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Human Development Report 2009

Estonia

The Human Development Index - going beyond income

Each year since 1990 the Human Development Report has published the human development index (HDI) which looks beyond GDP to a broader definition of well-being. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income). The index is not in any sense a comprehensive measure of human development. It does not, for example, include important indicators such as gender or income inequality nor more difficult to measure concepts like respect for human rights and political freedoms. What it does provide is a broadened prism for viewing human progress and the complex relationship between income and well-being.

Of the components of the HDI, only income and gross enrolment are somewhat responsive to short term policy changes. For that reason, it is important to examine changes in the human development index over time. The human development index trends tell an important story in that respect. Between 1990 and 2007 Estonia's HDI rose by 0.46% annually from 0.817 to 0.883 today. HDI scores in all regions have increased progressively over the years (Figure 1) although all have experienced periods of slower growth or even reversals.

Figure 1: HDI Trends

This year's HDI, which refers to 2007, highlights the very large gaps in well-being and life chances that continue to divide our increasingly interconnected world. The HDI for Estonia is 0.883, which gives the country a rank of 40^th out of 182 countries with data (Table 1).

By looking at some of the most fundamental aspects of people’s lives and opportunities the HDI provides a much more complete picture of a country's development than other indicators, such as GDP per capita. Figure 2 illustrates that countries on the same level of HDI can have very different levels of income or that countries with similar levels of income can have very different HDIs.

Building the capabilities of women

The HDI measures average achievements in a country, but it does not incorporate the degree of gender imbalance in these achievements. The gender-related development index (GDI), introduced in Human Development Report 1995, measures achievements in the same dimensions using the same indicators as the HDI but captures inequalities in achievement between women and men. It is simply the HDI adjusted downward for gender inequality. The greater the gender disparity in basic human development, the lower is a country's GDI relative to its HDI.

Estonia's GDI value, 0.882 should be compared to its HDI value of 0.883. Its GDI value is 99.9% of its HDI value. Out of the 155 countries with both HDI and GDI values, 13 countries have a better ratio than Estonia's.

Table 2 shows how Estonia’s ratio of GDI to HDI compares to other countries, and also shows its values for selected underlying indicators in the calculation of the GDI.

The gender empowerment measure (GEM) reveals whether women take an active part in economic and political life. It tracks the share of seats in parliament held by women; of female legislators, senior officials and managers; and of female professional and technical workers- and the gender disparity in earned income, reflecting economic independence. Differing from the GDI, the GEM exposes inequality in opportunities in selected areas.

Estonia ranks 30^th out of 109 countries in the GEM, with a value of 0.665.

Migration

Every year, millions of people cross national or international borders seeking better living standards. Most migrants, internal and international, reap gains in the form of higher incomes, better access to education and health, and improved prospects for their children. Most of the world’s 195 million international migrants have moved from one developing country to another or between developed countries.

Estonia has an emigration rate of 12.2%. The major continent of destination for migrants from Estonia is Europe with 81.1% of emigrants living there.

The United States is host to nearly 40 million international migrants – more than any other country though as a share of total population it is Qatar which has the most migrants – more than 4 in every 5 people are migrants. In Estonia, there are 201.7 thousand migrants which represent 15.0% of the total population.

Remittances

Remittances, which are usually sent to immediate family members who have stayed behind, are among the most direct benefits from migration; their benefits spread broadly into local economies. They also serve as foreign exchange earnings for the origin countries of migrants. However, remittances are unequally distributed. Of the total US$370 billion remitted in 2007, more than half went to countries in the medium human development category against less than one per cent to low human development countries. In 2007, US$426 million in remittances were sent to Estonia. Average remittances per person were US$319, compared with the average for Central and Eastern Europe and the CIS of US$114. (See Table 5 for more details.)