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African Development Bank

Are African countries richer than they are developed?
A multidimensional analysis of well-being


Economic Research Working Paper No 83

Valérie Bérenger, Audrey Verdier-Chouchane1

African Development Bank

February 2006

SARPN acknowledges the African Development Bank as a source of this publication: www.afdb.org
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Abstract

Sen’s capability approach inspired a new conception of development and succeeded in the Human Development Index (HDI). On the basis of HDI critics, we propose to enlarge the number of variables and we use 9 indicators of Standard of Living and 9 indicators of Quality of Life that allows measuring two components of well-being and that can be divided into various fields (health, education, environment, etc.) to provide a finest measurement of poverty. The empirical results for 170 countries in 2000 are based on two different multidimensional analysis of poverty, the Totally Fuzzy Analysis and the Factorial Analysis of Correspondences. The conclusions depend on the considered method but are generally similar. The paper focuses on the African continent and shows that some countries are “richer” than “developed” or inversely. The correlation matrix between different indicators reveals that education is a key variable for defining poverty. Comparisons extended with HDI classification and GDP per capita classification prove that monetary poverty is related with all other dimensions of poverty and that the HDI takes into account its essential dimension even if it can’t be used to reduce some specific aspects as our original index.

Chapter I: Introduction

The eight Millennium Development Goals2 lie within a very specific scope of poverty reduction and they reflect an awakening of the multiple dimensions of development and well-being. International organizations have recognized that development goes beyond economic growth and that poverty is a multidimensional phenomenon that covers all dimensions of human well-being. Some of this recognition goes back to Sen’s work on social justice and inequalities (1985, 1992), which inspired a new conception of development and poverty. His capability approach has contributed to the construction of the Human Development Index (HDI) in 1990, intended as a more comprehensive indicator for comparing the well-being of nations than income per capita. However, the HDI has received two essential critics. First, it has been argued that the number of indicators remains insufficient and that their selection is arbitrary. Second, the definition of the HDI is still inadequate to make the capability approach operational.3 The originality of this article is to define two new composite indices across 170 countries, supporting Sen’s capability approach. The first one we call “Standard of Living”, the second one we call “Quality of Life”. Focusing on 52 African countries, we adopt and compare two recent methodologies, the Totally Fuzzy Analysis (TFA) and the Factorial Analysis of Correspondences (FAC), to analyse the usefulness of these two new composite indices. The results are confronted with the HDI and income per capita (measured by per capita gross domestic product (GDP)), which also allows us to examine the cogency of the HDI and the closeness of the GDP per capita indicator with broader quality of life indicators.


Footnotes:
  1. , Lecturer, Faculty of Economics, University of Nice and , Research Economist, Research Division, Development Research Department (PDRE), African Development Bank. The authors are very grateful to Bernhard Gunter for his encouragement, his helpful comments and the valuable inputs he provided. They retain responsibility for any errors.
  2. The Millennium Development Goals are: (1) eradicate extreme poverty and hunger, (2) achieve universal primary education, (3) promote gender equality and empower women, (4) reduce child mortality, (5) improve maternal health, (6) combat HIV/AIDS, malaria and other diseases, (7) ensure environmental sustainability and (8) develop a global partnership for development.
  3. The literature on HDI critics is important. We will quote for example work of Ivanova et al. (1999), Kelley (1991), McGillivray (1991) and Srinivasan (1994).


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