Ethiopia: No Improvement in Standard of Living – UNDP’s HD Report Reveals

Update: Title Changed, and HDI vs. GDP explained per feedback from readers.

The 2009 United Nations Development Programme’s (UNDP’s) Human Development Index (HDI), which refers to 2007, ranks Ethiopia as the 12th least developed country in the world. The HDI for Ethiopia is 0.414, which gives the country a rank of 171st of out 182 countries with data (Table 1). Ethiopia scored less than the average HDI of ~0.51 for the sub-Saharan Africa.

For contrast, neighboring countries: Kenya, Sudan, Djibouti and Eritrea, have ranked 147th, 150th, 155th and 165th, respectively. Due to its stateless situation, no data is available for Somalia.

UNDP’s 2009 Human Development Report further details that Ethiopia made no improvement in its people’s standard of living compared to the previous year’s data. Just this week, Dr. Merera Gudina, a prominent opposition leader from the newly-formed FORUM coalition, refuted the TPLF-led government’s claim of a 10%-per-year growth of GDP and added “Ethiopians would know the figures were false because their standard of living has failed to improve.” (VOA News – October 5, 2009) UNDP’s data support Dr. Gudina’s claims. Despite government’s rhetoric about “development”, Ethiopia continues to show no improvement in people’s standard of living, which is a more robust measure of development according to UNDP. In other words, the GDP growth in Ethiopia has made a very few individuals become filthy rich while leaving the millions others as poor as or poorer than they had always been. For this reason, UNDP does not look at “GDP” as a measure of development for a country, but it calculates the “Human Development Index” (HDI) to better measure the development (more on HDI below) of a country.
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About UNDP’s HDI
Each year since 1990 the Human Development Report has published the human development index (HDI) which looks beyond GDP to a broader definition of well-being. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income). The index is not in any sense a comprehensive measure of human development. It does not, for example, include important indicators such as gender or income inequality nor more difficult to measure concepts like respect for human rights and political freedoms. What it does provide is a broadened prism for viewing human progress and the complex relationship between income and well-being.

Human poverty: focusing on the most deprived in multiple dimensions of poverty

The HDI measures the average progress of a country in human development. The Human Poverty Index (HPI-1), focuses on the proportion of people below certain threshold levels in each of the dimensions of the human development index – living a long and healthy life, having access to education, and a decent standard of living. By looking beyond income deprivation, the HPI-1 represents a multi-dimensional alternative to the $1.25 a day (PPP US$) poverty measure.

The HPI-1 value of 50.9% for Ethiopia, ranks 130th among 135 countries for which the index has been calculated.

The HPI-1 measures severe deprivation in health by the proportion of people who are not expected to survive to age 40. Education is measured by the adult illiteracy rate. And a decent standard of living is measured by the unweighted average of people not using an improved water source and the proportion of children under age 5 who are underweight for their age. Table 2 shows the values for these variables for Ethiopia and compares them to other countries.
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Building the capabilities of women

The HDI measures average achievements in a country, but it does not incorporate the degree of gender imbalance in these achievements. The gender-related development index (GDI), introduced in Human Development Report 1995, measures achievements in the same dimensions using the same indicators as the HDI but captures inequalities in achievement between women and men. It is simply the HDI adjusted downward for gender inequality. The greater the gender disparity in basic human development, the lower is a country’s GDI relative to its HDI.

Ethiopia’s GDI value, 0.403 should be compared to its HDI value of 0.414. Its GDI value is 97.3% of its HDI value. Out of the 155 countries with both HDI and GDI values, 132 countries have a better ratio than Ethiopia’s.

Table 3 shows how Ethiopia’s ratio of GDI to HDI compares to other countries, and also shows its values for selected underlying indicators in the calculation of the GDI.
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The gender empowerment measure (GEM) reveals whether women take an active part in economic and political life. It tracks the share of seats in parliament held by women; of female legislators, senior officials and managers; and of female professional and technical workers- and the gender disparity in earned income, reflecting economic independence. Differing from the GDI, the GEM exposes inequality in opportunities in selected areas.

Ethiopia ranks 85th out of 109 countries in the GEM, with a value of 0.464.

Migration

Every year, millions of people cross national or international borders seeking better living standards. Most migrants, internal and international, reap gains in the form of higher incomes, better access to education and health, and improved prospects for their children. Most of the world’s 195 million international migrants have moved from one developing country to another or between developed countries.

Ethiopia has an emigration rate of 0.4%. The major continent of destination for migrants from Ethiopia is Asia with 37.5% of emigrants living there.
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The United States is host to nearly 40 million international migrants – more than any other country though as a share of total population it is Qatar which has the most migrants – more than 4 in every 5 people are migrants. In Ethiopia, there are 554.0 thousand migrants which represent 0.7% of the total population.
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Remittances

Remittances, which are usually sent to immediate family members who have stayed behind, are among the most direct benefits from migration; their benefits spread broadly into local economies. They also serve as foreign exchange earnings for the origin countries of migrants. However, remittances are unequally distributed. Of the total US$370 billion remitted in 2007, more than half went to countries in the medium human development category against less than one per cent to low human development countries. In 2007, US$359 million in remittances were sent to Ethiopia. Average remittances per person were US$4, compared with the average for Sub-Saharan Africa of US$26. (See Table 6 for more details.)
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