THE FORMULATION OF A COMPOSITE REGIONAL DEVELOPMENT INDEX

Abstract

The measurement of a region’s progress with regards to achieving its developmental potential, plays a crucial role in improving the prosperity and quality of life of local communities. This process has however proven difficult as contemporary views on measurement of regional development are presented as multi-dimensional concepts. Attempts at measuring the development process have made use of composite indices, such as the Human Development Index (HDI) and other index variations. Nonetheless, those indexes mostly fail to truly reflect the various dimensions of the development process. The primary objective of this study was to construct a composite regional development index that successfully measures all the dimensions of development in a quantitative manner. The index was designed to be able to assess regions on a national, regional and local level. The hypothesised index consisted of four dimensions (demographic, social, labour and economic) that were constructed from 17 indicators. Furthermore, the index as developed could be utilised as a tool for future analysis in measuring regional efforts and progress as well as being used to compare different economic functional regions regarding the level of socio-economic development

Keywords

• Development index, economic development, regional development

References

1. Alkire, S. 2009. The capability approach as a development paradigm. (In C. E.
2. Martinetti, ed. Debating global society: reach and limits of the capability approach. Milan: Fondazione Giangiacomo Feltrinell. p. 31-60.) Ascani, A., Crescenzi, R. & Iammarino, S. 2012. Regional economic development: A review. http://www.ub.edu/searchproject/wp-content/uploads.pdf
3. Date of access: 4 Apr. 2016.
4. Bairoch, P. & Braider, C. 1991. Cities and economic development: from the dawn of history to the present. Chicago. University of Chicago Press.
5. Bell, S. & Morse, S. 2003. Measuring sustainability: learning from doing. London: Earthscan,
6. Belle, D. & Bullock, H.E. 2011. Psychological consequences of unemployment. https://www.spssi.org/index. Date of access: 25 Jul. 2016.
7. Bloom, D.E., Canning, D. & Fink, G. 2010. Implications of population ageing for economic growth. Oxford Review of Economic Policy, 26(4):583-612.
8. Calderón, C. & Servén, L. 2010. Infrastructure and economic development in

9. Sub-Saharan Africa. Journal of African Economies, 19(1):13-87. Canning, D. Mitchell, M., Bloom, D. & Kleindorfer, E.L. 1994. The family and economic development. http://info.worldbank.org/etools/docs/library.pdf. Date of access: 20 Jul. 2016.
10. Carlson, B.A. 1999. Social dimensions of economic development and productivity: inequality and social performance. An overview. (In B.A. Carlson, ed. Social dimensions of economic development and productivity: inequality and social performance. Santiago: United Nations. p. 7-19.)
11. Cobb, J.B. 1989. The Index of Sustainable Economic Welfare. (In H.E. Daly &
12. J.B. Cobb, eds. For the common good. Boston: Beacon Press. p. 401–455.) Costanza, R., Hart, M., Posner, S. & Talberth, J. 2009. Beyond GDP: the need for new measures of progress. Pardee Working Paper no.4. Massachusetts: Boston University.
13. Cowen, T. 2016. Economic development in an “average is over” world. https://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Manila. pdf. Date of access: 18 Aug. 2016.
14. Dao, M.Q. 2012. Population and economic growth in developing countries.
15. International Journal of Academic Research in Business and Social Sciences, (1):6-17. De Muro, P., Mazziotto, M & Pareto, A. 2009. Composite indices for multi- dimensional development and poverty. http://www.fao.org/fileadmin/templates/ ess/pages/rural.pdf. Date of access: 4 Apr. 2016.
16. Deaton, A. 2003. Health, inequality, and economic development. Journal of
17. Economic Literature, 41(1):113-158. Draper, P. & Freytag, A. 2008. South Africa’s current account deficit: are proposed cures worse than the disease? Trade Policy Report no. 25.
18. Johannesburg: South African Institute of International Affairs. Easterlin, R.A. 1967. Effects of population growth on the economic development of developing countries. The Annals of the American Academy of Political and Social Science, 369(1):98-108.
19. Estes, R.J. 1997. Social development trends in Europe, 1970–1994: development prospects for the new Europe. Social Indicators Research, 42(1):1-19.
20. Feldman, M., Hadjimichael, T., Kemeny, T. & Lanahan, L. 2015. The logic of economic development: a definition and model for investment. Environment and Planning C: Government and Policy, 20(1):1-17.
21. Gallardo, G. 2009. The Human Development Index as an effort to measure well- being in Honduras. Paper presented at the 3rd OECD World Forum on Statistics,
22. Knowledge and Policy: Charting progress, building visions, improving life. Busan, Korea: 27 October. http://www.oecd.org/site/progresskorea/44110008.pdf
23. Date of access: 21 Mar. 2016.
24. Gurria, A. 2013. Measuring well-being and progress. Paris: OECD Publishing.
25. Haller, A.P. 2012. Concepts of economic growth and development challenges of crisis and of knowledge. Economy Transdisciplinarity Cognition, 15(1):66-71.
26. Heerink, N. 2012. Population growth, income distribution, and economic development: theory, methodology, and empirical results. Berlin: Springer.
27. Higgins, B. & Savoie, D.J. 2009. Regional development theories and their application. 4th ed. New Brunswick, NJ: Transaction Publishers.
28. Horsley, J., Prout, S., Tonts, M. & Ali, S.H. 2015. Sustainable livelihoods and indicators for regional development in mining economies. The Extractive
29. Industries and Society, 2(2):368-380. Hossain, N. 2009. Crime and social cohesion in the time of crisis: early evidence of wider impacts of food, fuel and financial shocks. IDS Bulletin, 40(5):59-67.
30. Hueting, R. 1980. New scarcity and economic growth: more welfare through less production? Amsterdam: North-Holland.
31. Huq, M.M., Clunies-Ross, A. & Forsyth, D. 2009. Development economics.
32. London: McGraw Hill Education. Hussmanns, R., Mehran, F. & Verma, V. 1990. Surveys of economic active population: employment, unemployment and underemployment. Geneva:
33. International Labour Office. IMF (International Monetary Fund). 2006. Data quality assessment framework. http://dsbb.imf.org/images/pdfs/dqrs_factsheet.pdf. Date of access: 4 Apr. 2016.
34. Iyer, S., Kitson, M. & Toh, B. 2005. Social capital, economic growth and regional development. Regional Studies, 39(8):1015-1040.
35. Jacobs, G. & Šlaus, I. 2010. Indicators of economic progress: the power of measurement and human welfare. Cadmus, 1(1):52-115.
36. Kanbur, R. 2000. Income distribution and development. (In A.B. Atkinson & F.
37. Bourguignon, eds. Handbook of income distribution. Amsterdam: Elsevier. p. – 841.) Kaulich, F. 2012. Diversification vs. specialization as alternative strategies for economic development: can we settle a debate by looking at the empirical evidence? Vienna: UNIDO.
38. Klasen, S. & Nestmann, T. 2006. Population, population density and technological change. Journal of Population Economics, 19(3):611-626.
39. Kovacevic, M. 2011. Review of HDI critiques and potential improvements. http://www.hdr.undp.org/ sites/default/files/hdrp_2010_33.pdf.
40. Date of access: 25 Mar. 2016.
41. Krugman, P.R. 1979. Increasing returns, monopolistic competition, and international trade. Journal of International Economics, 9(4):469-479.
42. Krugman, P.R. 1991. Geography and trade. London: The MIT Press.
43. Maccari, N. 2014. Sustainable human development: Human Development Index and the environment. International Journal of Sustainable Human Development, (1):29-34.
44. Malecki, E.J. 1997. Technology and economic development: the dynamics of local, regional and national change. Longman: Harlow.
45. McCall, T. 2010. What do we mean with regional development? Hobart:
46. University of Tasmania. Myrdal, G. 1957. Rich lands and poor. New York: Harper and Row.
47. Naudé, W., Rossouw, S. & Krugell, W. 2009. The non-monetary quality of city life in South Africa. Habitat International, 33(4):319-326.
48. Nussbaum, M. 2003. Capabilities as fundamental entitlements: Sen and social justice. Feminist Economics, 9(2-3):33-59.
49. OECD (Organisation for Economic Co-Operation and Development). 2008.
50. Handbook on constructing composite indicators: Methodology and user guide. Paris: OECD Publishing. OECD (Organisation for Economic Co-operation and Development). 2014. Using well-being indicators for policy making: Region of Sardinia, Italy. Paris: OECD Publishing.
51. Perrons, D. 2012. Regional performance and inequality: linking economic and social development through a capabilities approach. Cambridge Journal of
52. Regions, Economy and Society, 5(1):15–29. Pike, A., Rodríguez-Pose, A. & Tomaney, J. 2007. What kind of local and regional development and for whom? Regional Studies, 41(9):1253-1269.
53. Porter, M.E. 1990. The competitive advantage of nations. Harvard Business Review, 68(2):73-93.
54. Ranis, G. 2004. Human development and economic growth. Discussion Paper no.
55. New Haven, CT: Yale University. Reddy, P.A. 2004. Literacy retention and socio-economic development. New Delhi: Sarup & Sons.
56. Rodríguez-Pose, A. & Tijmstra, S. 2009. On the emergence and significance of
57. Local Economic Development strategies. CAF Working Paper no. 2009/07.
58. Caracas: Financiando El Desarollo. Rokicka, E. 2014. The concept of ‘Quality of Life’ in the context of economic performance and social progress. (In D. Eißel, E. Rokicka & J. Leaman, eds.
59. Welfare state at risk: rising inequality in Europe. New York: Springer International Publishing Switzerland. p. 11 – 34.) Rostow, W.W. 1959. The stages of economic growth. The Economic History Review, 12(1):1-16.
60. Sagar, A.D. & Najam, A. 1998. The Human Development Index: a critical review.
61. Ecological Economics, 25(3):249-264. Sánchez-Domínguez, Á. & Ruiz-Martos, M.J. 2014. A progressive approach to the measurement of regional performance in the European Union. Journal for a
62. Progressive Economy, 3:62-104. Schrott, L., Gachter, M. & Theurl, E. 2015. Regional development in advanced countries: a within-country application of the Human Development Index for
63. Austria. DANUBE: Law and Economics Review, 6(1):1-23. Sen, A. 1983. Poor, relatively speaking. Oxford Economic Papers, 35(2):153-169.
64. Shabu, T. 2010. The relationship between urbanization and economic development in developing countries. International Journal of Economic
65. Development Research and Investment, 1(2):30-36. Solow, R.M. 1956. A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1):65-94.
66. Stiglitz, J., Sen, A.K. & Fitoussi, J.P. 2009. The measurement of economic performance and social progress revisited: reflections and overview. OFCE
67. Working Paper. New York, NY: Columbia University. Szajnowska-Wysocka, A. 2009. Theories of regional and local development: abridged review. Bulletin of Geography, 12(12):75-90.
68. Thirlwall, A.P. 2006. Growth and development. 8th ed. Basingstoke, UK: Palgrave Macmillan.
69. Todaro, M.P. & Smith, S.C. 2011. Economic development. 11th ed. Essex: Pearson Education Limited.
70. UNDP (United Nations Development Programme). 1990. Human development report 1990. New York, NY: Oxford University Press.
71. UN-HABITAT (United Nations Human Settlement Programme). 2013. State of the World’s cities 2012/2013: prosperity of cities.
72. Vala, F. & Pinho, M.M. 2015. Composite indicators for monitoring regional development: seven years of Portuguese experience. Paper presented at the UNECE seminar on the role of National Statistical Offices in the production of leading, composite and sentiment indicators. https://www.unece.org/fileadmin/
73. DAM/stats/documents.pdf. Date of access: 5 Apr. 2016.
74. Van den Bergh, J. & Antal, M. 2014. Evaluating alternatives to GDP as measures of social welfare and progress. http://www.econstor.eu/bitstream.pdf. Date of access: 28 Mar. 2016.
75. Victor, P. 2010. Questioning economic growth. Nature, 468(7322):370-371.
76. World Bank. 1993. Housing: enabling markets to work. World Bank Policy Paper.
77. Washington DC: World Bank. World Bank. 2015. World Bank’s new end-poverty tool: Surveys in poorest countries. Washington DC: World Bank.