The concept of human development centres around the notion that human welfare depends on various dimensions, many of which are not well captured by conventional measures of economic income (see Griffin and Knight, 1990; UNDP, 1990). Particular attention has been given to using measures of health and education as welfare indicators in addition to GDP per capita. Education, good health and longevity are intrinsically valuable outputs. In conventional measures of economic output, health and education’s contribution is measured essentially by the costs of producing the outcomes, ie expenditures on schools and medical facilities. Such a procedure identifies inputs rather than outputs. The valuation of both health and education is difficult as both are goods with attributes different from most types of goods produced in an economy. Whilst high incomes may be conducive to health, health cannot be directly purchased like material goods and services. Health and education are often subsidised by the state and in some countries education is compulsory for certain minimum length of times. Many, if not most, health and education services are produced by the public sector. Governments play a direct part in providing services very directly linked to human welfare.
In this paper, health outcomes are measured mainly through mortality statistics. Of these, life expectancy at birth is perhaps the most comprehensive, depending as it does on the current agespecific mortality rates for all age groups. Educational indicators are either stock or flow measures.
Stock measures of educational indicators include the literacy of the population, the average number of years of education of the population and the extent of educational attainment by level. These measures are appropriate for assessing the accumulated achievement of a country or for estimating the contribution of education to economic performance. Flow measures are school enrolment ratios and measure investment in the future capacities of the population.1 The UNDP has developed a composite indicator, the human development index (HDI), which gives equal weight to three indicators: real GDP per capita (measured at purchasing power parity in constant prices); life expectancy at birth; and educational attainment, measured by adult literacy (two-thirds weight) and combined primary, secondary and tertiary enrolment ratios (onethird weight) (see UNDP, 1997, p122 for details). The index is valuable in extending the economic concept of welfare, but for many purposes it is more useful to focus on the individual components of the index than the index itself. Africa has performed very differently in each of the three dimensions of the welfare and the dimensions are not independent.
The most recent UNDP Human Development Report shows that Africa has the lowest level of human development of any region but its income per capita is higher than that of South Asia.2 In what follows, we often compare Africa with South Asia. This comparison provides a useful benchmark, since South Asia is the region most similar to Africa in terms of income and overall development. For example, it is instructive to consider why Africa has a lower HDI than South Asia despite having higher income. The proximate cause is the relatively low life expectancy at birth of Africans.
Human Capital and Economic Development Simon Appleton and Francis Teal
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The African Development Bank is the
premier financial development institution
of Africa, dedicated to combating poverty
and improving the lives of people of the
continent and engaged in the task of
mobilizing resources towards the economic
and social progress of its Regional Member
Countries.The Bank’s s mission is to
promote economic and social development
through loans, equity investments, and
technical assistance.
The ADB is a multilateral development bank
whose shareholders include 53 African
countries and 24 non-African countries
from the Americas, Asia, and Europe. It
was established in 1964, with its
headquarters in Abidjan, Côte d’Ivoire,
and officially began operations in 1967.
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