Summary and Conclusion
This paper argues for the necessity of making HDI more policy oriented and operational.
Judging from the historical fate of the numerous composite indices which have appeared and
subsequently disappeared in recent decades it seems that if this is not done the HDI will soon
suffer from the same fate.
To make the index more policy oriented at country level we should be prepared to relax some of
the generality of the index which is expected from an inter-country composite index. The
constituent, content and structure of the index should be more related to the policy problems
specific to the country concerned. We should accept that such policy problems and hence the
content of the index may be different for various countries and that the index should be tailored
to the policy concerns of the country in mind, although some such policy concerns may be
common in a number of countries. Indeed from a look at the various human development
reports at country level it can be seen that the focus of each country’s report is on the specific
problems of the country and the related policies within the spirit of the concept of human
development.
How this can be done is demonstrated by focusing on an important and persistent problem in
the case of Iran. Regional disparities are an important policy concern in the Third Development
Plan of Iran. The second part of this paper proposes a method and a model for the systematic
reduction of these disparities. The proposed method develops a composite index based on
sixteen operational indicators of longevity, education, health, gender, poverty and economic
activity, within the spirit of HDI for ranking different provinces of Iran. It proceeds to identify
homogenous groups of provinces and captures the degree of heterogeneity within these groups.
The proposed method computes a set of targets for all provinces in Iran . The computation of
these targets is based on three principles: equity, capacity to absorb progress and practical
concerns at the national level. The computed targets are then included in a 0-1 integer
programming model for project selection.
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