Inequality in income reduces human development index

The rank of 104 would have looked much different if the architects of the 2010 Human Development Index (HDI) had kept the population of countries from its previous reports. The exclusion of the Caribbean countries of Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines made way for Guyana to move up the ranks instead of occupying the 110th spot.  According to the authors of the report, these countries were removed from coverage because of the unavailability of data or the uncertainty of validity of their data.  The removal from the report must have been a shock to Antigua and Barbuda which, along with Barbados, was listed among the countries with a very high human development.  The absence of these six Caribbean countries from the report turned out to be a blessing in disguise for Guyana, allowing it to move to a more favourable position in the ranking.  Even with that, the value of the index improved for Guyana leading consumers of the report to believe that it has made progress in some area or areas of importance.

The authors of the Human Development (HDR) were careful also to caution users about using the indices to compare the quality of life across countries.  Even though they say that, it would be hard not to notice that, despite the progress Guyana has shown, it has fallen quickly behind several countries that it superseded only a few years ago.  Countries like Jamaica, Algeria, Azerbaijan, El Salvador, Sri Lanka, Gabon and Bolivia had lower rankings than Guyana two years ago but have risen to better placement in the 2010 report that was released earlier this month.  In a few cases, the rise in ranking is meteoric.  Azerbaijan, for example, rose 31 places from a rank of 98 two years ago to a rank of 67.  Similarly, Gabon rose 26 places to 93 to achieve a rank above Guyana. The new placement of countries like Bolivia, Turkmenistan, Algeria and Jamaica are also eye-catching since the first two countries moved 22 places while Jamaica and Algeria moved 21 and 20 positions respectively.



In week four of November 2010, the Lucas Stock Index (LSI) showed declined by 0.1 percent from the previous week.  The index ended the period at 117.94 after experiencing no change last week and after reaching 118.49 during the first week of the month.  Trading this week saw the stocks of DDL decline by 1 percent.  Notwithstanding the decline, the index remains above four times that of the risk-free Treasuries with maturity in November 2010.

There is no doubt that Guyanese are wondering how it is that countries could exhibit such notable changes in rank and Guyana for all the money it is spending has been unable to sustain any kind of consistent upward movement in rank.  A review of some data points might provide some insight to the anomaly and why the authors preach against using it for international comparison.  Life expectancy in Algeria and Bolivia for example increased by 1.2 and 1.6 years respectively while in Guyana it improved by 2.7 years, almost a doubling of both countries.  At the same time, the mean schooling in Algeria is 7.2 years while in Guyana it is 8.2 years.  Yet, Algeria was able to vault 20 spots from 104 to 84 in the 2010 report. These meaningful disparities offer no

rationale for Guyana’s placement, especially when it is noticed that the inequality index in Guyana is 39.7 while it is 45.5 in Gabon and 48.3 in Bolivia.  Yet, Guyana trails these countries.

More Data

Part of this anomaly has to do with the handling of data and nothing to do with the impact of current policy changes.  It must be kept in mind that two things often happen when the HDR is being prepared.  One point of relevance is that the period that the data cover can change.  In the 2008 report, the preparers of the index point out that estimates have been based on data covering the period 1975 to 2005.  The authors of these reports have explained that historical data that are already in the possession of international agencies which are often used in the preparation of the index could be revised and this revision could result in the change in the rank of a country.  A second reason for the change in ranking between Guyana and other countries could be as a result of changes in country coverage. Simply put, the index could be using more data than it had in the past not necessarily for Guyana, but for the countries that have shown rapid improvements.

Lingering Problems
Considering that some of the data used in the preparation of the index could be from as far back as the early nineties, the index does not necessarily tell us all that we need to know about what is happening in Guyana today.  As the authors of earlier Human Development Reports confirm, these reports often reflect revision of historical data rather than “real changes in a country”.  From that perspective, the index best represents an indication of lingering social and economic problems and really do not reflect the impact of new problems and the effectiveness of current public policy on tackling those problems for the well being of Guyanese households.  One way to understand this situation is to examine the relationship between household income and household spending in the aggregate between 1992 and 2009.


The information is presented in current prices and is addressing spending and not necessarily consumption levels.  From 1992 to 2004, Guyanese had an estimated annual average of G$13.5 billion left after using their disposable income to meet household needs. By 2009, that situation had changed dramatically.  From 2005 to 2009, Guyanese households have been scrambling around to find as much as G$42 billion each year to make ends meet.  The spending refers to Guyanese of all income levels.  This means that the numbers refer to the wealthy who could afford to buy a lot of highly expensive items and to the poor and not-so-poor who are probably going hungry or living on the margins.  The preparers of the HDI are working to bring data on households current but it is clear that the UN data is still to catch up with the realities in Guyana.  At some point, the impact of the floods of 2005 and 2006 and the punitively high rate of VAT introduced in 2007 would soon catch up with Guyana.

It is against this background that the 2010 HDR should be viewed.  Guyanese have to believe that the administration is interested in seeing improvements in the living standards of the country, but must also wonder if they are going about it the right way. The administration has a guide, the Millennium Development Goals (MDG) to help it. The index focuses on three components of those goals, income, education and health in an effort to tackle the problems of poverty.  Yet, the concern over the handling of the economy is not over blown because the HDR indicates that the very high inequality in income is responsible for the largest reduction in the HDI by countries of the region to which Guyana belongs.

Latest in Business

Guyana Metal Recyclers Association President Michael Benjamin

Metal exporters want urgent presidential intervention

– business ministry working on new procedures Piqued over what it says has been the suspension—without either notice or official notification—of the scrap metal trade by the APNU+AFC administration since June last year, the Guyana Metal Recyclers Association (GMRA) the official umbrella body for local exporters has told the Stabroek Business that the protracted inability of businesses to ply their trade is wreaking havoc with the industry and denying legitimate businessmen the right to earn a living.

The Far Rockaway Hotel

Kwakwani $$$M hotel investment seeks to breathe new life into community

Gavin August may well be unique in the extent of his financial investment in Kwakwani: an estimated $50 million to create a 12-room hotel, which he hopes will pay him back down the road, when the fortunes of the community change.

default placeholder

Does crowdfunding have the power to grow Caribbean economies? (Part 2)

By A Cecile Watson   A Cecile Watson is the founder of She is a former senior regional banker, an international speaker, a certified financial education instructor and the Women’s Entrepreneurship Day Ambassador Regional Leader for the Caribbean.

20160624gold prices June24

Kitco Market

Gold Prices for the three day period ending Thursday  June 23, 2016Kitco is a Canadian company that buys and sells precious metals such as gold, copper and silver.

IDB Chief Economist Jose Juan Ruiz

Caribbean facing savings crisis – IDB

A new study released earlier this month by the Inter-American Development Bank (IDB) has put countries in Latin America and the Caribbean on notice that they are confronted with a savings crisis that might do damage to their economies in the years ahead.


Prices Prepared by the Guyana Marketing Corporation

(Prepared by the Guyana Marketing Corporation and published by Stabroek Business as a public service)*Prices only represent the average Wholesale Farmgate and Retail Prices at the above mentioned markets and are NOT prices set by the Guyana Marketing Corporation or Ministry of Agriculture.

Aunty Picky

Placing a premium on education: Annandale businesses support growth of secondary school

As the story goes, the name Annandale is said to honour the two daughters of the proprietor of the tract of land to which the name was given.

Talks underway: The respective delegations from the Guyana Public Service Union and the Government of Guyana face each other on Wednesday at the start of what could be the country’s most important industrial relations encounter since the Armstrong Arbitration Commission.

GPSU, gov’t pay hike talks opening ‘a transformational moment’ – Yarde

The Guyana Public Service Union (GPSU) is treating the current public service wages and salaries negotiations with the Government of Guyana as “the start of a process aimed at bettering the lot of public servants in a manner that goes way beyond the monetary benefits which we expect will derive from the process,” its President Patrick Yarde has said.


About these comments

The comments section is intended to provide a forum for reasoned and reasonable debate on the newspaper's content and is an extension of the newspaper and what it has become well known for over its history: accuracy, balance and fairness. We reserve the right to edit or delete comments which contain attacks on other users, slander, coarse language and profanity, and gratuitous and incendiary references to race and ethnicity.

Stay updated! Follow Stabroek News on Facebook or Twitter.

Get the day's headlines from SN in your inbox every morning: