This is significant because there are few credible historical databases. The Maddison Project database, which provides estimates for world per capita income from the year 1820 onwards, is a rare example.
As is the human development index study by Professor Leandro Prados-de-la-Escosura that shows that the world as a whole has witnessed substantial improvement in human development since the mid-19th century and especially over the period 1913-1970.
Convergence between rich and poor countries
Between 1870 and 2007, the Historical Index of Human Development (HIHD) rose for all regions, but the pace was higher in areas that had a low score to begin with. The average HIHD score for the entire world has grown six times since 1870. For rich countries (i.e. the Organisation for Economic Co-operation and Development, or OECD), this multiple was 4.6, while the score for Sub-Saharan Africa rose eight times. Emerging economies have witnessed an even sharper improvement with the score for India and China rising by 12 and 15 times, respectively.
Nevertheless, a substantial gap still exists between rich and poor nations, partly owing to the historical starting point. Moreover, while human development scores have somewhat converged, the ranking order of countries remains roughly similar. India’s ranking has been consistently on the lower side.
India is catching up with rich countries in income, but not in health or education
The gap between India and rich countries continues to rise even after economic reforms started in the 1990s. While the income gap between India and OECD has been narrowing since the 1980s, it is widening in health and education.
The post-1990 divergence in health and education scores is partially attributable to how the indices have been constructed—according greater value to improvements at higher levels, and perhaps justifiably so.
Owing to the relative underperformance in health and education, India’s overall human development score continues to remain relatively suppressed, not only against OECD countries but also against China.
China started outperforming India only after 1950
In 1950, India and China were roughly at the same level of human development with almost identical indicators in health (denoted by life expectancy), education and income.
However, post 1950, China began to rapidly improve. The HIHD data suggests that China improved at a compounded annual growth rate (CAGR) of 3% in the 1950-2007 period, while India improved at only 2%, resulting in a gradually widening gap.
Initially at least, China’s outperformance vis-à-vis India was solely on account of its rapid improvement in life expectancy and education. The two countries’ income scores were very similar till 1980 with India actually being slightly ahead. In other words, China improved its health and education before raising its income, while the sequence of events in India seems to be the other way round.
How does the HHID work?
The Human Development Index (HDI) for a country, in its general form, is an average score of its relative performance in three different dimensions—health, education and income. Progress in health is calculated by life expectancy, while education level is calculated from a combination of indicators like literacy rate, enrolment ratio, expected years in school, etc. The third dimension, income, is indicated by per capita GDP. Typically, a lower weight is assigned to very high incomes which are considered redundant from the point of view of human development.
The index is created in such a way that it can have a maximum value of 1 and a (very unlikely) minimum value of zero. For example, for any country to achieve the HDI score of 1 in 2013, it required to have a life expectancy of 83.6, 13.3 mean years of schooling, 18 years of expected schooling and per capita gross national income equal to that of Qatar. Of course, no country achieved the score of perfect 1 in 2013, the highest score being 0.944 (Norway). India’s had a much more modest 0.311.