Stabroek News
May 13, 2001

As indicated last week, today we shall conclude our discussion of the global indicators used for measuring global poverty, development and related matters, which began seven weeks ago. How time flies! The question everyone is perhaps asking themselves at this stage is, what is the position in regard to the time-honoured indicator of development, national income per person, or as it is usually expressed, per capita national income, GNP or GDP?

Per Capita National Income

The answer is, that this indicator is still of great importance, if not absolutely indispensable. Nonetheless, it has come to be realized over time that it has several serious limitations. One is the fact that it is an average measure, which is greatly influenced by extremes and can therefore be very misleading. Thus, if the average income of two persons is $50,000 per month, one might be earning as much as $90,000 and the other only $10,000. Surely, then the average would be misleading if there was no information on the distribution of income between the two!

A second limitation is that national income, GDP, and GNP measure income, output, and expenditure, all of which take place through the market. When economic transactions occur in the informal or illegal sectors they are ignored. There are many other similar weaknesses, but the ones the new indicators we have considered respond to principally are those which relate to the fact that GDP, GNP, and national income measures do not capture the state of health, learning, employment, gender-gaps and so on, within a population. Yet these are crucial indicators of their level of development. These limitations however do not mean that national income measures are of no great use. To the contrary, they are. And, current practice is to use both sets of measures, so that the UNDP development indicators are always cited along with the per capita income measures. They complement each other. And, as the evidence shows, the two sets of indicators do not necessarily move together. Indeed, if they did, one of them would surely be redundant.

HPI-2

When we examined the UNDPs Human Poverty Index earlier, we only considered the one used for developing countries (HPI-1). To recall, this was based on measuring the extent to which the population was deprived of knowledge, longevity, and a decent standard of living. The same three indicators are used in the case of the developed economies. However, a fourth has been added, along with changes to the way the other three deprivations are measured. This other index is termed HPI-2.

For the HPI-2, deprivation of longevity is measured by the percentage of the population not expected to survive to age 60. This is 20 years longer than the 40-year standard used for the developing countries in the HPI-1. For the deprivation of knowledge, the standard used in the HPI-2 is the percentage of the population that is functionally illiterate. This is a higher standard than simple illiteracy or inability to read or write, which is the standard used for developing countries. Functional literacy is measured by such tasks as the ability to read the long set of instructions and information that comes with prescriptions, when these are filled overseas. It would also be measured by the ability of a person to supervise a child's homework in all subjects, up to at least the completion of the primary level of education. In the case of deprivation from an acceptable standard of living, the measure used is 50 percent of the "median" disposable household income in the country concerned.

Social exclusion

The fourth indicator in the index is extremely interesting. It seeks to measure whether persons in the population are socially excluded. The concept of social exclusion is very important to the understanding of poverty. In Guyana we allude to this when we speak of marginalisation. Basically it reflects the fact that the poor are invariably excluded from all the major institutionalized processes of the country, including the market, the state, the community, and the household. In other words, poverty and social exclusion go hand in hand. The proxy measure the UNDP uses for measuring social exclusion is the rate of long-term, that is 12 months or more, unemployment of the labour force. The assumption here is that in industrialised societies, those out of a job for a year or more are effectively non-functioning members of the society. The simple average of the four indicators provides the HPI-2 index.

The new millennium goals and targets

In commemoration of the New Millennium the United Nations set about to establish a universal set of indicators and norms from which targets have been set for global achievement. These were published in its report "A Better World for All". This report follows two previous World Development Reports on poverty, in 1980 and 1990. The basic theme of the Millennium Report is that through the interaction of markets, state, and civil society, the forces that propel development, such as technology, trade, and investment, could be changed so as to serve the interests of poor people and raise their well-being worldwide. To achieve this, however, actions are needed in three fundamental and complementary areas. These are opportunity, empowerment, and security.

The first area refers to increased opportunities for poor people. This can be done by emphasising growth with equity, better access to markets, and expanded assets for the poor. The second area refers to the empowerment of people. This can be done by ensuring that the institutions of power and authority in society, such as the state, systematically remove social barriers and close gaps between men and women, and ethnic and racial groups. The third area refers to improved security of the population. This can be achieved through better management of society so as to reduce shocks and the vulnerability of the poor. The various actions indicated are required at every level of society, community, nation, region, and global.

Goals

The UN indicators and goals now represent the focused effort of the international community. There are three major goals. One is "economic well-being". Here the target is to reduce by one-half the proportion of persons living in extreme poverty in developing countries by the year 2015. The specific targets for this include an improvement in the numbers of the poor as measured by head count, poverty gap, inequality, and child malnutrition numbers, by 2015. A second goal is "social development". For this there are several specific targets. One is universal primary education in all countries by 2005. Another is gender equality in primary and secondary education by 2005. Others include a reduction by two-thirds in the number of infant and children deaths by 2015; a reduction by three-quarters in the current rate of maternal mortality by 2015; and, access for all to primary health care for reproductive health services by 2015.

The third goal is "environmental sustainability and regeneration". Here the target is for all countries to have in place national strategies for sustainable development by 2005, as well as for current trends in the loss of environmental resources to be reversed by 2015. The latter is covered by specific targets related to the acreage in forests, improved biodiversity; improved energy efficiency in production, improved access to clean water, and control of carbon dioxide emissions.