Question

Answer the following questions

1. Explain construction of HDI.

2. State advantages of PQLI.

3. What is the importance of HDI.

4. Give limitations of PQLI.

Answer 1

1. HDI or Human Development Index basically refers to the index used for measuring the economic development of a country. It involves three dimensions namely, Life Expectancy Index (L.E.I), Education Index and the GDP index. For constructing the HDI, the following steps are required to be followed:
i. To begin, minimum and maximum of the 3 indicators are chosen in order to measure the dimension indices.
ii. These minimum and maximum values are then presented on the two sides of a table as the goal posts. The lower goal post highlighting 0 indicates the worst performance of a country and the upper goal post i.e. 100, indicates the best performance.
iii. After this, the dimension index for each indicator i.e. L.E.I, E.A.I and S.L.I. is calculated using the following formula,

$\mathrm{Dimansion}\mathrm{Index}=\frac{\mathrm{Actual}\mathrm{Value}-\mathrm{Minimum}\mathrm{Value}}{\mathrm{Maximum}\mathrm{Value}-\mathrm{Minimum}\mathrm{Value}}$

iv. Lastly, the HDI is calculated by taking an average of the three dimensions calculated above, using the following formula,

$HDI=\frac{L.E.I+E.A.I+S.L.1}{3}$

2. PQLI was developed by Morris D. Morris in 1979 to measure the economic development of a country. The following are some of the advantages of PQLI.
a. Accounts for welfare- PQLI involve the dimensions that reflect the socio-economic welfare of a country further indicating the overall welfare of the people.
b. Easily measurable- It is easy to measure PQLI as the data required and used for the calculation of PQLI is easily available.
c. Indicates distributional characteristics- PQLI considers distribution in the sense that through its indicators it helps in judging the level to which a country enjoys the fruits of economic development.
d. Easily comparable- This index makes it easy to compare the economic development and the level of well being in various countries. Thereby, it helps the underdeveloped and developing countries to take necessary measures.

3. HDI or Human Development Index basically refers to the index used for measuring the economic development of a country. The following points indicate the importance of HDI.
1. Multidimensional- It is multidimensional as it includes indicators such as literacy rate, enrolment ratio, life expectancy rate, infant mortality rate, etc. This helps in covering all the dimensions or aspects of human development.
2. True yardstick for economic development- It acts as a true yardstick to measure development in real sense. Unlike per capita income, which only indicates that a rise in the per capita income implies economic development, HDI considers many other vital social indicators and helps in measuring a nation's well-being.
3. Helps to compare- HDI helps as a differentiating factor to distinguish and classify different nations on the basis of their HDI ranks. Countries with higher HDI i.e above 0.8 are ranked in High HD Groups and countries with medium HDI i.e. those lying between 0.5 to 0.8 are ranked under Medium HD Groups. Similarly, countries with low HDI i.e. below 0.5 are ranked under Lower HD Groups.

4. PQLI was developed by Morris D. Morris in 1979 to measure the economic development of a country. The following are the various limitations of PQLI.
a. Ignores important determinants- PQLI ignores various factors which determine the quality of life of an individual such as employment, justice, security and much more. Thus, it is not considered as a very good indicator for economic development.
b. Wrongly assigns the weights- It gives equal weight to all indicators in spite of the fact that all indicators may not be equally important while measuring the quality of life and economic development.
c. Fails to measure economic development- An important drawback of PQLI is that it fails to correctly measure the economic development of a country. This is because the PQLI as an indicator is unable to explain the structural changes in the economy. Thus, it is considered as a poor measure for calculating economic development