Institutional sphere contribution to human development: an institutional approach

Institutional sphere contribution to human development: an institutional approach

The institutions have been considered as a major determinant of development with the new institutional economics. The main objective of this paper is to emphasise the importance of integrating the institutional indicator component for evaluating human development. To this aim, the paper proposes a human development composite index (HDCI), which takes into account the three economic, social and institutional spheres.

The document uses institutional indicators for a sample of 178 countries, and reclassifies these countries in an increasing order of HDCI to estimate the differences compared to the HDI (the HDI published by the UNDP). Furthermore, the authors identify four groups of countries at different development levels (HDCI).

As a result, the paper finds, for every group, countries outgoing and countries entering from the initial HDI classification towards lower or superior levels of HDCI according to the importance of their institutional sphere. On the other hand, the authors show that various measures of HDCI are highly sensitive to indicators that are considered in the construction.

In the final analysis, the document suggests a need for more studies on countries differences in development, and improved efforts to share the above findings with global indicator programs.

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