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Development: Meaning, Measurement and Strategies - Part Two of ten

Pareto Optimality in India

Exploiting Personnel Management to Build Corporate Image

AIDS : Changing Prevention Paradigms for Developing Countries

Current Events - Reactions of An Indian

Indicators of Human Development

Capturing all the dimensions of development either through a single measure or a composite measure is riddled with many difficulties.

The Human Development Index (HDI)

The first Human Development Report introduced a new way of measuring development - by combining indicators of life expectancy, educational attainment and income into a composite human development index, the HDI.  In 1995, Canada (0.960), France (0.946), Norway (0.943) and the US (0.943) rank at the top on the HDI.  Among developing countries Cyprus and Barbados are at the top with HDIs of 0.913 and 0.909, only marginally lower than those of Greece, Italy and Israel. Wide disparities in human development persist in 1995.  Canada's value of 0.960 is more than five times Sierra Leone's 0.185.  Thus Canada has to make up a shortfall in human development of only 4%, Sierra Leone one of 82%.

Of the 174 countries ranked, 98 rank higher on HDI than on GDP per capita (PPP$), suggesting that they have converted economic prosperity into human capabilities very effectively. This achievement is noteworthy for such low-income countries as Lesotho, Madagascar, the United Republic of Tanzania and Vietnam.  For 73 countries the ranking on the HDI is lower than that on GDP per capita (PPP$), suggesting that they have failed to translate economic prosperity into correspondingly better lives for their people.  This is particularly disturbing for some of the more affluent (Brunei Darussalam, Kuwait, Mauritius and Qatar) and equally so for some of the poorest (Angola, Iraq, Lao People's Democratic Republic, Senegal and Uganda).   The HDI measure goes beyond that of conventional growth measures.  Economic growth is critical to sustain the welfare of a country, but it is not the end of human development.  It is one of the important means to an end.

The Human Poverty Index (HPI)

Rather than measure poverty by income, the HPI uses indicators of the most basic dimensions of deprivation: a short life, lack of basic education and lack of access to public and private resources.  The HPI concentrates on the deprivation in the three essential elements of human life already reflected in the HDI: longevity, knowledge and a decent living standard.  The first deprivation relates to survival: the vulnerability to death at a relatively early age and is represented in the HPI by the percentage of people expected to die before age 40.  The second dimension relates to knowledge: being excluded from the world of reading and communication and is measured by the percentage of adults who are illiterate.  The third aspect relates to a decent standard of living, in particular, overall economic provisioning.  This is represented by a composite of three variables: the percentage of people with access to health services and to safe water, and the percentage of malnourished children under five.

Estimates of the HPI for developing countries have been worked out for 77 countries with comparable data by Human Development Office of the World Bank.  The HPI value reflects the proportion of people affected by the three deprivations - providing a comparative measure of the prevalence of human poverty.  Human Development Report (HDR) 1998 reveals the following: 1. The HPI for developing countries ranges from 3% in Trinidad and Tobago to 62% in Niger.  2. Other countries with an HPI of less than 10% are Chile, Uruguay, Singapore and Costa Rica. 3. The HPI exceeds 50% in Mali, Ethiopia, Sierra Leone, Burkina Faso and Niger.  4. The HPI exceeds 33% in 32 countries, implying that an average of at least a third of the people in these countries suffer from human poverty.

A comparison of HDI and HPI values shows how well - or poorly - the average achievements in a country are distributed.  China and Egypt have similar levels of overall human development, but the HPI for China is only 17%, while that for Egypt is 34%.  Similarly, Kenya and Pakistan are at par in the HDI, but the HPI for Kenya is less than 30% and that for Pakistan is more than 45%.  This reveals that the fruits of human development are distributed more inequitably in Egypt and Pakistan than in China and Kenya.

Human Expenditure Ratio

The human expenditure ratio - the percentage of national income devoted to human priority concerns - is the product of the following three ratios: 1. The public expenditure ratio: the percentage of national income that goes into public expenditure. 2. The social allocation ratio: the percentage of public expenditure earmarked for social services. 3. The social priority ratio: the percentage of social expenditure devoted to human priority concerns.

The human expenditure ratio is a powerful operational tool that allows policy-makers who want to restructure their budgets to see existing imbalances and the available options.  If public expenditure is already high (as in many developing countries), but the social allocation ratio is low the budget will need to be reassessed to see which areas of expenditure could be reduced.  Military spending, debt servicing and loss-making public enterprises are often likely candidates.

If the first two ratios are high, but the ultimate human development impact, as reflected in human development indicators, is low the social priority ratio must be increased.  For the poorest countries, this is likely to involve seeking a better balance between expensive curative hospitals and preventive primary health care, between universities and primary schools and between focusing greater attention on the cities and on the rural areas, where most poor people live.

For example, Pakistan and Indonesia have a low human expenditure ratio, despite reasonable overall levels of public expenditure.  The reason is that their social allocation and social priority ratios are low.  The republic of Korea, on other hand, directs a large share of its relatively small public budget towards social priorities and has, as a result, a much better human expenditure ratios, while others have particularly high social priority ratios.

Aid ratios

Aid budgets, like government expenditures, can be examined through four ratios: 1. The aid expenditure ratio - the percentage of a donor's GNP that it gives in aid. 2. The aid social-sector ratio - the percentage of each donor's aid that go to the social sector. 3. The aid priority ratio - the percentage of social sector aid committed to human priority areas. 4. The aid human expenditure ratio - the product of the three foregoing ratios, is thus the percentage of donor's GNP going to human priority areas in recipient countries.

Gender-related Development Index (GDI)

Gender-related Development Index (GDI) measures the achievement in the same basic capabilities as the HDI does, but takes note of inequality in achievement between women and men.  The methodology used imposes a penalty for inequality, such that the GDI falls when the achievement levels of both women and men in a country go down or when the disparity between their achievements increases.  The greater the gender disparity in basic capabilities, the lower a country's GDI compared with its HDI.  The GDI is simply the HDI discounted, or adjusted downwards, for gender inequality.  The GDI thus, reflects gender imbalances in basic health, education and income.

The HDR 1998 presents the GDI calculated for 163 countries.  The human development achievements of women fall below those for men in every country, and the shortfall in the GDI relative to the HDI reflects this inequality.  There are other interesting features of the GDI: 1. For 60 of the 163 the GDI rank is lower than the HDI rank.  This shows the unequal opportunities that women face relative to men.  For several countries the GDI rank falls short of the HDI rank by 20 points or more: Oman, Saudi Arabia, the Islamic Republic of Iran, the Syrian Arab Republic, Algeria, Libya and the United Arab Emirates, in descending order. 2. The GDI rank falls short of the HDI rank by 10 points or more in such industrial countries as Ireland and Malta.  3. For 82 countries the GDI rank exceeds the corresponding HDI rank.  The countries with a GDI rank more than 10 points higher than the HDI rank include 12 in Eastern Europe and the Commonwealth of Independent States (CIS).  Only three countries outside this region - Thailand, Jamaica, and Sri Lanka - have a GDI rank more than 10 points greater than the HDI rank.

Gender Empowerment Measure (GEM)

Gender Empowerment Measure evaluates progress in advancing women at the political and economic level.  It examines whether women and men are able to actively participate in economic and political life and take part in decision-making.  While the GDI focuses on expansion of capabilities, the GEM is concerned with the use of those capabilities to take advantage of the opportunities of life.

At the top of the GEM rankings are three Nordic countries - Sweden, Norway, and Denmark, each with high levels of human capabilities and many opportunities for women to participate in economic and political activities.  Some developing countries do even better than industrial countries on the GEM.  Trinidad and Tobago and Barbados are ahead of the United Kingdom and Ireland.  Cuba and Costa Rica are ahead of France and Israel.  China and Mexico are ahead of Japan.

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Preamble

The notion of ‘Welfare State’ has acquired a great deal of popularity in recent years. in a restricted sense, Welfare State is a state that provides ‘economic security’ to its citizens. A state is a Welfare State if it provides certain social services to its people, such as, education, health, unemployment and old age, etc.  Welfare State in wider sense, specially in under developed countries, includes various activities, such as, rural development, labour welfare, the reduction of economic inequality and measures to raise the general standards of living besides the provision of economic security. In this sense, India is attempting to become a Welfare State.

The need to tackle the problem of poverty, inequality and economic uncertainty has increased the importance of welfare State. The Welfare State can ensure that production increases and that a greater share of the total produce may be provided to those who are in need.

What is Pareto-Optimality?

Welfare economics is concerned with the evaluation of alternative economic situations from the point of view of the society’s well-being. to evaluate alternative economic situations we need some criterion of social well-being or welfare. The measurement of social welfare requires same ethical standard and interpersonal comparisons, both of which involve subjective value judgments. Objective comparisons and judgments of the deservingness or worthiness of different individuals are virtually impossible, according to many economists.

Various criteria of social welfare measurements have been suggested by economists at different times. one of the path-breaking contribution was made by the famous Italian economist Vilfredo Pareto, which objectively seeks to measure economic efficiency. According to Pareto Criterion any change that makes at least one individual better-off and no one worse-off is an improvement in social welfare. conversely, a change that makes no one better-off and at least one worse-off is a decrease in social welfare.

in short, a situation in which it is impossible to make anyone better-off with out making someone worse-off is said to be Pareto-Optimal or Pareto-Efficient.
 

What conditions are required to obtain Pareto-Optimality?

For the attainment of a Pareto-Efficient situation in an economy, three marginal conditions must be satisfied:

1. efficiency of distribution of commodities among consumers (efficiency in exchange);

2. efficiency of the allocation of factors among firms (efficiency of  production); and

3. efficiency in the allocation of factors among commodities (efficiency in the production-
    mix, or composition of output).
 

India and the Welfare State

The Constitution of  India (1950) envisages the creation of a Welfare State. The Directive Principles of State Policy in Part IV of the Constitution lay down that “the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life”.

India, with the help of planning, aims to attain a Welfare State by providing education for all, free medical and health services, equitable social security, housing and slum clearance, welfare of backward classes, resettlement of displaced persons, community development and social welfare.
 

India and Pareto-Optimality

In order to provide the social well-being facilities, Indian Government uses the components of Public Finance, such as, public expenditure, taxation, etc.  But, “how far Pareto’s Optimality is reached in India while providing social facilities” is a very big question which has to be answered.

In a country like India where around 75 per cent of the National Income is enjoyed by 25 per cent of the population, to attain equities, it is very essential to aim at Pateto-Optimality.

Even though the public finance policies are framed keeping in mind Paretian conditions, due to the following reasons, India is not able to reach the point of Pareto-Optimality :

1. the efficiency of commodity distribution of any two goods are not equal for all
    consumers;

2. the efficiency of the allocation of any two inputs are not equal in the production of all
    commodities; and

3. the marginal rate of product transformation is not equal to the efficiency of commodity
    distribution for any two goods.

Apart from the above three reasons, India faces a lot of additional problems - which are unique only to India - in implementing the social well-being facilities. Let us view two examples.

Example - 1

The government is providing Mr X a house/flat through slum clearance program. But, Mr X sells/rents the house after some time and returns to the slum again. There are several Mr Xs in India, which forces the government to incur expenditure again on same individuals. It is impossible to increase the utility of a person when the person himself does not want to increase his utility.

Example - 2

The government is providing free medical facilities. But does these facilities reach those people for whom they are meant to be?  The entry of richer class into free hospitals reduces the total utility of poor people. Further, to add oil to the fire we find many drugs which is suppose to reach poor people through government hospitals getting sold outside. In these kind of conditions how a country can attain Pareto-Optimality?
 

Concluding Remarks

Even though it is very difficult to achieve Pareto-Optimality for a nation like India, it is very much necessary to aim towards it. This requires a lot of structural and technical changes starting from the policies of the government through the executors of various policies and to the people who ultimately reap the benefits from such programs. There is no point in blaming any single section for our inability to attain near the point of bliss. unless all share the responsibilities, it is quite difficult to share the benefits, which, though naturally due to us, have been denying ourselves and indifferently acting unawaredenlly against giving ourselves a ‘Welfare State’ where one person can be better-off without making the other worse-off.

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The Corporate image affects all aspects of corporate life - share price, acquisitions, partnerships, purchasing as well as sales. It also affects the core strength of the company - manpower.

Corporate image is the image of the company that is projected in the media and market place reflecting upon the organisation and its activities as a whole. Corporate image if build professionally - especially in service industries such as software development and advertising - can pull best talents to the organisation. On the other hand, each employee of the company can be used skillfully to build a firm’s corporate image. Since, each employee currently employed by the company or who worked earlier can be silent representatives who build corporate image in an indirect fashion.

Each employee of an organisation speaks while in employment or after that about the company’s behaviour towards them. Thus, if a company can maintain excellent employee relations within the organisation can definitely maintain a superior corporate image compared to its competitors. Further, in the high labour turnover industries (like mentioned earlier) this will lead to a better image which will help the company to get the best cream available in the market.

If the personnel are managed without dignity, it will be reflected in the corporate image and the company will get only second or third best quality manpower. For example, a Chennai-based advertising agency (which is in the top 10 list of A&M survey) was in need of a copy writer some time back. And no copy writer was willing to join that agency, because of their treatment towards employees. In the process, the agency could get only substantial copy writers and it is reflected in their creative work, which is the life blood of advertising industry. Today this agency is known in the advertising industry for its lack of creativity. In fact, the Chennai branch (which is the head office of the agency) gets its creatives done from its other branches. The agency do not want to pay their staff what they are entitled to. At the time of leaving, they do not pay cheques. They delay final cheques with out any reason. They use employees provident fund for other financial adjustments. They take more than a month to issue Form 16A. Will the ex-employees of this agency talk good about this agency? Definitely they will only function as image-destroyers of that agency.  This is paradoxical to the core, since ad agencies are suppose to help clients build brands/images, are not able to manage their own image.

Contrast to the above example, in a highly labour turnover software industry where retaining manpower itself is a major task, one company is an exception. Infosys. Because, they treat employees as human beings.

Another appropriate example is Hotel Saravana Bhavan, a local Chennai-based vegetarian restaurant chain. An employment with Saravana Bhavan is considered to be equivalent of a government job. The management take care of the employees very well. They even take care of employees’ children’s education, leisure, health needs, etc.

Another advantage of better personnel management is that, if treated properly with dignity, even the best ex-employees may come back to the company at a later stage with more experience, which will in turn improve the quality of work of the company. Further, a better man power management will not only help to build corporate image, but also retain them for long. This is very important in an competitive business environment with the entry of trans-nationals with the globalisation of the Indian economy.

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The steps in an attempt to eradicate any infectious disease  must identify  the disease,  learn about  the  disease,  treating  the disease and protecting against the disease. All this must be done simultaneously as high priority not one against the other. HIV was recognised much later in India than in rest of the  world. The country's achievements in the field of development and health may be treated if epidemic is not contained. A mature  epidemic has  it's own sequelae as observed in other countries -  increase in health care costs, decreased life expectancy. And increase in infections which decrease the life span  of  the infected. Since  HIV was detected in 1985/86 in India, Prevention  strategies were given priority as this is certainly the best way to halt any infectious  disease.  However,  in  the  second decade  of   this infection, there is need to reconsider our priorities.

1.  There  is  a  need to introduce HIV  as  a  subspeciality  in medicine as it is a multi system disease presenting in any opd be it medicine, surgery, OBGY or pediatrics.

2.  There  is  a need to invest in training of  the  health  care community  in  care of the infected and the  affected.  Hospitals ought  to  treat  the  HIV infected like  any  other  infectious disease.

3. There is a need to reduce transmission in the community

4.  The prevalence of MTCT ranges between 1-4 % in India.   It  is now  possible to reduce MTCT up to 50-60 % when drugs  costing  Rs 160 are given to a pregnant mother.

5.  There is need to introduce an retrovial drugs to most need  - the priority being women and children

6.  There  is  a need to make  Tuberculosis  control  a  national emergency   and committed  innovative  programmes  need  to   be implemented,  where  the community  has  a  major  role  in   its prevention. There is a need to look into our culture, folk lore and tradition to learn from them as to find "Cure" and bring them into the main stream of our intervention

7. There is a need for us to investment HIV prevention,  vaccine, its development and production.

8. To achieve these  steps a collaborative approach of all sectors of society is needed to make his paradigm shift a reality.

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All the current news during past few weeks - Socio, Economic, Political etc., have disturbed the author of this article, like any average Indian. There is no news which is good news. This may be the new Millennium  greetings for an Indian citizen from all pockets, thanks to Indian policy makers and politicians. I have my views on few selected news items.  

Reduction of Interest Rates  for Public Provident Fund

The recent decision of the Finance Minister to reduce PPF interest rate is a retrograde move. Despite being a poor country, India is seen as remarkable in public savings. Which amounts to 20 % of GDP. The public savings play a vital role in financing mega projects of the Government of  India. Though this latest move may bring a savings of a few crores of rupees on interest payment, in the long run it will turn out to be the story of the man killing the golden goose.  

Tamil, as  an Instruction Medium

Making Tamil compulsory as the medium of instruction up to 5th standard is fraught with linguistic dangers. No doubt it will enhance the language and its usage. But in this cyber world where still a majority of universally accepted terms are yet to find a Tamil equivalent, this move will seriously harm the students. There is nothing wrong, but one can’t close eyes to reality. Tamil being in existence for well over 5000 years doesn’t need a ‘tag’  of compulsion to grow or spread.  

Moopanar’s Move

The recent decision of the Tamil Manila Congress to align with AIADMK for the February  by-elections only reminds us of the old saying “ Politics makes strange bed fellows”. Whatever excuses Moopanar may throw to justify his decision will not hold water since the very birth of his party was against Jayalalitha. So now will TMC ultimately merge with Congress (I) since the major alliance question is now settled or is it Moopanar postponing Kamraj rule another time, another day. Well, time will tell.  

Oh, The Land of Gandhi

The recent decision of the Gujarat Government to allow its employees to become RSS Members is the biggest shame in secular India. To happen in the land  where father of the nation Mahatma Gandhi was born is even still a bigger shame. When there is so much to be done for the people, wasting steam on a small issue does not serve the purpose. To encourage the growth of RSS there are other means, but god saved the country, what if the rule was if you’re a Government employee, you’re automatically a RSS member?.  

Flyovers or Fly Over?

The recent news item announcing the inauguration of two flyovers in Chennai by  Tamil Nadu Chief Minister of February 5, makes the average Chennaite let take a deep breathe, because almost 75 per cent of the population has been affected by the flyover construction . Doing it at 7 places simultaneously made one wonder whether it was better to fly around in Chennai rather take the road! So much inconvenience has been caused,  but the average Indian silence has gulped it all. Is it going to solve the problem? Or, will it accumulate traffic from one point to another given the statistics of 500 vehicles being added everyday on Chennai road.  

For the People, By the People, Burn the People?

The recent horrific crime of burning three teenaged  Agricultural College  girl students near Dharmapuri (Tamil Nadu) is beyond the word ‘Crime’. Though the real culprits are to be apprehended, the needle of suspicion is pointed towards workers of two major  Dravidian parties of Tamil Nadu. It makes the people wonder democracy is the right avenue for India, when we have hooligans as party cadres, leaders .... the less said the better. It’s time there is a major overhaul of the constitution, leave alone renew to put an end to this uncivilised acts. Should it continue, we may end as the world’s   second largest shameless democracy.

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