A new sustainable human development indicator for small island developing states: A reappraisal from data envelopment analysis

This paper proposes a transparent and robust measurement of sustainable human development for developing economies. We focus in particular on small island developing states [SIDS] which appear to be highly vulnerable in both economic and environmental dimensions. Hence, our contribution is twofold. First, we introduce some new sustainability components into the standard Human Development Indicator [HDI]. Second, we adopt an endogenous weighting system rather than the more common equal weighting system, determined within the “Data Envelopment Analysis” framework (Charnes et al., 1978). We apply the recent multiplicative optimization approach of Zhou et al. (2010) to construct composite indicators. Then, by implementing this original composite indicator to a set of developing countries including 32 SIDS and comparing the outcomes with standard HDI, we demonstrate that these small islands are not particularly penalized in terms of sustainable human development.