Understanding Human Development Index (HDI) and Unemployment: Economic Perspectives

In this questions we will discuss about economics and below are the summaries point:- Human Development Index (HDI) as a measure of social and economic well-being. HDI's assessment of health, education, and per capita income for measuring development. Criticisms of HDI's effectiveness, including issues with indicators and the impact of war on rankings.

Running head: ECONOMICS
Economics
Student Name:
University Name:
Note of the Author:

1
ECONOMICS
Table of Contents
Question No 1..................................................................................................................................2
Question No 2..................................................................................................................................3
Question No 3..................................................................................................................................4
Reference List..................................................................................................................................6

2
ECONOMICS
Question No 1
Statement for the Thesis: Human Development Index (HDI) is an effective measure of the social
and economic well-being.
Critical Assessment
This index is regarded as a combined measure for the purpose of well-being that explains
the three key elements of health life quality of humans, the scenario of education and the per
capita income. A different index is calculated for each of the explained indicators. HDI is
thereafter assessed as a weighted aggregate of the three indices. In case of health index, the
measure that is utilized is the birth expectancy. At the time of assessing education, the two
different processes used are literacy rate of the adults and the ratio of gross enrolment. Per capita
income is computed by the gross capital national income.
There are both opponents and supporters in accordance to the point that HDI is an
effective measure for economic development. In some of the cases, HDI addresses the precise
extent of development. Health and education have now been considered apart from shelter,
clothing and food as the essential necessities of human health. Each one of them looks to gain
further knowledge in order to have a prosperous future. Humans want to have a longer and
healthy life. The countries that are ranked higher in the perspective of GDP have lower rank in
HDI. For instance, USA is ranked 10th, Japan is positioned at 11th, Germany at 20th and China at
85th. The addition of the other parameters therefore gives out the actual image of the well-being
of the population of a country. The expectancy year of life in Norway in the year 2006 has been
found to be 82.9 years and the same in USA has been 77.7 years.

3
ECONOMICS
The indicators of HDI have been discovered to have various issues in some of the cases.
For instance, the life expectancy indicators take into account the current trend of mortality rates
during the time of birth stays constant and therefore enhances their HDI rank automatically. The
nations that faces war and the instances has been Turkey, it is an issue to explain the problem
without ending the war in the country. The figures thereafter do not truly show the effectiveness
of the social policies. Iraq and Sri Lanka even face the same issues with respect to the index of
war. In such cases, HDI cannot show the true extent of enhancement.
Question No 2
Statement of the Thesis: Unemployment is the reason of serious issue for an economy
Critical Assessment
The journal named “Unemployment is a necessary evil” address the impact of
unemployment within an economy by taking into account the views of the supporters and the
opponents. Unemployment has been the easiest measure for the condition of labor market in an
economy. It reflects the percentage of the overall labors, who do not find an ideal job. There are
several economists who are in the opinion that unemployment is effective for the health of an
economy to an acceptable limit. The limit has been ascertained by NAIRU or the Non-
Accelerated Inflation rate of unemployment. This is regarded as the minimum unemployment
rate that is required to maintain the prices and wages within the level that is targeted. Full
employment is considered for an economy that has unemployment rate within NAIRU. ABU
ascertains NAIRU to be at 5% in Australia. This explains that it is effective for an economy to
attain 1 out of 20 members within the labor force to remain unemployed.

4
ECONOMICS
However, NAIRU is not regarded to be an effective measure for disclosing the condition
of the labor market as it is not a static measure. It changes due to various factors. There can be a
fall in NAIRU leading to a rise in the occurrence of underemployment. The rise in
underemployment can lower the statistics regarding unemployment but is not good for the labor
market. The underemployment that is due to part time, informal and casual jobs in a manner
increases the dissatisfaction level among the laborers. The subsidy of the government with
regards to education or health can even lower NAIRU.
On the other hand, leaving behind NAIRU, there are other impacts of unemployment in
the society and the economy as well. Humans face lower self-esteem and poverty if they remain
unemployed for a longer time period. The unemployed people are unable to have better
education and health for their children. The negative impact of unemployment therefore lowers
the capacity of the next generation. The long term unemployment even increases the rate of
unsocial activities. Therefore, an economy cannot perform effectively due to the presence of
unemployed individuals. The negative impacts of unemployment discussed earlier in an
economy, the author of the journal opposes the motion that unemployment is better for the
economy.
Question No 3
Statement of the Thesis: Globalization is beneficial for the developing countries with respect to
decline in poverty.
Critical Assessment:
The impact of globalization on lowering poverty is a topic worthy of a debate. The ones
who are in favor of globalization have the notion that globalization lowers poverty with respect

5
ECONOMICS
to developing economic development. The debate is on the basis of the claim that advantages of
development are neutrally distributed within all the sections of the society. Globalization has
developed in the past two decades has pushed the economic development of several developing
nations. The distribution of globalization lowers poverty among various countries and regions.
The largest fall in poverty was seen in Asia. The benefits of reduction in poverty are not
restricted only to East Asian economies but have gone to the South Asian big shot countries as
well. Among them, China has recorded the biggest reduction in poverty. The poverty decline in
the rural areas of China has fallen from an increased level of 79% in the year 1981 to the lower
level of 27% in the year 2001.
Against the claim that globalization significantly lowers poverty there are others who
debate that various developing countries have faced the issue of poverty and rise in inequality of
income with the extent of globalization. The economic development stagnation and the issue of
poverty have been prevalent in most of the Latin American and African countries since the year
1980. The economies that are developing have faced extensive international completion from the
nations that are participating in the globalization procedure. The globalization force generally
works mostly for the countries that are richer. The debate that globalization lowers poverty
therefore does not hold in every scenario.

6
ECONOMICS
Reference List
Biggeri, M. and Mauro, V., 2018. Towards a more ‘Sustainable’Human Development Index:
Integrating the environment and freedom. Ecological Indicators, 91, pp.220-231.
Chatterjee, S., 2016. Articulating globalization: Exploring the bottom of the pyramid (BOP)
terrain. Organization Studies, 37(5), pp.635-653.
Deb, S., 2015. The human development index and its methodological refinements. Social
Change, 45(1), pp.131-136.
Dietrich, H. and Möller, J., 2016. Youth unemployment in Europe–business cycle and
institutional effects. International Economics and Economic Policy, 13(1), pp.5-25.
Grusky, D.B., 2018. Globalization and Inequality: 131• Joseph E. Stiglitz Globalism’s
Discontents. In Social Stratification (pp. 1154-1172). Routledge.
Kpolovie, P.J., Ewansiha, S. and Esara, M., 2017. Continental Comparison of Human
Development Index (HDI). International Journal of Humanities Social Sciences and Education
(IJHSSE), 4(1), pp.9-27.
Prados de la Escosura, L., 2015. World human development: 1870–2007. Review of Income and
Wealth, 61(2), pp.220-247.
Yapa, L., 2017. Globalization and poverty: From a poststructural perspective. In Globalization,
the third world state and poverty-alleviation in the twenty-first century (pp. 15-29). Routledge.