ABSTRACT: On may 24th, in London, The UNITED NATIONS DEVELOPMENT PROGRAMME (one of the major UN agencies) published "The Human Development Report 1990". The report addresses, as its main issues, the question of how economic growth translates - or fails to translate- into human development. The focus is on people and on how development enlarges their choices.

The Report discusses the meaning and measurement of human development, proposing a new composite index. But its overall orientation is practical and pragmatic. It summarises the record of human development over the past three decades, and it analyses the experience of 14 countries in managing economic growth in the interest of the broadest possible number of people.

With this as its foundation, the Report then sets forth strategies for human development in the 1990s, emphasising the importance of restructuring budgetary expenditures, including military expenditures, and creating an internationsl economic and financial environment conducive to human development. A special focus chapter addresses the human development aspects of urbanisation.

This report has been prepared by a team of eminent economists and distinguished development professionals under the overall guidance of Mahbub ul Haq, former Finance and Planning Minister of Pakistan and now Special Adviser to the UNDP Administrator. The panel of consultants included Gustav Ranis, Amartya K. Sen, Frances Stewart, Meghnad Desai, Keith Griffin, Azizur Rahman Khan, Paul Streeten and Shlomo Angel.

Within UNDP, the Report was coordinated by Inge Kaul and the prepation of the statistical tables supervised by Leo Goldstone.

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This Report is about people - and about how development enlarges their choices. It is about more than GNP growth, more than income and wealth and more than producing commodities and accumulating capital. A person's access to income may be one of the choices, but it is not the sum total of human endeavour.

Human development is a process of enlarging people's choices. The most critical of these wide-ranging choices are to live a long and healthy life, to be educated and to have access to resources needed for a decent standard of living. Additional choices include political freedom, guaranteed human rights and personal self-respect.

Development enables people to have these choices. No one can guarantee human happiness, and the choices people make are their own concern. But the process of development should at least create a conducive environment for people, individually and collectively, to develop their full potential and to have a reasonable chance of leading productive and creative lives in accord with their needs and interests.

Human development thus concerns more than the formation of human capabilities, such as improved health or knowledge. It also concerns the use of these capabilities, be it for work, leisure or political and cultural activities. And if the scales of human development fail to balance the formation and use of human capabilities, much human potential will be frustrated.

Human freedom is vital for human development. People must be free to exercise their choices in properly functioning markets, and they must have a decisive voice in shaping their political frameworks.

Starting with this perspective, human development is measured in this Report not by the yardstick of income alone but by a more comprehensive index - called the human development index - reflecting life expectancy, literacy and command over the resources to enjoy a decent standard of living. At this stage, the index is an approximation for capturing the many dimensions of human choices. It also carries some of the same shortcomings as income measures. Its national averages conceal regional and local distribution. And a quantitative measure of human freedom has yet to be designed.

The index does, however, have the virtue of incorporating human choices other than income, and consequently is a move in the right direction. It also has the potential for refinement as more aspects of human choice and development are quantified. This Report lays out a concrete priority agenda for better data collection that will enable the human development index to be used increasingly as a more genuine measure of socioeconomic progress.

The Report analyses the record of human development for the last three decades and the experience of 14 countries in managing economic growth and human development. Several policy conclusions from this experience underpin a detailed analysis of human development strategies during the 1990s.

The Report ends with a special focus on the problems of human development in an increasingly urban setting. The orientation of the Report is practical, looking not just at what is to be done- but also at how.

The Report's central conclusions and policy messages are clear, and some of their salient features are summarised here.

1. The developing countries have made significant progress

towards human development in the last three decades.

Life expectancy in the South rose from 46 years in 1960 to 62 years in 1987. The adult literacy rate increased from 43% to 60%. The under-five mortality rate was halved. Primary health care was extended to 61% of the population, and safe drinking water to 55%. And despite the addition of 2 billion people in developing countries, the rise in food production exceeded the rise in population by about 20%.

Never before have so many people seen such significant improvement in their lives. But this progress should not generate complacency. Removing the immense backlog of human deprivation remains the challenge for the 1990s. There still are more than a billion people in absolute poverty, nearly 900 million adults unable to read and write, 1.75 billion without safe drinking water, around 100 million completely homeless, some 800 million who go hungry every day, 150 million children under five (one in three) who are malnourished and 14 million children who die each year before their fifth birthday. In many countries in Africa and Latin America, the 1980s have witnessed stagnation or even reversal in human achievements.

2. North-South gaps in basic human development have narrowed

considerably in the last three decades, even while income gaps

have widened.

In 1987 the average per capita income in the South was still only 6% of that in the North. But its average life expectancy was 80% of the northern average and its average literacy rate 66%.

Developing countries reduced their average infant mortality from nearly 200 deaths per 1,000 live births to about 80 in about four decades (1950-88), a feat that took the industrial countries nearly a century to accomplish. This is clearly a message of hope. The essential task of taking the developing world to an acceptable threshold of human development can be accomplished in a fairly manageable period and at a modest cost - if national development efforts and international assistance are properly directed.

But this promising trend must be seen in its proper perspective. While North-South gaps have narrowed in basic human survival, they continue to widen in advanced knowledge and high technology.

3. Averages of progress in human development conceal large

disparities within developing countries - between urban and

rural areas, between men and women, between rich and poor.

Rural areas in the developing countries have on the average half the access to health services and safe drinking water that urban areas have, and only a quarter of the access to sanitation services.

Literacy rates for women are still only two-thirds of those for men. And the maternal mortality rate in the South is 12 times that in the North - the largest gap in any social indicator and a sad symbol of the deprived status of women in the Third World.

High-income groups often preempt many of the benefits of social services. Levels of health, education and nutrition among higher income groups far exceed those of the poor in many countries. There is thus considerable room for improvement to ensure that the benefits of social expenditures are more evenly distributed, flowing to the very poor. The rationale for government intervention greatly weakens if social spending, rather than improving the distribution of income, makes it worse.

4. Fairly respectable levels of human development are possible

even at fairly modest levels of income.

Life does not begin at $ 11,000, the average per capita income in the industrial world. Sri Lanka managed a life expectancy of 71 years and an adult literacy rate of 87% with a per capita income of $ 400.

By contrast, Brazil has a life expectancy of only 65 years, and its adult literacy rate is 78% at a per capita income of $ 2,020. In Saudi Arabia, where the per capita income is $ 6,200, life expectancy is only 64 years and the adult literacy rate is an estimated 55%.

What matters is how economic growth is managed and distributed for the benefit of the people. The contrast is most vivid in rankings of developing countries by their human development index and by their GNP per capita. Sri Lanka, Chile, Costa Rica, Jamaica, Tanzania and Thailand, among others, do far better in human development than in income, showing that they have directed more of their economic resources towards human progress. Oman, Gabon, Saudi Arabia, Algeria, Mauritania, Senegal, Cameroon and the United Arab Emirates, among others, do considerably worse, showing that they have not yet translated their income into human progress.

The valuation given to similar human development achievements is quite different depending on whether they were accomplished in a democratic or an authoritarian framework. A simple quantitative measure to reflect the many aspects of human freedom - such as free elections, multiparty political systems, an uncensored press, adherence to the rule of law, guarantees of free speech, personal security and so on - will be designed over time and incorporated in the human development index. Meanwhile, the Report lists the top 15 countries that have achieved relatively high levels of human development within a reasonably democratic political and social framework : Costa Rica, Uruguay, Trinidad and Tobago, Mexico, Venezuela, Jamaica, Colombia, Malaysia, Sri Lanka, Thailand, Turkey, Tunisia, Mauritius, Botswana and Zimbabwe.

5. The link between economic growth and human progress is not

automatic.

GNP growth accompanied by reasonably equitable distribution of income is generally the most effective path to sustained human development. The Republic of Korea shows what is possible. But if the distribution of income is unequal and if social expenditures are low (Pakistan and Nigeria) or distributed unevenly (Brazil), human development may not improve much, despite rapid GNP growth.

Even in the absence of satisfactory economic growth or a relatively even income distribution, countries can achieve significant improvements in human development through well-structured public expenditures. For example, during the last three decades, Sri Lanka experienced relatively slow growth, rather equally distributed, and Botswana and Malaysia had adequate growth, unequally distributed. Yet all these countries have made impressive achievements in their human development levels because they have had well-structured social policies and expenditures.

Costa Rica and Chile, too, have demonstrated that dramatic human progress can be achieved - in a short time and even without rapid GNP growth.

But distributive policies can compensate for the effects of low GNP growth or unequal income distribution only in the short and medium run. these policy interventions do not work indefinitely without the nourishment that well-distributed growth provides. In the long run, economic growth is crucial for determining whether countries can sustain progress in human development or whether initial progress is disrupted or reversed (as in Chile, Colombia, Jamaica, Kenya and Zimbabwe).

6. Social subsidies are absolutely necessary for poorer income

groups.

The distribution of income is fairly uneven in most of the Third World. Simply stated, economic growth seldom trickles down to the masses. Free market mechanisms may be vital for allocative efficiency, but they do not ensure distributive justice. That is why added policy actions are often necessary to transfer income and other economic opportunities to the very poor.

Food and health subsidies serve that purpose - as long as they are properly targetted to low-income beneficiaries and efficiently administered. They establish an essential safety net in poor societies that generally do not have the social security schemes that are familiar in the industrial nations. Generally amounting to less than 3% of GNP, these subsidies have not been too costly. And when they are removed without an alternative safety net, the ensuing political and social disturbance has cost far more than the subsidies themselves.

Social subsidies will serve the interest of developing countries much better if more effort is devoted to designing them as efficient tools of income redistribution, without hurting the efficiency of resource allocation. Such effort is far preferable to the usual acrimonious debate supporting or rejecting all subsidies arbitrarily and across the board.

7. Developing countries are not too poor to pay for human

development and take care of economic growth.

The view that human development can be promoted only at the expense of economic growth poses a false tradeoff. It misstates the purpose of development and underestimates the returns on investment in health and education. These returns can be high, indeed. Private returns to primary education are as high as 43% in Africa, 31% in Asia and 32% in Latin America. Social returns from female literacy are even higher - in terms of reduced fertility, reduced infant mortality, lower school dropout rates, improved family nutrition and lower population growth.

Most budgets can, moreover, accommodate additional spending on human development by reorienting national priorities. In many instances, more than half the spending is swallowed by the military, debt repayments, inefficient parastatals, unnecessary government controls and mistargetted social subsidies. Since other resource possibilities remain limited, restructuring budget priorities to balance economic and social spending should move to the top of the policy agenda for development in the 1990s.

Special attention should go to reducing military spending in the Third World - it has risen three times as fast as that in the industrial nations in the last 30 years, and is now approaching $200 billion a year. Developing countries as a group spend more on the military (5,5% of their combined GNP) than on education and health (5,3%). In many developing countries, current military spending is sometimes two or three times greater than spending on education and health. There are eight times more soldiers than physicians in the Third World.

Governments can also do much to improve the efficiency of social spending by creating a policy and budgetary framework that would achieve a more desirable mix between various social expenditures, particularly by reallocating resources :

* from curative medical facilities to primary health care

programmes,

* from highly trained doctors to paramedical personnel,

* from urban to rural services,

* from general to vocational education,

* from subsidising tertiary education to subsidising primary

and secondary education,

* from expensive housing for the privileged groups to sites and

services projects for the poor,

* from subsidies for vocal and powerful groups to subsidies for

inarticulate and weaker groups and

* from the formal sector to the informal sector and the

programmes for the unemployed and the underemployed.

Such a restructuring of budget priorities will require tremendous political courage. But the alternatives are limited, and the payoffs can be enormous.

8. The human costs of adjustment are often a matter of choice,

not of compulsion.

Since there is considerable room for reallocating expenditures within existing budgets, the human costs of adjustment are often a matter of choice, not compulsion. When there is a sudden squeeze on resources, it is for policymakers to decide whether budgetary cuts will fall on military spending, parastatals and social subsidies for the privileged groups - or on essential health, education and well-targetted food subsidies. The evidence of the 1980s shows that some countries (such as Indonesia and Zimbabwe) protected their human development programmes during the process of adjustment by reorienting their budgets. Yet in some countries where education and health expenditures were cut, military expenditures actually rose. Obviously, the poverty of their economies was no barrier to the affluence of their armies.

External donors can help protect human development by providing additional resources to ease the pain of adjustment and by agreeing with developing countries on new and benign conditions for adjustment assistance - conditions that would make it clear that external assistance will be reduced if a country insists on spending more on its army than on its people. They could stress the right of the recipient country - indeed its obligation - not to cut social expenditures and subsidies that benefit poorer income groups and other vulnerable segments of the population. And they could specify that human development programmes should be the last, not the first, to be reduced in an adjustment period after all other options have been explored and exhausted.

9. A favourable external environment is vital to support human

development strategies in the 1990s.

The outlook is not good. The net transfer of resources to the developing countries has been reversed - from a positive flow of $42.6 billion in 1981 to a negative flow of $32.5 billion in 1988. Primary commodity prices have reached their lowest level since the Great Depression of the 1930s. The foreign debts of developing countries, more than $1.3 trillion, now require nearly $200 billion a year in debt servicing alone.

In the 1990s the rich nations must start transferring resources to the poor nations once again. For this to happen, there must be a satisfactory solution to the lingering debt crisis - with debts written down drastically, and a debt refinancing facility created, within the existing structures of the IMF and the World Bank, to foster an orderly resolution of the debt problem.

10. Some developing countries, especially in Africa, need

external assistance a lot more than others.

The least developed countries, particularly those south of the Sahara, suffer the greatest human deprivation. Africa has the lowest life expectancy of all the developing regions, the highest infant mortality rates and the lowest literacy rates. Its average per capita income fell by a quarter in the 1980s.

There is thus a growing trend towards a concentration of poverty in Africa. Between 1979 and 1985 the number of African people below the poverty line increased by almost two-thirds, compared with an average increase of one-fifth in the entire developing world. That number is projected to rise rapidly in the next few years - from around 250 million in 1985 to mere than 400 million by the end of the century.

In any concerted international effort to improve human development in the Third World, priority must go to Africa. The concept of short-term adjustment is inappropriate there. Required, instead, is long-term development restructuring. Also required is a perspective of at least 25 years for Africa to strengthen its human potential, its national institutions and the momentum of its growth. The international community should earmark an overwhelming share of its concessional resorces for Africa and display the understanding and patience needed to rebuild African economies and societies in an orderly and graduated way.

11. Technical cooperation must be restructured if it is to help

build human capabilities and national capacities in the

developing countries.

The record is not reassuring. In many developing countries the amount of technical assistance flowing each year into the salaries and travel of foreign experts exceeds by far the national civil service budget. Unemployment of trained personnel and a national civil service demoralised by low salary levels often exist side by side with large numbers of foreign, high-priced experts and consultants. In some countries, there continues to be an acute lack of trained national personnel. Technical assistance to Africa amounts to $4 billion a year - as much as $7 a person. But institution-building and the expansion of human capabilities has been grossly inadequate in most of the region.

More successful technical cooperation in the 1990s requires that programmes focus more on human development issues. This will broaden the basis for more effective national capacity-building - through the exchange of experience, the transfer of competence and expertise and the fuller mobilisation and use of national development capacities. Emphasis must be placed on improving the availability of relevant social indicators and on assisting developing countries in formulating their own human development plans. The yardstick for measuring the success and impact of technical assistance programmes must be the speed with which they phase themselves out.

12. A participatory approach- including the involvement of NGOs

- is crucial to any strategy for successful human

development.

Many overplanned, overregulated economies are now embracing greater market competition. Increasingly, the role of the state is being redefined: it should provide an enabling policy environment for efficient production and equitable distribution, but it should not intervene unnecessarily in the workings of the market mechanism.

The movement of nongovernmental organisations (NGOs) and other self-help organisations has gained considerable momentum and proven its effectiveness in enabling people to help themselves. NGOs are generally small, flexible and cost-effective, and most of them aim at building self-reliant development. They recognise that when people set their own goals, develop their own approaches and take their own decisions, human creativity and local problem-solving skills are released, and the resulting development is more likely to be self-sustaining. A comprehensive policy for the participation of NGOs is essential for any viable strategy of human development.

13. A significant reduction in population growth rates is

absolutely essential for visible improvements in human

development levels.

The number of people in developing countries - having increased from 2 billion in 1960 to an estimated 4 billion in 1990 - will probably reach 5 billion in 2000. The decline in the population growth rate - from 2.3% a year during 1960-88 to an estimated 2.0% during 1988-2000 - is insufficient to make a dent in the overall demographic picture. More vigorous efforts are required to reduce population growth in the developing world, above all in Africa and South Asia. There is an urgent need to strengthen programmes of family planning, female literacy, fertility reduction and maternal and child health care.

The world's demographic balance is shifting fast. The share of the developing countries in world population is expected to grow from 69% in 1960 to 84% by 2025, and that of the industrial nations to shrink from 31% to 16%. Even more telling, 87% of all new births are in the Third World, and only 13% in the industrial nations.

If the developing world's new generations cannot improve their conditions through liberal access to international assistance, capital markets and the opportunities for trade, the compulsion to migrate in search of better economic opportunities will be overwhelming - a sobering thought for the 1990s, one that spotlights the urgent need for a better global distribution of development opportunities.

14. The very rapid population growth in the developing world is

becoming concentrated in cities.

Between 1950 and 1987 the number of urban dwellers in developing countries more than quadrupled, from 285 million to one and a quarter billion. Their number is likely to increase to nearly 2 billion by 2000, when eight of the 10 largest mega-cities (each with 13 million people or more) will be in the Third World. This process of urbanisation seems to be inevitable, as various attempts to discourage urban migration have for the most part failed.

The urban challenge for planners and policymakers in developing countries during the 1990s will be to ideintify and implement innovative programmes to deal with four critical issues.

* Decentralising power and resources from the central government

to municipalities.

* Mobilising municipal revenue from local sources with the active

participation of private and community organisations.

* Emphasising "enabling" strategies for shelter and infrastructure

including assistance targeted to weaker groups.

* Improving the urban environment, especially for the vast

majority of urban poor in slums and squatter settlements.

The effectiveness of government responses to these issues will largely determine human development in the urban setting.

15. Sustainable development strategies should meet the needs of

the present generation without compromising the ability of

future generations to meet their needs.

On this, the consensus is growing. But the concept of sustainable development is much broader than the protection of natural resources and the physical environment. After all, it is people, not trees, whose future choices have to be protected. Sustainable development therefore must also include the protection of future economic growth and future human development. Any form of debt - financial debt, the debt of human neglect or the debt of environmental degradation - is like borrowing from the next generations. Sustainable development should aim at limiting all these debts.

Poverty is one of the greatest threats to the environment. In poor countries, poverty often causes deforestation, desertification, salination, poor sanitation and polluted and unsafe water. And this environmental damage reinforces poverty. Many choices that degrade the environment are made in the developing countries because of the imperative of immediate survival, not because of a lack of concern for the future. Any plans of action for environmental improvement must therefore include programmes to reduce poverty in the developing world.

If environmental problems are seen in the above perspective, it will help ensure that global ecological security is viewed as a unifying link, not a divisive issue, between the North and the South. Further, the additional costs of environmental protection must come largely from the rich nations since they are responsible for a major part of environmental degradation. With 20% of the world's population, they emit more than half the greenhouse gases that warm our planet. It is mainly the willingness of the rich nations to change their environmental policies, to transfer environmentally sound technologies and to provide additional resources that can ensure the protection of our global commons.

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These, then, are the main policy conclusions and policy messages of this first Human Development Report. Far from answering all questions in this first effort, the findings and conclusions often point to issues requiring deeper analysis and more meticulous research: What are the essential elements of strategies for planning, managing, and financing human development? What are the requirements of a practical framework for participatory development ? What is a conducive external environment for human development ? These and related questions will set the agenda for future Human Development Reports.

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