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had to be selective about the choice of the different elements of well-being, as well as the
variables representing them, in accordance with the availability and quality of data in the
different countries. For example, life expectancy and child mortality were used to represent
improved health; or literacy and school dropout rates as a proxy for education. Similarly, other
variables were used to represent different elements of human development for different
countries.
18.
In the construction of the human development index (HDI), the UNDP continued to use
income as an indicator of all the elements of well-being which could not be captured by any
specific index based on the available data for a country. The use of income was clearly stated as
a matter of convenience and as a proxy for other substantive variables, which were the
constituent elements of well-being. The role of income was not an objective in and of itself; it
only stood for other constituent elements of well-being for which it was only one of the means or
instruments.
19.
It is in this sense that conceiving economic development as human development was a
value addition to the earlier development literature. The policy that would have to be adopted to
promote economic development as human development would have to be quite different from
those realizing maximum GDP growth. They have to be addressed to the requirements of
specific sectors, such as increasing life expectancy, providing nutrition, reducing child mortality
or expanding literacy, primary education and protecting school enrolment, etc. All these would
require creating specific institutions and ensuring participation in grass-roots development,
which would call for major changes in the organization of different countries and their current
structures of economic activities and institutions. These would be very different from policies
that would raise the economic growth rate such as raising the rate of savings, inviting foreign
savings to supplement domestic savings, raising the domestic rate of investment, attracting
foreign direct investment and upgrading technology. Over a period, there was an increasing
emphasis on liberalizing market forces and opening up foreign trade and investment to allow a
fuller play of competition, raising efficiency of production and economic growth.
20.
Although policies for promoting human development are quite different from policies
designed to raise economic growth, they do not necessarily conflict with each other. The growth
of income plays a significant instrumental role in promoting the different elements of human
development, as all of them require increased availability of some related goods and services
associated with improved, broad-based and equitable access to them. At any point in time, a
growth in the overall stock of resources in a country facilitates both the increased availability of
and improved access to any of the goods and services, although it is not impossible to achieve
some improvement in both of them by reallocating the given resources among the different uses.
It is primarily an empirical issue as the effect of an instrumental variable on a target depends on
the context of an economy and its prevailing management of resources. In some cases even a
small increase in income may have a substantial impact on the targets; and in other cases even a
large increase in income may have no effect.
21.
In principle, an increase in income is neither a necessary nor a sufficient condition for
reaching the target, and all would depend upon supplementary economic policies. If appropriate
policies are designed and implemented, human development outcomes can be improved by
reallocating existing resources, changing existing institutions and resource management at