Development Challenges Index

Many debates have centred on issues to consider in measuring development achievements. The present report makes the case for adopting a broad and qualitative framework that focuses on the most developmentally challenged countries. In earlier years, a focus on quantitative achievements was justified because shortfalls in human development were so profound. As countries filled in the gaps, however, the quality of human development has become increasingly important. It is imperative that human development measures go beyond quantitative achievements to capture the quality of progress.

As a first step towards this goal, this report adapts the global HDI to reflect the quality of human development achievements. Such an analytical approach implies an appropriate methodology for discounting HDI achievements by measures of quality. A broader development measurement framework also entails integrating other dimensions. The present report proposes two contextual challenges that are of fundamental importance at all levels, global, regional or national: environmental sustainability and governance.

The case for integrating these aspects is strong. Environmental sustainability is an important operating condition for human development. Sen and Anand endeavoured to address the integration of sustainability and human development using a theoretical and systematic approach.[1] They argued that sustainability is essentially intwined with intergenerational equity. In the context of the environment, sustainability means that “the present generation should strive to preserve the environment in such a fashion as to equitably bequeath comparable human-development benefits to future generations”.[2]

Today, the world faces intensified environmental threats in various forms, such as increased extreme weather episodes, prolonged droughts, wildfires and floods. Such natural occurrences pose serious barriers to social and economic well-being, either directly through rising death tolls and financial costs owing to physical damages, or indirectly through an array of adverse impacts on water stress levels, marine and terrestrial ecological balance, economic growth and poverty alleviation, and so on. Almost all economic sectors incur substantial loses following natural disasters, but agriculture may be more susceptible due to crop destruction or constraints on cultivation that impact crop quality, with negative implications for food security and poverty.

The second and arguably most acute global development challenge is that of good governance. Well-being has largely been the focus of the human development approach and the Human Development Reports over the years. With well-being realized to a certain degree, it has become more important to emphasize agency. That freedom has an independent and intrinsic worth of its own and is instrumental in enhancing well-being. Agency is fundamentally linked to freedom of expression, democratic space and participation. Democratic governance and efficient institutions help ensure the protection of human rights and the creation of democratic space and opportunities for participation. In contrast, as seen from recent history in many Arab countries, deficits in good governance and effective institutions undercut both well-being and agency, ensuring they cannot be guaranteed or sustained.

Realigning the analytical lens of human development implies a measurement adjustment with three aspects. The first entails integrating quality into the HDI measurement framework by discounting achievements to reflect their quality-adjusted levels, such as from income achievements to distribution-adjusted income achievements, from mean years of schooling to mean years adjusted by quality of education received, and from expected life expectancy to expected healthy life years. The second involves added two contextual dimensions, good governance and environmental sustainability. A third adjustment is in shifting the focus from achievements to shortfalls in human development.

In sum, the proposed DCI measures challenges to three development achievements: basic well-being freedoms (as measured by the quality adjustment of the HDI’s three traditional dimensions, health, education and income), environmental sustainability and good governance.[3]

The following principles guided the DCI methodology, including the choice of indicators (table 1):

• Indicators must make sense, be meaningful and relevant and reflect human development concerns.
• Data availability must be considered. There must be a match between aspiration and reality.
• The weights of the three challenges should be equal, reflecting a normative stance that all challenge indices are of the same importance, and following the computing formula of the HDI. Weights within dimensions may be adjusted to the relative importance of a component.

Source: ESCWA.

Data sources and details on constructing the DCI, including the minimum and maximum levels used for indicators, are detailed in the main methodological background technical paper for this report. It also describes statistical validation and robustness tests.[4]

Constructing the DCI involves two simple steps. The first entails a conversion from achievement indicators to challenge indicators by subtracting the former from 1. The second step is to take the simple average of the indices reflecting the challenges (figure 1). For the present report, all results are presented as shortfalls from a maximum level of achievements. Given the shift from achievements to challenges, plotting the HDI or other achievement indices against the DCI would likely yield a negative correlation.

Two main advantages come from computing the DCI this way. First, in line with the guiding criterion of maintaining simplicity, the use of an arithmetic average rather than a geometric one leads to an index that is easy to compute and interpret. Although there are often good reasons to use a geometric average in calculating composite indicators, especially ones with interdependent relationships among dimensions, a geometric average becomes more problematic with indices with many indicators and dimensions. Additionally, arithmetic averages allow relatively easy calculation of the shares of the challenges in the overall index and the shares of the dimensions in each of the three challenges. Furthermore, in this case, DCI robustness tests have shown little difference in country rankings or scores between scenarios using geometric and simple averages.

Second, the shift from development achievements to development challenges implies reversing the focus of the narrative. The top scorers will now be countries with the gravest challenges. This shift is imperative to ensure that countries are not left behind in the global discussion on human development and the SDGs.

Scores on the DCI and its components are distributed among five categories of challenges: very low, low, medium, high and very high. For the first four categories, the thresholds are one minus the thresholds used for the HDI. For example, scores between 0.7 and 0.8 on the HDI are considered high scores, hence scores between 0.2 and 0.3 on the DCI are considered low-challenge scores. Since many countries show poorer performance on the DCI compared to the HDI, and many appear in the high-challenge category owing to the inclusion of additional indicators, a very high-challenge category was added for countries with DCI scores above 0.55.

To calculate regional scores, countries were divided into seven regions: the Arab region, East Asia and the Pacific, Europe and Central Asia, Latin America and the Caribbean, North America, South Asia and sub-Saharan Africa. This followed the global Human Development Report groupings to the extent possible. Some differences exist, however. All members of the League of Arab States with available data are included in the Arab region. North America was added as a group.

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[1].      Sen and Anand, 1994.

[2].      McKinley, 2016.

[3].      For more information on the DCI methodology, please refer to Abu-Ismail, Hlasny, Jaafar and others, 2022.

[4].      Abu-Ismail, Hlasny, Jaafar and others, 2022.