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The Local Human Development Index - policy tool in Poland

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OECD-Universities Joint Conference …

OECD-Universities Joint Conference
July 2013 — France

“Economics for a Better World”

This will be the third international conference of economists interested in welfare economics and public policy broadly defined. This 3rd conference will follow those organised in Oxford (July 2009) and Paris (July 2011). The 2013 OECD-Universities Joint Conference will be informed by the work done over the past decade by economists, statisticians and social analysts to develop broad measures of well-being, and touch on some of the well-being dimensions included in recent OECD reports on the subject. The conference will feature research papers, panel discussions and plenary talks organised by researchers from a range of institutions in Europe, mainly.

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  • 1. The Local Human Development Index – policy tool in Poland Piotr Arak, Project Coordinator UNDP PO in Poland PhD candidate, Institute of Social Policy, University of Warsaw Senior Analyst, Centre for Policy Analysis Polityka INSIGHT Economics for a Better World - New Directions in Welfare Economics III Paris, 4 July 2013
  • 2. Social development by Ian Morris 2Źródło: Ian Morris (2013), „The Measure of Civilization: How Social Development Decides the Fate of Nations”, Princeton University Press. 1 10 100 1000 Levelofsocialdevelopment(inpoints) Time East West Social development is defined as “a measure of communities' abilities to get things done in the world”: energy capture per person, social organization, information technology and war-making capacity.
  • 3. Human development • Human development encompasses more than just the rise or fall of national incomes. • Development is thus about expanding the choices people have, to lead lives that they value, and improving the human condition so that people have the chance to lead full lives. • Thus, human development is about much more than economic growth, which is only a means of enlarging people’s choices. 3
  • 4. Capability approach • Capabilities are the substantive freedoms a person enjoys to lead the kind of life they have reason to value. • Human development disperses the concentration of the distribution of goods and services that underprivileged people need and center its ideas on human decisions. • By investing in people, we enable growth and empower people to pursue many different life paths, thus developing human capabilities. • The most basic capabilities for human development are: to lead long and healthy lives, to be knowledgeable (e.g., to be educated), to have access to the resources and social services needed for a decent standard of living, and to be able to participate in the life of the community. 4
  • 5. Human Development Index 5 • The index encompasses statistics such as life expectancy at birth, an education index (calculated using mean years of schooling and expected years of schooling), and gross national income per capita. • Though this index does not capture every aspect that contributes to human capability (staying in home to raise children, bartering goods, perception of well being), it is a standardized way of quantifying human capability across nations and communities.
  • 6. Principles behind the HDI As Mahbub ul Haq recalls, there were several principles guiding the search for a new index: • to find a measure that goes beyond income while retaining methodological soundness, • to limit the number of variables to ensure simplicity and manageability, • to construct a composite index rather than an extensive set of indicators, and finally • to merge social and economic indicators. Since 1990 the HDI has been gradually refined, but the main principles remain unchanged. 6
  • 7. Local Human Development Index (1) • The UNDP Project Office together with the Ministry of Regional Development and the Warsaw School of Economics have launched a project on developing and implementing a new tool for measuring human development at the local level based on the HDI methodology. • The HDI computed at the local and regional level may show the way in which different administrative units (counties and voivodeships) develop vis-a-vis the others, what the source of these differences are, what the strengths and weaknesses of these units are and what the priorities of local governments and central authorities should be. • What these factors actually are good economic performance, people’s health or a high degree of education with achievements in individual domains often compensating for gaps in the other two. 7
  • 8. Local Human Development Index (2) • Additionally, changes over time of growth rates or index values for the period 2007-2010 (the feasible timeframe of data availability) can be calculated for all territorial units. Such an approach allows the decision- makers to take appropriate pre-emptive steps or, if need be, to maintain the current status quo. • Taking into account Poland’s EU membership and support from structural funds, which aim at diminishing the regional disparities, the conducted research may also outline what impact the EU funds have had on human development in Poland. • Public authorities are closer to the standards of good governance when their decision making is based on established knowledge and critical data analysis (evidence-based policy). • The regional goal is cohesion and the general strategic aim in the year 2030 perspective is well being (measured with the HDI and different sets of measures for 25 sub-goals eg. efficient state. • The progress is going to be checked every 2 years. 8
  • 9. Aim: clear/full picture of Poland 9
  • 10. Territorial divide 10 Level Number of units General description Scope of LHDI data required for measurements NUTS 2 - Voivodeships 16 Large units of territorial division with a high number of inhabitants, local territorial government units. Data available on: Disposable income Education, health LAU 1 – Counties and cities with county status 314+65 Smaller territorial units, highly diversified in terms of population (number of inhabitants) ranging from small counties to big cities such as a Warsaw, local territorial government units. Data on disposable income is unavailable, however, fiscal data on tax-payers’ income is possible. Data on education is available. Limited availability of health data.
  • 11. A new approach to measuring human development • Defining the indicators of human development related inputs – estimating indicators of a quantitative and of a qualitative nature, divided according to type of expenditure (financial, infrastructural and other public policy expenditures). • Defining the indicators of the human development related outcomes (the LHDI)– estimating indicators of quantitative character, evaluating results in the field of public intervention (i.e. lower mortality, higher degree of citizens’ knowledge, higher income). 11
  • 12. LHDI idicators 12 Dimension Health Education Welfare LHDI dimensional indicators Average life expectancy at birth indicator (Estimated life expectancy at birth) Pre-school education indicator (Enrolment rate of children in pre-school education: 3 to 4 years of age) Welfare indicator (Average person welfare level) Aggregated mortality index (Aggregate mortality rate due to cancer and cardiovascular diseases) Lower secondary school exam results index (Average results from the lower secondary schools exam - mathematics and natural sciences only) LHDI dimensional indices Health Index Education Index Welfare Index Local Human Development Index (LHDI) – at county and voivodeship levels Human development on a local and regional level
  • 13. Welfare Index sum of: • Total taxpayers’ income prior to taxation plus • Income from agriculture on the basis of comparative fiscal hectares (community income from the agricultural tax divided by the tax value of one comparative fiscal hectare times the mean income from one hectare convertible from the activity of individual agricultural households, which are the basis of the agricultural land tax) • Total social security expenditures together with other public policy tasks: the sum of social securities and expenditures on family policy in the budgets of local governments (communities and counties) excluding securities paid due to natural disasters divided by the number of the county’s population. In other words, it is the mean level of the people’s welfare 13
  • 14. Formula LHDIi is the local human development value for a country or voivodeship i, HIi – is the Health Index in the county i, EIi – is the Education Index in the country i, WIi – is the Welfare Index in the county i. 14
  • 15. Thresholds • What should be considered in the future is replacing the empirically observed threshold values for the respective dimensional index with values defined as strategic or political goals. • This solution would enable a better tracking of progress in the implementation of particular strategic goals. 15
  • 16. Relation between the Welfare Index (WI), and the Education and Health Index (EI and HI) in 2010 by county 16
  • 17. Local Human Development Index (LHDI) in voivodeships in 2010 (the index assumes values from 1 to 100) 17 36.8 39.3 39.6 41.2 42.3 42.9 43.8 44.4 44.4 46.3 47.0 49.5 50.2 51.1 51.9 60.2 0 10 20 30 40 50 60 70
  • 18. Voivodeship ranking according the value of LHDI in 2010 and the change of rank in voivodeships compared to 2007 18 Voivodeship Rank according to LHDI 2010 Change of rank according to 2007 LHDI HI EI WI Mazovian 1 0 60,21 58,18 61,68 60,84 Lesser Poland 2 0 51,93 69,10 57,65 35,15 Pomeranian 3 0 51,14 71,28 47,16 39,79 Greater Poland 4 0 50,22 63,32 50,19 39,86 Silesian 5 0 49,54 48,39 53,92 46,59 Opole 6 0 46,95 59,76 55,94 30,96 Lower Silesian 7 0 46,34 47,61 48,79 42,84 Podlasie 8 1 44,40 66,08 51,60 25,67 Lubusz 9 2 44,36 54,72 47,21 33,79 Podkarpacie 10 0 43,77 72,28 48,15 24,09 West Pomeranian 11 -3 42,89 52,31 42,51 35,48 Warmian- Masurian 12 0 42,33 58,61 41,85 30,93 Kuyavian- Pomeranian 13 0 41,22 49,17 42,31 33,67 Lublin 14 1 39,55 48,61 46,46 27,40 Łódż 15 1 39,28 31,48 52,25 36,85 Świętokrzyskie 16 -2 36,78 45,95 39,18 27,62
  • 19. The Local Human Development Index (LHDI) in counties in 2010 (the index assumes values from 1 to 100) 19
  • 20. Education Index 20
  • 21. Health Index 21
  • 22. Welfare Index 22
  • 23. Voivodeship ranking according the value of LHDI in 2010 and the change of rank in voivodeships compared to 2007 23 County Ranking as per LHDI 2010 Change in rank in comparison to 2007 LHDI HI EI WI Warszawa (Capital) 1 0 87,63 68,97 97,75 99,83 Piaseczno 2 0 80,75 68,01 83,74 92,44 Pruszków 3 0 72,92 59,95 78,93 81,96 Warsaw West 4 1 72,48 67,39 70,88 79,72 Cracow 5 -1 72,05 69,00 88,47 61,27 Poznań 6 0 71,52 62,35 85,83 68,37 Rzeszów 7 0 71,22 85,90 83,24 50,52 Sopot 8 10 69,78 52,86 88,38 72,74 Gdynia 9 2 69,55 75,60 77,53 57,40 Legionowo 10 3 69,09 66,35 73,76 67,37
  • 24. Context and policy 24
  • 25. Dimensions and contextual indices of human development 25 Dimens ion Human Capital Labour market Poverty Civic activity Digital engagem ent Women’s empowermen t Environme ntal protection Index Average number of years necessary to gain the level of education by persons above 15 years of age (Census 2002) Registered unemploym ent rate Percentage of people receiving social security in a household compared to the total number of inhabitants Local government elections attendance (Community Council) Percentag e of tax declaration s submitted via Internet Number of local government mandates held by women Mixed municipal waste from households per capita Local Human Development Index Context Human Development in the county and voivodeship level
  • 26. Human development and human development policy inputs 26 The impact of other factors: government policy, inflation, changes in demographics, spatial arrangement, geographic location, historical events, etc. Human development Local Human Development Index - LHDI Public policies spending (administrative, social, infrastructural concerning: health, education and the economy) Local Human Development Index - Policy Input - LHDIPI
  • 27. Dimensions of public policy inputs included in the Local Human Development Index (LHDIPI) 27
  • 28. The relationship between the Local Human Development Index (LHDI) and the Local Human Development Index – Policy Input (LHDIPI) in 2010, by counties 28 R² = 0.17 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 70 80 90 100 LocalHumanDevelopmentIndex-PolicyInput(LHDIPI) Local Human Development Index (LHDI)
  • 29. Impact of public policies on human development • In the case of investments such as health or education, the returns in the form of an increased level of human development take longer than four years (the period covered by the study). • This statement is supported by the fact that the linear correlation coefficient for the LHDIPI from 2007 with the values of the LHDI index from 2010 equals 0.538 and is higher than the correlation between LHDI and LHDIPI from 2010. This means that the expenditures from 2007 are more strongly correlated with the human development outcomes in 2010 than current expenditures. 29
  • 30. The relationship between the amount of EU funds spent from the budgets of local governments (municipalities and counties) within a country from 2006-2010, per capita (PLN, nominal) and the value of the Local Human Development Index (LHDI) in 2010, by counties 30 R² = 0.00 0 500 1000 1500 2000 2500 3000 0 10 20 30 40 50 60 70 80 90 100 AmountofEUfundsspentfromthebudgetsofmunicipal andcountygovernmentswithinacountyin2006-2010per capita(inPLN,nominal) Local Human Development Index (LHDI)
  • 31. 31 R² = 0.00 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0 10 20 30 40 50 60 70 80 90 100 Amountofco-financingforprojectsfromoperational programmesuntiltheendof2010percapita(in PLN,nominal) Local Human Development Index (LHDI) The relationship between the amount of co-financing for projects from operational programmes until the end of 2010, per capita (PLN, nominal) and the value of the Local Human Development Index (LHDI) in 2010, by counties
  • 32. The relationship between the amount of co-financing of projects from the Human Capital Operational Programme until the end of 2010, per capita (PLN, nominal) and the value of the Local Human Development Index (LHDI) in 2010, by counties 32 R² = 0.34 -100 0 100 200 300 400 500 600 700 0 10 20 30 40 50 60 70 80 90 100 Amountofco-financingforprojectsfromtheRegional OperationalProgrammesuntiltheendof2010percapita(in PLN,nominal) Local Human Development Index (LHDI)
  • 33. The relationship between the average number of years of education needed to get the attained education of people of over 25 years of age in 2002 (in years) and the value of the Local Human Development Index (LHDI) in 2010, by counties 33 R² = 0.76 0 2 4 6 8 10 12 14 16 0 10 20 30 40 50 60 70 80 90 100 Meanyearsofeducationneededtogettheattained educationofpeopleofover25yearsofagein2002 Local Human Development Index (LHDI)
  • 34. The relationship between the average number of years of education needed to get the attained education for people of over 25 years of age in 2002 (in years) and the value of average monthly base income in 2010 (PLN, face value) as well as the value of the Local Human Development Index (LHDI) in 2010, by counties 34
  • 35. The relationship between the percentage of tax declarations submitted via the e-Deklaracje online system out of all tax declarations submitted in a given county (%) and the value of the Local Human Development Index (LHDI) in 2010, by counties 35 R² = 0.22 0 1 2 3 4 5 6 7 8 0 10 20 30 40 50 60 70 80 90 100 Thepercentageoftaxdeclarationssubmittedviathee- Deklaracjeonlinesystemoutofalltaxdeclarationssbumitted inagivencounty(in%) Local Human Development Index (LHDI)
  • 36. Conclusions and recommendations 36
  • 37. Conclusions (1) 37 • In Poland, the highest level of human development occurs in large cities and in their surroundings. • The lowest level of human development occurs in rural counties. Most of the areas with the lowest LHDI are located in the territory of the former Russian partition, which can be linked to their peripheral status (remoteness from engines of growth or vibrant metropolitan centres) – both hundreds of years ago and today. A long tradition of dominance for agriculture in the areas’ local economies also contributes to their low level of human development. • The level of human development depends not only on the income and wealth of the inhabitants of counties. The level of human capital is also very important, which depends mainly on health and knowledge.
  • 38. Conclusions (2) • The study confirmed a strong correlation between the level of human development and expenditure under the Human Development Operational Programme. Investments in education and skills are one of the most important factors in increasing the income and health of people in a community. • There are visible examples of negative demographic changes associated with the aging population that occurs in certain urban areas, and especially in some eastern regions of Poland. This population ageing increases important categories of expenditure met by public finances, which could eventually lead to bankruptcy for some local governments. 38
  • 39. Conclusions (3) • Another conclusion, resulting from the study, is the need to improve the rules for data collection and processing by Polish public institutions. The data is often unstructured, and the databases, even within a single institution, are not always compatible with each other. • Data collected during this research allows for broadening and deepening the knowledge about human development in Poland. The study reveals a picture of regions and counties, which is not obvious and often counterintuitive from purely an economic-driven perspective. A subset of territorial units whose rank was particularly low or particularly high, requires additional analyses. 39
  • 40. Recommendations (1) 40 • The amount of public resources available online (such as information resources) in order to ensure the supply of high- quality content should be increased. • Open standards for sharing public information should be developed, taking into account legal, technical and financial aspects, to ensure, among others, possibilities for automated information processing. • Personal data protection laws should be harmonized and administered to the benefit of the end user. The continued legal uncertainty and inconsistency may discourage users from using and even knowing that such data exist.
  • 41. Recommendations (2) • Clear rules should be introduced to ensure that the public resources and assets financed with public funds, which will be created in the future, will comply with the standards of transparency for public resources. • It is necessary to create a central registry of health information on public health (morbidity, mortality, hospital admissions, and the time required to perform specific diagnostic tests for various diseases, as well as the use of medications). This registry is necessary for increasing the efficiency of the health system. It is not just about limiting the opportunities for the misuse of funds and frauds, but also about limiting the opportunities for medical service price inflation and unnecessary treatment that is sub- optimal for the taxpayer. 41
  • 42. Long-term goal: well being 2030 42 http://www.flickr.com/photos/t orrelodones/2727949918/
  • 43. Thank you for your attention! E-mail: p.arak@polityka.pl Report in English will be available at: http://hdr.undp.org/en/nhdr/ 43