HDI is the most complete social pointer used to know the development degree of a city, region or nation. Mainly, it measures the newborn's expectation of surviving, the percentage of education among adults and the per capita income.
HDI is a simple average to which three factors contribute:
- Per capita income: this is the division of the GDP by the number of inhabitants in the country or region. It represents the amount of value each inhabitant would receive, should gross domestic product be divided equally (ignoring wealth centralization).
- Life expectancy: how many years people can be expected to survive, taking into account the social, medical and sanitary conditions of a nation.
- Literacy rate: this is the combined index of the primary, secondary and tertiary education enrollment rates amongst the population.
To which of these factors a value between 0 and 1 is assigned - the HDI is obtained by calculating the simple resulting average. A country whose HDI is lower than 0,500 is said to have a low index of human development; between 0, 500 and 0,799 it gets a "medium", and above that the country has a high index of human development.
So great is the relevance of this index that its inventors - the economists Mahbub ul Haq and Amartya Sen - had received an Nobel Prize in 1990.
Although the index shows the development of a region, it does not indicate how the income is distributed among the population, and, because of that, it can be used to hide the human poverty of regions with high HDI and bad distribution of income.