Institutional Sphere Contribution to Human Development : An Institutional Approach

Measuring” human development is a very important way for evaluating life level of a given human population. However, this task is not as easy as we may think of! Numerous parameters have to be taken into account to reach this goal. The main objective of this work is to emphasize the importance of integrating the institutional indicator component for evaluating human development as referring to economic and social indicators used independently by the United Nations' Development Program (UNDP). These three spheres are inter-connected. The importance of the institutional sphere in the process of development depends on the development level of social and economic spheres. We propose then a human development composite index (HDCI) which oversteps the HDI published by the UNDP. The latter gives equal weight to the economic sphere indicator -the per capita income-, and the social sphere ones - education and health. Our HDCI takes into account the three economic, social and institutional spheres.We used as institutional indicators, those of Kaufmann, Kraay and Mastruzzi (KKZ) for a sample of 178 countries with different economic and social development levels. As a first step, we calculated, for every country, the HDCI, and then we reclassified these countries in an increasing order of HDCI to finally estimate the differences compared to the HDI. As a second step, we identified four groups of countries at different development levels (HDCI) and we comparedit with the HDI classification. We found, 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. Finally, we measured the contribution of the institutional sphere in the development for every group of countries