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2013 Human Development Report: Chile Human Development Index improves and, for the first time, outperforms a developed OECD country
I. Description The United Nations Development Programme’s (UNDP) Human Development Report gathers a series of indicators related to income, education and health, into one composite indicator: the Human Development Index (HDI). The HDI represents each country’s level of human development; and is calculated on the basis of three equally weighted components. Those components are:
The income component, which is calculated on the basis of the Gross National Income per capita, measured in US Dollars and purchasing power parity (PPP).
The education component, which is calculated on the basis of the mean years of schooling and the expected years of schooling. Each indicator is weighted equally within this component.
The health component, which is calculated on the basis of life expectancy at birth.
This report synthesizes the most relevant elements of the Human Development Report 2013, "The Rise of the South".
II. Main highlights of the Human Development Report 2013
In a little over thirty years, Chile has improved its HDI from 0.638 in 1980 to 0.819 in 2012. The 2012 HDI represents progress relative to 2011 (HDI 2011: 0.817) and places Chile among the 47 countries classified as "very high human development" countries.
Globally, Chile is ranked 40th of 187 countries - two spots above Chile's 2010 rank, similar to its 2011’s rank, and the highest HDI rank the country has ever earned. The Global average HDI was 0.694 in 2012, 18% below Chile.
Chile is currently ranked first in Latin America for human development - as it has been since 1990. The OECD ranks Chile 31 of 34; however, for the first time in the history of this publication, Chile outperformed a developed OECD country: Portugal, which ranked three places below Chile (43 v. 40).
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FIGURE 1: HUMAN DEVELOPMENT INDEX, 1980 - 2012
The development gap relative to the OECD has been narrowed from 9% in 2007 to 7.5% in 2012.
FIGURE 2: RANK IN THE HUMAN DEVELOPMENT INDEX, 1980 - 2012
Chile's human development index is higher than the rest of Latin America’s. In fact, Argentina and Chile are the only Latin American countries classified as "very high human development" countries. Analysis of Argentina, Cuba, Ecuador and Venezuela’s performance - which were all at levels higher than or similar to Chile at the beginning of the 1980s - reveals how much better Chile has performed over the last two decades.
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FIGURE 3: RANKING OF VARIOUS LATIN AMERICAN COUNTRIES, 1980 - 2012
In order to account for inequality of income, education and health in each country, the UNDP also publishes an inequality-adjusted HDI (called the IHDI). Calculations are based on the Atkinson inequality index (1970), which is calculated for each component as follows:
Where x = education, income or health and and formula for each component, respectively.
, with
the geometrical mean
FIGURE 4: IHDI 2012 RANKING FOR LATIN AMERICA
When adjusted for income, Chile falls from an HDI of 0.819 to an IHDI of 0.0664. However, regional analysis reveals that Chile is the Latin American leader for this
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indicator; thus, the figure is consistent with the high levels of inequality observed in the region as a whole. In fact, Chile’s IHDI is 26% higher than the regional average (0.526). The UNDP also measures each country’s percentage loss due to inequality, based on the difference between the HDI and the IHDI. The statistic allows the reader to easily identify which countries suffer from the greatest human development inequalities and which have more equitable distribution. Chile's “loss” due to inequality compares with the rest of Latin America as follows:
Chile's 18.9% loss is the region’s second lowest, after Uruguay (16.4%).
The average loss in Latin America is 25.8%. FIGURE 5: LOSS DUE TO INEQUALITY
Loss
Average loss in Latin America
It is important to state that the adjustment due to the distribution of income takes into account the numbers available in 2009. Therefore, in the subsequent versions of this report, there may be an increase in this indicator since, according to the data made public in the 2011 Casen, the Gini index – which increased between 2006 and 2009 from 0.54 to 0.55 – suffered a setback to 0.54 in the latest version. Moreover, the difference in income between the wealthiest 10% and the poorest 10% – which between 2006 and 2009 increased from 31.3 to 46 times – decreased to 35.6 times in the most recent survey.
Addendum: Measures implemented by the Government to enable further progress in the Human Development Index.
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Several measures promoted by the Government of President Sebastian Piñera will have a positive effect on HDI and IHDI levels in the future. The following is a summary of the measures that shall affect each of the components in the future.
1. Policies affecting the income component
The new boom of the Chilean economy, which grew by 5.9% per year between 2010 and 2012, surpassing the mean global growth (4.1%), Latin American growth (4.8%), and even the growth of our own economy in the 4 previous years (3.3% between 2006 and 2009), shall have a highly positive influence on the relative performance of the income component. In accordance with IMF estimates, the GDP per capita of Chile, adjusted by buying power, shall rise from US$ 15,206 in 2009 to US$ 20,251 in 2014, the equivalent of a 33% nominal increase in just 5 years. In addition to the latter, the creation of 817,000 new jobs along with a decrease in the unemployment rate, from 9% to 6% in the last three years, has been fundamental.
2. Policies affecting the education component.
The Budget available for education has increased from US$ 7.8 billion to US$ 12.8 billion between 2009 and 2013, with an average cost of 4.2% of GDP, which represents the greatest investment in the educational sector in the past 30 years (between 2006 and 2009, on average, said amount reached 3.8% of GDP). This has allowed for progress in the following initiatives:
a. School education
A 20% increase of pre-school state subsidies and free coverage for pre-kinder and kindergarten for all children from homes in the first three quintiles.
b. School education
Extension of the preferential school state subsidy from 700,000 students to 2.2 million (once the preferential state subsidy for the middle class is approved). Real increase of 50% of the total state subsidy received by the most vulnerable students (from $60,000 to $90,000 per month). Implementation of Education Superintendency and Quality Agency. 60 new Flagship Schools, distributed throughout all the regions of Chile. Teacher Vocation Scholarship, which has allowed more than 6,000 students who scored more than 600 points on the PSU to study Teacher Training for free. Tax credit for expenses the parents incur in educating their children.
c. Higher education
Significant increase in the number of higher education scholarships and extension of their coverage to include the middle class, reaching 60% of the most vulnerable sector, which means that 314,000 scholarships can be provided in 2013 (118,000 in 2009). Increase of scholarship coverage for students of professional institutes, technical educational centers and non-traditional private universities. Reduction in the interest rates for university loans such as CAE and Corfo, from 8% and 6% to a single rate of 2%, and payments shall not exceed 10% of income. Studies Division
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3. Policies affecting the health component
Extension of the coverage and duration of postnatal maternity leave from 3 to 6 months, which favors breastfeeding and bonding during the first few months of a child’s life. End of the waiting lists for the priority ailments listed under the AUGE scheme. Extension of AUGE Plan coverage from 56 ailments in 2007 to 80 in 2013. Between 2010 and 2014, 20 hospitals and 94 primary care centers will have been built or renovated. Incorporation of approximately 3,000 professionals into the medical specialist program, almost triple compared to the previous period. Increase of resources for primary care through a sustained increase of per capita, which shall reach $3,452 per month in 2013, 46% more than in 2009 ($2,362).
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