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Human Development and Economic Uncertainties: Exploring Another Dimension of Development

Author

Listed:
  • Jamshed Y. Uppal

    (Associate Professor of Finance, Catholic University of America, Washington, DC.)

  • Syeda Rabab Mudakkar

    (Assistant Professor of Statistics, Lahore School of Economics, Pakistan.)

Abstract
This study makes the case that economic uncertainties—i.e., the extent to which economies face systemic uncertainties—need to be considered another dimension of human development because they render development vulnerable, diminish social welfare, and constrain human capabilities. We propose a methodology for adjusting the human development index (HDI) for economic uncertainties, using the time variability of income changes as a proxy. We construct an adjusted index associated with the income component for the 2011 HDI. Our analysis indicates that such an index contains additional information. The percentage loss in the income component of the HDI seems to reflect the variability in economic indicators arising from the political and economic tribulations experienced by each country. In Pakistan’s case, the results of a time-series analysis of the percentage loss from the uncertainty adjustment appear to closely trace the country’s political and economic upheavals.

Suggested Citation

  • Jamshed Y. Uppal & Syeda Rabab Mudakkar, 2013. "Human Development and Economic Uncertainties: Exploring Another Dimension of Development," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(Special E), pages 305-334, September.
    • Handle: RePEc:lje:journl:v:18:y:2013:i:sp:p:305-334
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Human development index; capabilities; human development; economic growth; economic vulnerability; uncertainty; risk.;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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