Assume you are the head of an Economic Development Policy team. Suppose that you create two teams to collect data on two developing countries (Viet Nam and India) that need support and resources to help them grow economically. As the boss of the team, you task the two teams to collect sufficient data to help the team to create the New Human Development Index for the two countries. Suppose after 6 months of data collection the teams came back with information in Table 1 below. Using the information provided in Table 1, answer the following questions:
Table 1: Data collected by teams
Economic Data | Team 1: Viet Nam | Team 2: India |
PPP GNI per capita | $5,859 | $7,060 |
Life Expectancy | 76.5 | 68.8 |
Mean years of schooling | 8.2 | 6.4 |
Expected years of schooling | 12.7 | 12.3 |
NB: Please make sure to watch the videos on New HDI before answering this question.
The Human Development Index (HDI) is a statistic composite index of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development .
HDI = (Life Expectancy Index X Education Index X Income Index) 1/3
1. Formula to calculate Life Expectancy Index (LEI) = Life Expectancy of a country -20/ 83.2-20
2. Formula to calculate Education Index = (MYSI X EYSI) 1/2 – 0/ 0.951 - 0
Formula to calculate Mean Years of Schooling Index (MYSI) = Mean years of schooling - 0/ 13.2 - 0
Formula to calculate Expected Years of Schooling Index (EYSI) = Expected Years of Schooling – 0/ 20.6 – 0
3. Formula to calculate Income Index = Log (Country's GNIpc) – Log ($163) / Log ($108,211) – Log ($163)
First we will find out the HDI for Vietnam:
Life Expectancy Index of Vietnam = Life expectancy of Vietnam -20/ 83.2-20 = 76.5-20/ 83.2-20 = 0.94
Education Index of Vietnam = (MYSI X EYSI) 1/2 – 0/ 0.951 - 0 ;so we have to find out MYSI and EYSI first
Mean Years of Schooling Index (MYSI) for Vietnam = Mean years of schooling of Vietnam- 0/ 13.2 - 0
= 8.2-0/13.2-0=0.621
Expected Years of Schooling Index (EYSI) for Vietnam= Expected Years of Schooling – 0/ 20.6 – 0
= 12.7-0/20.6-0 = 0.617
Education Index of Vietnam =( MYSI X EYSI) 1/2 – 0/ 0.951 - 0 = (0.621x0.617)1/2 – 0/ 0.951 - 0
= .651
Income Index of Vietnam= Log (Country's GNIpc) – Log ($163) / Log ($108,211) – Log ($163)
= Log (5859) – Log ($163) / Log ($108,211) – Log ($163)
=3.768/2.212 - 5.03/2.212 = 1.70/2.27 = 0.748
HDI of Vietnam= (Life Expectancy Index X Education Index X Income Index) 1/3
= (0.94x0.651x.748)1/3 = 0.770
Now we will move to the Indian Case:
Life Expectancy Index of India = Life expectancy of India -20/ 83.2-20 = 68.8-20/ 83.2-20 = 0.772
Education Index of India= (MYSI X EYSI) 1/2 – 0/ 0.951 - 0 ;so we have to find out MYSI and EYSI first
Mean Years of Schooling Index (MYSI) for India = Mean years of schooling of India- 0/ 13.2 - 0
= 6.4-0/13.2-0=0.4848
Expected Years of Schooling Index (EYSI) for India= Expected Years of Schooling – 0/ 20.6 – 0
= 12.3-0/20.6-0 = 0.597
Education Index of India =( MYSI X EYSI) 1/2 – 0/ 0.951 - 0 = (0.4848x0.597)1/2 – 0/ 0.951 - 0
= .5656
Income Index of India= Log (Country's GNIpc) – Log ($163) / Log ($108,211) – Log ($163)
= Log (7060) – Log ($163) / Log ($108,211) – Log ($163)
=3.849/2.212 - 5.03/2.212 = 1.74/2.27 = 0.766
HDI of India= (Life Expectancy Index X Education Index X Income Index) 1/3
= (0.597x0.5656x.766)1/3 = 0.63758
According to the new ranking system updates, India ranks 130 out of 189 countries while Vietnam ranks 116 out of 189 countries.
As the Head of Economic Development Policy Team, I will take some initiatives to improve the HDI ranking of India as it is far behind Vietnam though the percapita GNI is higher for India, and hence more resources will be allocated towards the health and education sector of India.
Assume you are the head of an Economic Development Policy team. Suppose that you create two...
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