 34 34 45 57 33 62 22 26 41 40 50 41 46 38 39 64 53 51 44 57 46 48 R(E-HDI) 2 1 3 7 8 11 5 6 4 15 13 13 24 9 11 21 19 9 16 20 23 25 22 28 27 36 33 37 40 54 31 60 18 26 38 34 44 n/a 47 35 41 58 49 43 32 50 46 48 November2012 E-HDI 0,8635 0,83075 0,8825 0,8065 0,87575 0,705 0,91025 0,7805 0,76375 0,82275 n/a 0,78425 n/a 0,762 0,77575 0,94825 0,716 0,75975 0,838 0,8275 0,79525 0,7775 0,75525 0,79475 0,79175 0,79375 0,9045 0,835 0,83925 HDI HDI-E-HDI 0,837 -0,0265 0,796 -0,03475 0,88 -0,0025 0,761 -0,0455 0,865 -0,01075 0,683 -0,022 0,902 -0,00825 0,72 -0,0605 0,71 -0,05375 0,914 0,09125 0,818 n/a 0,729 -0,05525 0,916 n/a 0,699 -0,063 0,817 0,04125 0,944 -0,00425 0,688 -0,028 0,71 -0,04975 0,806 -0,032 0,807 -0,0205 0,751 -0,04425 0,734 -0,0435 0,703 -0,05225 0,747 -0,04775 0,732 -0,05975 0,777 -0,01675 0,895 -0,0095 0,804 -0,031 0,813 -0,02625 R(HDI) 48 61 34 65 43 77 31 71 72 28 52 70 27 75 53 22 76 72 57 56 66 68 74 67 69 63 32 60 55 R(E-HDI) 45 55 39 59 42 74 29 66 69 57 n/a 65 n/a 70 68 17 73 71 52 56 61 67 72 62 64 63 30 53 51 R(HDI-E-HDI) 3 6 -5 6 1 3 2 5 3 -29 n/a 5 n/a 5 -15 5 3 1 5 0 5 1 2 5 5 0 2 7 4 Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil LEI 0,737 0,72 0,827 0,778 0,852 0,442 0,91 0,722 0,71 0,91 0,858 0,673 0,875 0,795 0,819 0,92 0,691 0,711 0,8 0,795 0,777 0,758 0,749 0,771 0,783 0,79 0,843 0,666 0,787 GDPI 0,911 0,707 0,885 0,633 0,788 0,765 0,908 0,541 0,5 0,92 0,71 0,624 1 0,542 0,753 1 0,478 0,532 0,728 0,743 0,589 0,603 0,664 0,678 0,607 0,702 0,95 0,782 0,761 EMPI 0,945 0,936 0,89 0,944 0,908 0,77 0,936 0,96 0,927 0,961 n/a 0,948 n/a 0,951 0,651 0,96 0,799 0,908 0,933 0,891 0,927 0,909 0,911 0,936 0,971 0,844 0,932 0,927 0,918 EI 0,861 0,96 0,928 0,871 0,955 0,843 0,887 0,899 0,918 0,91 0,886 0,892 0,872 0,76 0,88 0,913 0,896 0,888 0,891 0,881 0,888 0,84 0,697 0,794 0,806 0,839 0,893 0,965 0,891 EMPI, E-HDI, R(E-HDI): Authors' own calculations. Source: UNDP (2009); ILO Table 2: Employment-adjusted Human Development Index (E-HDI): 2007 SEE Journal Iceland Norway Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Germany Greece Republic of Korea Portugal Czech Republic Hungary Poland Slovakia Mexico Turkey Estonia Georgia Hong Kong Israel Latvia Lithuania Malaysia Argentina Bulgaria Chile Croatia China Russia Belarus Cuba HDI GROWTH RATE 2000-2007 (% change) 3,526 3,079 3,301 2,766 4,324 2,338 3,448 2,894 3,102 3,556 3,118 1,810 4,600 3,132 3,132 2,047 1,491 3,784 3,599 4,162 2,378 5,134 5,518 2,712 2,034 -0,453 0,000 -0,227 6,750 8,625 6,901 4,011 6,306 4,353 8,250 7,673 6,010 2,607 7,831 5,656 7,664 6,336 4,609 4,822 8,553 R-HDI 2000 7 1 4 3 16 2 11 9 8 11 10 4 20 14 14 11 4 16 19 20 16 22 24 26 26 29 32 31 44 61 39 58 24 22 44 42 49 34 51 37 41 67 50 47 46 CHANGE IN HDI RANK R-HDI 2007 2000-2007 3 4 1 0 2 2 4 -1 5 11 7 -5 9 2 9 0 6 2 8 3 12 -2 13 -9 14 6 14 0 14 0 20 -9 17 -13 9 7 19 0 18 2 20 -4 24 -2 25 -1 29 -3 30 -4 37 -8 34 -2 34 -3 45 -1 57 4 33 6 62 -4 22 2 26 -4 41 3 40 2 50 -1 41 -7 46 5 38 -1 39 2 64 3 53 -3 51 -4 44 2 E-HDI GROWTH RATE 2000-2007 (% change) 2,134 2,694 2,954 2,319 2,925 1,458 2,314 2,618 2,141 2,780 3,250 0,847 4,223 2,874 2,545 1,611 1,040 2,297 3,171 4,239 1,949 5,753 5,029 1,444 6,230 3,668 6,918 7,035 4,884 5,022 7,745 2,203 5,012 3,322 8,722 9,582 4,441 3,609** 8,624 4,243 7,917 4,333 4,596 3,494 7,074 R-E-HDI 2000 1 2 7 8 13 5 6 11 3 16 18 4 25 15 12 14 9 10 19 20 17 28 25 24 29 29 39 42 35 52 38 58 22 21 46 46 43 34 51 33 45 55 49 37 40 CHANGE IN E-HDI RANK R-E-HDI 20002007 2007 2 -1 1 1 3 4 7 1 8 5 11 -6 5 1 6 5 4 -1 15 1 13 5 13 -9 24 1 9 6 11 1 21 -7 19 -10 9 1 16 3 20 0 23 -6 25 3 22 3 28 -4 27 2 36 -7 33 6 37 5 40 -5 54 -2 31 7 60 -2 18 4 26 -5 38 8 34 12 44 -1 37**** -3****** 47 4 35 -2 41 4 58 -3 49 0 43 -6 32 8 November2012 E-HDI GROWTH RATE 2000-2007 (% change) 7,942 7,039 6,094 5,049 6,031 6,518 2,936 4,442 -0,564 2,477 3,138 0,000 -8,609 8,041** 9,113 6,867** 6,722* 1,571 4,721* 1,309 0,165 5,375* 5,280 1,048 4,048 6,749 3,889 6,957* 4,406 5,205 4,505* 3,739* CHANGE IN E-HDI RANK R-E-HDI 20002007 2007 50 9 46 4 48 0 45 -1 55 1 39 2 59 -3 42 -6 74 -6 29 -2 66 -2 69 -8 57 -34 57**** 8****** 65 2 28**** 4****** 70 7***** 68 -17***** 17 10***** 73 -3 71 -8 52 6***** 56 -2 61 -8 67 -1 72 -3 62 -2 64 11***** 63 30 53 51 -1 0 4***** 3***** Ecuador Panama Romania Trinidad Ukraine Slovakia Paraguay Uruguay South Africa Malta Moldova Kyrgyzstan Cyprus Albania Bolivia Kuwait Nicaragua Macedonia Singapore Tajikistan Uzbekistan Peru Colombia Philippines Indonesia Egypt El Salvador Honduras Dominican Republic Bahrain Kazakhstan Brazil HDI GROWTH RATE 2000-2007 (% change) 10,109 6,734 8,000 3,975 6,417 5,389 2,838 4,091 -1,727 3,086 2,710 -0,281 3,511 11,596 11,639 12,669 10,079 5,829 6,667 3,148 -2,338 7,898 4,534 -0,398 7,310 9,502 5,807 14,734 6,878 7,702 7,200 7,398 R-HDI 2000 64 48 52 43 58 35 62 36 71 33 70 68 29 63 74 40 77 54 26 73 65 60 53 56 72 75 69 76 65 36 57 55 CHANGE IN HDI RANK R-HDI 2007 2000-2007 57 7 46 2 48 4 48 -5 61 -3 34 1 65 -3 43 -7 77 -6 31 2 71 -1 72 -4 28 1 52 11 70 4 27 13 75 2 53 1 22 4 76 -3 72 -7 57 3 56 -3 66 -10 68 4 74 1 67 2 69 7 63 32 60 55 2 4 -3 0 R-E-HDI 2000 59 50 48 44 56 41 56 36 68 27 64 61 23 65 67 32 77*** 51*** 27*** 70 63 58*** 54 53 66 69 60 75*** 62 30 57*** 54*** *Growth between 2001 and 2007 **Growth between 2000 and 2006 ***E-HDI Ranking in 2001 ****E-HDI Ranking in 2006 *****Change in E-HDI Ranking between 2001 and 2007 ****** Change in E-HDI Ranking between 2000 and 2006 Table 3: Employment-adjusted Human Development Index (E-HDI) Trends: 2000-2007 SEE Journal developed (EAD), 3 are highly EAD and 4 are moderately EAD. The two African countries are moderately EAD (See Table 2). During the period under study, 10 countries (i.e. Turkey, Ukraine, Bulgaria, Georgia Colombia, Albania, Paraguay, China and Ecuador) were promoted to being highly EAD from being moderately EAD. Likewise, 8 countries (i.e. Malta, Kuwait, Bahrain, Spain, Greece, Korean Republic, Czech Republic and Estonia) were elevated to being very highly EAD from highly EAD. Only Cyprus declined in its status from being very highly to highly EAD (See Tables 1 and 2). The analysis shows that the E-HDI and HDI have classified some countries in different categories in terms of human development. In 2007, while Bahrain and Estonia are highly developed countries according to the HDI, they are found to be very highly developed according to the E-HDI. While Ukraine, China, Paraguay and Georgia are moderately developed countries according to the HDI, they are found to be highly developed according to the E-HDI. Similarly, while Tajikistan, Nicaragua, South Africa are low developed countries according to the HDI where the absolute values are lower than 0.700, they are found to be moderately developed according to the E-HDI. Likewise, while Macedonia is highly developed according to the HDI, it is found to be moderately developed according to the E-HDI. Similarly, Cyprus is very highly developed according to the HDI, and is found to be only highly developed according to the E-HDI. Furthermore, there has been very small fluctuation in the E-HDIs of Uzbekistan, Kyrgyzstan, United States and South Africa with an E-HDI growth rate of less than 1%. High E-HDI growth rates of more than 7.5% were experienced by Lithuania, Latvia, Estonia, Croatia, Ecuador, Bolivia, Chile and Albania. Only Cyprus and South Africa have experienced negative E-HDI growth rates during the period under investigation (See Table 3). According to the present calculations, while Hungary, Slovakia, Uzbekistan and Phillipines experienced negative HDI growth rates during the analysis period, the E-HDI growth rates of these countries are found to be positive. Lastly, out of 77 countries, the E-HDI of only 22 countries was found to be greater than their HDIs. 5.2. Analysis of OECD Countries The sample included 30 OECD countries, most of which are highly developed and developed countries. Norway has led OECD countries for six years. According to both the HDI and E-HDI, it has always ranked within the top two countries. Nineteen OECD countries consistenly had an E-HDI score greater than 0.900, whereas only five countries (i.e. Hungary, Poland, Slovakia, Mexico and Turkey) among OECD countries consistently had an E-HDI score of less than 0.900. The relatively less developed nine countries (Greece, the Republic of Korea, Portugal, Czech Republic, Hungary, Poland, Slovakia, Mexico and Turkey) constitute a "low category" with respect to the E-HDI, by ranking always below the other 20 OECD countries. Five countries (i.e. Hungary, Poland, Slovakia, Mexico and Turkey) always ranked in the last five among OECD countries. Being the least developed OECD country, the E-HDI of Turkey has become greater than 0.800 only after 2005/6. This positive trend can be related to the significant rise in its employment rate alongside per capita growth in GDP and improvement in educational attainment figures (See Table 2 and 8). The other cluster of OECD countries which could be categorized as "middle" ranked always between the 13rd and 22th among the 30 OECD countries. These six countries are New Zealand, Italy, Germany, France, Finland and Spain. The "High" E-HDI category included Iceland, Norway, Australia, Canada, Ireland, Sweden, Switzerland and Japan since these countries always ranked in the top 11 OECD countries during the analysis period. Switzerland and Austria have had mostly stable rankings during the analysis period, whereas the most unstable rankings were observed for Ireland and Denmark. Furthermore, Ireland and the Unites States had a similar range of rankings. Likewise, Finland and New Zealand has had the same range of rankings between the 13th and 18th. The United Kingdom experienced a drastic fall in its 2007 rankings. Likewise, Luxembourg had a drastic fall in its 2005/6 rankings. Between 2005/6 and 2007, the E-HDI decreased only for Spain and the UK (See Table 2 and 8). Between 2004 and 2005, the E-HDI only decreased for Portugal (See Table 7 and 8). This trend can be associated with the signs of the global economic crisis for these countries. As is well known, Spain, Portugal and UK were adversely affected from the recent economic crisis, which manifested itself through declines in GDP, and especially a drastic rise in unemployment rates2. These three countries are among those which heavily suffered from the recent financial crises. According to Reinhart and Rogoff (2009), November2012 . Singapore, Israel and Hong Kong) countries. According to the E-HDI and HDI statistics, Kuwait began classed as very highly developed (i.e. HDI and E-HDI values exceeded 0.900) in 2004 and 2007 respectively, mainly due to its high per capita income level originating from the export revenues of oil products4. Additionally, the E-HDI and HDI statistics also depicted Malta as a very highly developed country with respect to human development in 2007 (See Table 2 and 7). The countries with the highest HDI growth rate between 2000 and 2007 were Honduras (14.734%), Kuwait (12.669%), Bolivia (11.639%), Albania (11.596%), Ecuador (10.109%) and Nicaragua (10.079%). The country with the lowest HDI growth rate was found to be Uzbekistan (-2.338%). In 2000, there was no developing country in the sample which had an HDI higher than its E-HDI. Argentina's HDI exceeded its E-HDI during the 2001-2004 period. For all years under study, Israel and Macedonia had HDIs higher than E-HDIs. In 2001, Lithuania's E-HDI was equal to its HDI. Bahrain, Romania, Indonesia, Trinidad and Ukraine have had mostly stable rankings during the analysis period. Controversially, developing countries like Macedonia, Cyprus and Cuba have had the most fluctuating rankings in their E-HDI. The countries with the highest E-HDI growth rates during the analysis period were found to be Lithuania (9.582%), Bolivia (9.113%), Latvia (8.722%), Bulgaria (8.624%) and Albania (8.041%). The country with the lowest E-HDI growth rate was found to be Cyprus. In fact, Cyprus had a negative growth rate during the analysis period (-8.609%). Furthermore, the biggest gains in E-HDI rankings between 2000 and 2007 were realised by Lithuania (+12), Honduras (+11), Singapore (+10), Ecuador (+9), Latvia (+8), Cuba (+8), Albania (+8), Estonia (+7) and Nicaragua (+7). The biggest drops in E-HDI rankings in this period were experienced by Cyprus (-34), Macedonia (-17), Phillipines (-8) and Kyrgyzstan (-8) (See Table 3). Depending on the comparison between HDI and EHDI rankings, it can be argued that at the beginning of the analysis period (in 2000), the current HDI underestimated the rankings of China (+12), Belarus (+10) The highest E-HDI value (0.972) was achieved by Norway in 2007. Spain, the Republic of Korea and Portugal reached 0.900 in 2000, Italy in 1999, Greece in 2002, and the Czech Republic in 2005/6. Among OECD countries, highest loss of rankings (-8) was experienced by Denmark during 2000-2001, whereas the highest gain in ranking (+7) was achieved by Belgium during the same period (See Table 1 and 4). The Highest annual increase in E-HDI was achieved by Turkey with 3.0% between 2005/6-2007 (See Table 2 and 8). Similarly, the highest annual decrease in the E-HDI was again achieved by Turkey, with -1.6% during the 20002001 period (See Table 1 and 4) owing to the most destructive crisis that the country ever experienced in its economic history. Consequently, severe unemployment problems deteriorated the human development performance of the country. None of the OECD countries enjoyed continuous increases in its ranking. However, 13 OECD countries (i.e. Ireland, Japan, Finland, Spain, Denmark, Austria, United Kingdom, New Zealand, Italy, Greece, the Republic of Korea, Hungary and Poland) had a rising E-HDI trend during the analysis period. Ireland succeeded in increasing its ranking from 2000 through 2005/6. Nevertheless, the global economic crisis jeopardized this trend and negatively affected its performance in terms of human development (See Table 1, 2, 4, 5, 6, 7 and 8)3. The E-HDI is greater than the HDI during the whole period for eight OECD countries, namely the Republic of Korea, New Zealand, Portugal, Turkey, Iceland, Japan, Mexico, Switzerland and Denmark. These countries had been underestimated by the HDI in terms of their human development levels. The addition of the employment factor to the HDI had significant effects on the values of the relatively less developed countries, such as Turkey, Mexico, the Republic of Korea and Portugal. Furthermore, Canada, France, Finland, Spain, Belgium and Italy had higher HDIs than E-HDIs for all years except 2005/6, which could be considered the starting period of the recent global economic crisis. 5.3. Analysis of Developing Countries In addition to 30 OECD countries, the sample also consisted of 44 developing and 3 highly developed (i.e. severe financial crises have adverse and lasting effects on output and unemployment. 3 To examine the effects of the current economic crisis on the basic fundamentals of the Irish economy, see for example Lane (2011), Hardiman (2010) and Kelly (2010). According to Wikipedia, Kuwait is a small economy with crude oil reserves of about 96 billion barrels which constitute nearly nine per cent of the total world oil reserves. In turn, oil accounts for about half of GDP, and 90 per cent of export revenues (http://en.wikipedia.org/wiki/Economy_of_Kuwait). SEE Journal Employment-adjusted Human Developmen Index H nt and El Salvad (+9), whereas Slovakia, Lithuania an a dor nd Croatia were o C overestimated by +6, +4 an +4 ranking d nd gs, respectively (T r Table 1). For th following ye the highest he ear, negative diffe n erence betwee the rankings of HDI an en nd EHDI were obs E served for Bela arus (-11), Kuw (-10), Chin wait na (-9), Malaysia (-9) and Cuba (-9). Macedo ( a onia gained 15 1 places (Table 4 p 4). In 2002, h however, the highest negat tive difference es between the rankings of the HDI an E-HDI wer b nd re observed for M o Macedonia (-17 Argentina (- and Bulgar 7), -8) ria (-7). Cuba, Kuwait and Malaysia gained +9, +8 and +8 ( + places, respec p ctively (Table 5). In 2005- the highest -6, difference bet d tween the ran nkings of the HDI and E-HD DI was observed for Macedonia (-18). Cuba g w a gained 6 place es. The rankings of Cyprus, M T Moldova, Malta, Russia an nd Georgia remained the same (Table 7). G minal year of t analysis p the period (in 2007 7), At the term addition of th unemploym a he ment factor t the HDI ha to as caused Cyprus and Macedonia to lose (-29) and (-15 c 5) places, respect p tively. On the o other hand, Cu and Belaru uba us have gained + and +8 p h +12 places, respect tively (Table 8). 8 This brief desc T criptive analys indicates that addition of sis o the unemployment factor to the HDI affec t o cted Macedonia the most am t mong develop ping countrie This effec es. ct remained mos stable after 2001. r stly r overcome some of its weakness ses. Above a the all, dimensio of the curr on rent index cou be enriche with uld ed the E-HD An additiona indicator ob DI. al bviously improves the explanato power of the HDI an makes sign ory f nd nificant contribut tions to its reliability. Mo oreover, the human developm ment performa ance of count tries could be better e evaluated and compared with othe countries by using d er y additiona information obtained fro the emplo al n om oyment situations of their citize ens. ever, it should be mentioned that the p d present Howe study co ould further be ameliorated through ass b d signing each co omponent a weighting d depending o any on predetermined criteria rather than assigning these on an e r focus on this fie eld. arbitrary basis. Future research may f jor t een A maj limitation of the present study has be the lack of d data for a num mber of the h human develo opment indicator for the rest of the countries in the world. Future rs o . work will hopefully ad ddress these g gaps and perm the mit ment of mo ore comprehe ensive and r reliable developm measurement of the various compo v onents of the HDI as a better data sources are identified and data accessed. eless, we bel lieve that th current re he esearch, Neverthe despite it exploratory nature, provid significant insight ts des on evalua ating and rank king countries over the last d decade. 6. Conclusion 6 n This pape on the H er Human Development Inde ex represents a first attempt to construct a measure of r o human develo h opment for 7 countries based on th 77 he framework developed incor f rporating the human securit ty component. A new index on human development, the Ec n HDI, is defined as the average of the scaled value of th H d he four compone f ents: income, human secur rity, health an nd education. W e While sub-indic ces of incom health an me, nd education ar e re taken fr rom the UN NDP's Huma an Development Reports, the t D total unemplo oyment rate ha as been pointed to and used as an indicator of huma b d an security, i.e. the new propose sub-index. In doing so, th s ed he current study searches for whether the inclusion of an c a employment indicator into t existing HDI would resu e the ult in different r i rankings of c countries. Add ditionally, it is disputed that the HDI could be appropria d d ately altered via v integrating an employmen dimension to the curren i n nt nt index. i iences of a re elatively large number of 77 7 The experi sample countr offer prom s ries mising results for the path to t improve the c i current status of the HDI, and hence, to s t

Journal

South East European Journal of Economics and Businessde Gruyter

Published: Nov 1, 2012

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