The Relationship between Education Index and GDP Index

Tuesday, 12 August 2008 22:50 - Last Updated Tuesday, 26 January 2010 16:30

SAMEEO SHEESH and RADIA TAMIM

Abstract: The education and GDP indices are two components to determine the human
development index set by the United Nations Development Programme (UNDP). There remains
a high level of income and educational inequality between the countries of the world. This paper
found that the correlation between Education index (EDI) and GDP index (GDPI) is significant
for the high and medium GDPI countries; by contrast, it is not significant for the low GDPI
countries. This paper finds that in general income differences play vital role to lead the
discrimination in educational achievements with some exceptions and at the same time there
remains a noteworthy differences among the education indices within the low-income countries.

Keywords: Human development, Life expectancy, Education and GDP index

I. Introduction
Today, in the era of globalization, almost every country is related with each other and the
overall development of the world cannot be measured separately – ideally this statement
sounds great. By contrast, the reality is that one in four adults in the developing countries – 872
million people- are unable to read and write, and their numbers are growing. (OXFAM, 2000)
Just one of the facts is enough to show the scenario of the precarious educational situation of
the developing and undeveloped countries of the world. In addition, under the same sky there
remains a huge `North-South Inequalities’ in education. For instance, per-capita spending on
primary-school pupils in Nepal and India is about $12; in the US, it is $5130. (ibid) Nonetheless,
it is universally accepted that education is one of the most vital instruments and components to
stimulate as well as to measure the overall economic and human development of a country, it is
visible that income differences play vital role to lead the discrimination in educational
achievements. However, at the same time, achievement on education within the low-income
countries is not the same at all.
This paper is divided into six sections. The section II, Research Question, mentions the query
of this paper. The next section, Conceptual Framework, illustrates the definition and
measurement scales. The section IV, Methodology, demonstrates the method of this study and
according to the method the data and findings have been presented in the following section. On
the basis of the findings the conclusions have been drawn.
II. Research Question
The question of this paper is whether within the lower-income countries there remains any
significant relationship among the educational achievements. So, the formulated hypotheses
are:
H1: There remains a significant relationship between the education index and GDP index in the
world.
H2: There remains a significant relationship between the education index and GDP index in the
high GDP indices countries.
H3: There remains a significant relationship between the education index and GDP index in the
medium GDP indices countries.
H4: There remains a significant relationship between the education index and GDP index in the
low GDP indices countries.
III. Conceptual framework 

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The Human Development Index (HDI), introduced by United Nations Development Programme
(UNDP), is the summary to measure the human development of a country. The following table-1
shows the three different dimensions, indicators, and indices to calculate the HDI.
Table-1: The Human Development Index
Dimension
Indicator Dimension Index
Calculation Method

A long and healthy life Life expectancy at birth Life expectancy index (LEI)
LEI =( Xi -25) /(85-25); Xi
Maximum value =85, Minimum value =25
Knowledge Adult literacy rate

Gross enrolment ratio (GER)

Adult literacy index (ALI)

Education index(EDI)

ALI = (Xi -0)/ (100-0)

Xi = adult literacy rate in country i,
Maximum value =100, Minimum value =0

EDI
= ²/3(ALI)
+⅓(GERI)

A decent standard of living

GDP per capita (PPPUS$)   
GDP index(GDPI) GDPI=

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{log(Xi)-log(100)}/
{log(40,000)-log(100)}
Xi = GDP per capita(PPP$) for country i,
Maximum value =40000 Minimum value =100
Human Development Human Development Index (HDI)   
HDI = ⅓(LEI)+ ⅓(EDI)+ ⅓(GDPI)

Source: UNDP (2004)

The UNDP divided the countries into three different categories, as high (HDI 0.800 and above),
medium (HDI 0.500-0.799) and low (HDI below 0.500) human developed countries. This paper
has divided the countries in the following categories: Indicator: Education
Indicator: GDP
High Education Index
(EDI 0.800 and above)
High GDP Index
(GDPI 0.800 and above)

Medium Education Index

(EDI 0.500-0.799)
Medium GDP Index
(GDPI 0.500-0.799)

Low Education Index

(EDI below 0.500)
Low GDP Index
(GDPI below 0.500)

IV. Methodology
At first, the correlation between EDI and GDPI in the world and high, medium, low indices
countries has been calculated by using SPSS. According to the results the significance of the
hypotheses were found.
Afterwards, the EDIs have been classified if any noteworthy differences were seen. Then some
comparisons have been exposed according to the following criteria:
(a)The differences between the EDIs of the low and high GDP indices countries.
(b)The differences between the EDIs of the low and medium GDP indices countries.
(c)The differences between the EDIs within the low GDP indices countries.

V. Data Collection and Findings

The data were collected from `Human Development Report 2004’ published by UNDP. They
have listed 177 countries and provided data for 2002. This study is based on these data. The
significances of hypotheses are expressed in table2.
Table2: Correlation between GDPI and EDI Classification
(Number of countries, N) Pearson Correlation or R2
Significance (2-tailed)

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World
N = 177 0.739 0.000
High GDPI (GDPI>0.8)
(N= 46) 0.345 0.019
Medium GDPI (0.5<GDPI<0.8)
(N= 88) 0.594 0.000
Low GDPI
(0.00<GDPI<0.5)
(N= 43) 0.194 0.212

According to table 2, it is found that at 0.05 level of significance the hypotheses no. H1, H2, H3
are accepted but H4 is rejected.
Thus, the results show that there remains a relationship between education and GDP indices
for the world, high and medium GDP indices countries, in contrast, with the low GDP indices
countries.
Out of the 177 countries, the EDI is higher than 0.8 for more than half the countries. However,
more than 90% of higher GDPI, vis-à-vis, 60% of mid GDPI countries EDI is higher than 0.8. By
contrast, only 10% of the GDPI countries EDI is higher than 0.8. From the human
development indices of the different countries of the world, among the low GDPI countries, the
EDI of some countries are admirably well. The EDI of some low GDPI countries such as,
Kyrgyzstan (GDPI=0.46), Uzbekistan (0.47), Tajikistan (0.38) and so on is higher than 0.9,
whereas, in Equatorial Guinea (GDPI = 0.95), United Arab Emirates (0.9), Oman (0.82), Saudia
Arabia (0.81)- with higher than  0.8 GDPI-  their EDI is less than 0.8. Even the EDIs of some
medium GDPIs countries (for example, Vanuatu, Mauritania, Angola, Guiena etc.) are lower
than some of the lower GDPI countries, like Kenya, Congo, Myanmar and so on. However,
within the low GDPI countries the differences of EDI is noteworthy. With the same or nearby
GDPI level of the previously mentioned low GDPI countries, the EDI of Pakistan (GDPI =0.49),
Gambia (0.47), Senegal (0.46) is just about 0.4. In addition, the GDPIs of Tajikistan and Burkina
Faso are 0.38 and 0.4, respectively. But with this almost same level of GDPI (even it is slightly
higher for Burkina Faso), there remains a remarkable difference between the EDI of these two
countries -EDI of Tajikistan is 0.9 and Burkina Faso is 0.16.

VI. Conclusion
The forthcoming discussion has shown that the GDPI is not the sole components to have a
higher EDI. Since, even with lower GDPIs, the EDI of some countries are even much higher
than the high and medium GDPI countries. Again, among the low GDPI countries the
differences of EDI are outstanding. Therefore, it can be sighted that the other factors, such as,
political stability, empowerment of women, history, culture, geography, law and order and so on
may play a vital role to determine the EDI of the low GDPI countries.
References
1. Oxfam (2000). “Break the Cycle of Poverty”, education now, Oxfam International, UK
2. UNDP (2004).  “Cultural Liberty in Today’s Diverse World”, Human Development Report
2004, Oxford University, NY

Authors: Kazi Sameeo Sheesh, Education Professional, Institute of Educational

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Development-BRAC University, Dhaka, Bangladesh and Radia Tamim, Master of Health

Economics, University of Dhaka, Dhaka, Bangladesh.

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