The Impact of Economic Inequality and Public Sector Corruption on Human Development

Comparative Case Study between Turkey and Brazil


Thesis (M.A.), 2015
35 Pages

Excerpt

Table of Contents

Abstract

Chapter One: Introduction

Chapter Two: Background Information
2.1 Human Development Index (HDI)
2.2 The Corruption Perceptions Index (CPI)
2.3 World Development Indicators (WDI)

Chapter Three: The Impact of Economic Inequality on Human Development in Turkey and Brazil
3.1 GNI per capita and Human Development Index in Turkey and Brazil
3.1.1 Comparing the per capita level of GNI in Turkey and Brazil
3.1.2 GNI per capita in Turkey and Brazil during the last decade.
3.1.3 HDI value changes in Turkey and Brazil since 2010.
3.2 Human Development Index (HDI) versus Inequality-Adjusted Human Development Index (IHDI).
3.2.1 The IHDI
3.2.2 HDI versus IHDI.
3.2.3 Comparing inequalities in each component - Healthcare, Education, and Income
3.2.3.1 Healthcare
3.2.3.2 Education
3.2.3.3 Income
3.3 Focusing on Economic Inequality
3.3.1 What is meant by economic inequality?
3.3.2 Gini Coefficient in Turkey and Brazil.
3.3.3 Income Distribution in Turkey and Brazil

Chapter Four: Public Sector Corruption in Turkey and Brazil
4.1 Why Focusing on Corruption Particularly in Public Sector?
4.2 Comparing relevant data in Turkey and Brazil in the year of
4.3 Comparing relevant data in Turkey and Brazil since

Chapter Five: Closing Thoughts

Bibliography

Table of Figures

Acknowledgements

I would like to express my gratitude to my supervisor Dr. Sheikh Selim for the useful comments, remarks and engagement through the learning process of this work.

Furthermore I would also like to thank my parents for their endless love and support.

Last but not least, I would like to thank my wife Selma, for her love, patience and support she has shown; it has taken me to finalize this thesis.

Abstract

The purpose of this comparative case study is to provide an explanation for how Turkey managed to have less economic growth than Brazil but was able to achieve higher levels of human development outcomes than Brazil. Therefore, by critically analysing and comparing relevant statistics this paper supports empirical and statistical evidence that there is a strong negative relationship between economic inequality and achievements in human development outcomes.

After indicating the level of GNI per capita as the crucial factor to comparing the economies of Turkey and Brazil, the main focus is given to relevant figures starting from the year 2010. The comparisons given demonstrate that there is a statistical significant negative relationship between human development indices and inequalities among relevant components such as healthcare, education, and the level of income. Accordingly, the more equal distribution of income among its population is one of the key reasons why Turkey was able to gradually reach higher human development outcomes than Brazil, although Brazil recorded higher levels of GNI per capita during this period. In particular, the notable success of Turkey’s government in tackling inequalities in the level of income in the year of 2013 obviously have had a significant impact on the event that Turkey even overtook Brazil according to the Human Development Index 2013.

This dissertation also indicates that public sector corruption is one of the main sources of economic inequalities; moreover, it is also a negative factor itself on human development achievements among the public funded sector (e.g., healthcare services or educational institutions) where the illegal action took place. By critically analysing credible data from the Corruption Perception Index provided by an internationally recognized civil society movement against corruption called Transparency International, this work illustrate the negative impact of corruption particularly in the public sector on progressing in human development. Alongside the Corruption Perception Index, this research is mainly based on relevant statistics from the Human Development Index introduced by the United Nations Development Program and preferably uses figures from the World Development Indicators which are collected by the World Bank.

Chapter One Introduction

As a society we are always interested in knowing how much progress we have made over time. In the past, economists, analysts and policy-makers mainly referred to changes in the level of gross domestic product to reflect how the population of a particular country has progressed during a given period of time. Indeed, the average material standard of the population is an essential tool in assessing how much progress a society has made.

However, various global, regional and local reports on human development have demonstrated that economic growth alone is far from sufficient as the sole condition for progressing in human development. Therefore, accurately measuring human development requires a frame that includes different key economic and social indices. Therefore, we need to think about a series of narrow and broad indicators such as per capita income but also life expectancy, education, and the extent of poverty. Based on this idea, there are different approaches that have become prominent in trying to explain what progress actually means to a society and how to measure the actual state of human development in a nation (Gallardo, 2009).

However, this dissertation is based on the results presented by the Human Development Index known to be one of the most valuable concepts in attempting to capture the state of human development in a country. According to its latest values, Turkey scores far above Brazil in the Human Development Index 2013 (United Nations Development Programme, 2014); although the World Bank indicates that Brazil has a higher level of per capita income than in Turkey (The World Bank, 2014). This paper supports the hypothesis that, in particular, the issues of economic inequality and public sector corruption have a significant impact on human development related indices. Therefore, by critically analysing and comparing relevant statistics of two comparable economies - Turkey and Brazil - this paper intends to provide a valuable explanation regarding the question: how can a country with lower levels of per capita income achieve higher human development outcomes?

Therefore, the next chapter provides useful background information about the Human Development Index introduced by the United Nations Development Programme in some detail. Furthermore, it describes the Corruption Perceptions Index - another valuable source of data used by this paper. Finally, this chapter briefly explains certain key elements of the World Development Indicators that also presents a significant repertoire of relevant statistics that are used by this paper. Consequently, this chapter mainly presents a more descriptive background that enables a better understanding of the analyses and explanations presented in the following chapters.

Following chapter three compares the levels of per capita gross national income recorded in Turkey and Brazil during the last decade with achievements in human development relevant indices among the key components health index, education index and income index. Moreover, this chapter introduces the Inequality- adjusted Human Development Index (abbreviated IHDI), an index that incorporates inequalities among the relevant components. Based on this, this chapter also presents a valuable comparison between achievements recorded in the Human Development Index and relevant statistics in the IHDI. Finally, by using the Gini Coefficient and the Lorenz Curve this chapter also provides further significant methods to compare the scope of economic inequalities in Turkey and Brazil. By critically analysing and correspondingly comparing the impact of economic inequalities on human development outcomes in Turkey and Brazil this chapter is the most important part in trying to explain how a country with lower levels of economic growth can reach higher achievements in human development.

The next chapter indicates the issue of public sector corruption as one of the main sources of economic inequalities; moreover, also as a negative factor itself on human development achievements among the public funded sector (e.g., healthcare services or educational institutions) where the illegal action took place. Moreover, by critically analysing credible data from the Corruption Perception Index provided by a civil society movement against corruption called Transparency International, this chapter explores the negative impact of corruption particularly in the public sector on progressing in human development in Turkey and Brazil.

Finally, the last chapter highlights and briefly evaluates certain efforts done by the governments of Turkey and Brazil in order to tackling these issues. Moreover, it summarises the most important findings of this study and presents an outlook.

Chapter Two Background Information

This chapter provides valuable definitions and important explanations to allow for a better understanding of the content presented in the following parts of this paper. Because the main purpose of this paper emerged from the UNDP approach and the findings, particularly in chapter three, are based on statistics presented by the Human Development Index. This chapter first describes this source of data in some detail. Next, it gives valuable information about another significant source of data which is mainly used in chapter four, the Corruption Perceptions Index, which is provided for by a recognized civil society organisation called Transparency International. Lastly, this chapter briefly explains certain key elements of the World Development Indicators commissioned and presented by the World Bank. This unique collection of valuable statistics, definitions, and explanations is another important resource that is used by this paper.

2.1 Human Development Index (HDI)

The United Nations Development Programme (UNDP) claimed that an increase in the level of real income per capita does not automatically mean a country’s population as a whole is better off. Based on this idea, the UNDP developed and introduced the Human Development Index (commonly abbreviated HDI) in 1975. The breakthrough for the HDI was the creation of a sole statistic which presents a suitable frame of reference for the actual state of human development achievements in a nation (UNDP, 2013).

However, too many indicators would obviously lead to a confusing picture and would, for instance, distract policy-makers from the more important overall development goals. Therefore, the HDI examines three elementary dimensions, without which other dimensions such as political freedom, subjective well-being or self respect would be inaccessible.

The first dimension calculated in the HDI is measured by life expectancy at birth, as an index of health and longevity of the country’s population (UNDP, 2010).

The second dimension is a country’s overall level of education. Until 2009, this dimension was a combined figure measured by the adult literacy rate and the gross enrolment ratios of students in primary school up to university level (Gallardo, 2009) Starting in the year 2010, the UNDP replaced this figure with the so-called education index. The education index is a combined statistic calculated by mean years of schooling and expected years of schooling. The third and final dimension is the average material living standard of a country’s population. Initially, this dimension was defined by GDP per capita in purchasing power parity terms. Instead of the level of GDP per capita, in 2010 the UNDP began using the level of per capita gross national income (formerly GNI per capita) as a measure of a decent standard of living (UNDP, 2010).

As a result of these changes in 2010, the HDI is the geometric mean of the three normalized dimensions explained above and can be shown in a formula as follows:

Abbildung in dieser Leseprobe nicht enthalten.

Consequently, the status of each country is expressed as a value between 0 (no development) and 1 (complete development). Accordingly, an index of 0 - 0.49 means low development, whereas an index of 0.5-0.69 indicates medium development, and an index of 0.7 to 0.79 indicates high development. Finally, an index of 0.8 and above means very high development. By using these results, the UNDP sets a minimum and a maximum level for the overall HDI as well as for each dimension. In relation to these so-called goalposts, the HDI indicates where each country ranks (Alkire and Foster, 2010).

2.2 The Corruption Perceptions Index (CPI)

Public sector corruption is an illegal activity and there are no official transactions. This leads to the fact that most of these cases remain undetected and unreported. Therefore, it is very difficult to find accountable statistics regarding such cases.

One of the most accurate and recognized sources of data related to public sector corruption is provided by the international civil society organisation called Transparency International. Founded in the year 1993, this independent global movement against corruption is now present in more than 100 countries. Via a variety of reputable institutions, it collects valuable statistics about corruption around the globe and defines various effective programmes in order to realize one vision: a world in which government, business, civil society and the daily lives of people are free of corruption (Transparency International, 2015).

In 1995, Transparency International first launched the Corruption Perceptions Index (formerly CPI) based on these data and added by further informed views of observers, analysts and qualified experts living and working in the countries evaluated. Therefore, the CPI scores countries particularly on how corrupt their public sectors are perceived to be where the scale starts from zero (highly corrupt) ends up by 100 (very clean). The latest CPI was recently released in 2014 and measures the perceived levels of public sector corruption in 175 countries and territories. This index sends a widely creditable and powerful message which leads to the situation where many governments react by putting the issue of corruption on their policy agenda (Transparency International, 2015).

Because of this valuable contribution and its credibility further observations, chapter four in particular looks at the issues related to the conflicts of public sector corruption via figures and relevant information provided for by Transparency International and the CPI.

2.3 World Development Indicators (WDI)

The World Development Indicators (WDI) are a notable collection of development indices, collected by officially recognized international sources covering more than 150 countries and presented by the World Bank. With this unique collection, the World Bank provides the most accurate data available related to more than 800 indicators. More or less all indicators can be seen as relevant to human development and are assigned by the World Bank to twenty topics such as Economy and Growth, Education, Health, Poverty, and Social Development. Additionally, this statistical source also includes national, regional and global estimates (The World Bank, 2014).

These statistics can be accessed from an online database, created and provided by the World Bank. This open online database is regularly updated four times a year and also includes useful explanations. Another notable WDI online source of WDI presented by the World Bank is the source of the so-called online tables. The World Bank presents in more than ninety tables relevant aggregate data organized into the following six main topics: world view, people, environment, economy, states and markets, and global links. This source provides both relevant data on human development and useful explanations about the data. These tables are automatically updated as soon as the online database is updated (The World Bank, 2014).

The graphs presented in Figure 1 that compares the path of annually generated GNI per capita levels in Turkey and Brazil during the last decade were created using online tools from the World Bank. Therefore, the utilized online tool provided by the World Bank presented an added value and an important learning tool already during the completion of this work. The use of this tool by the creation of these two graphs is elaborately explained in the graphs section.

The WDI by the World Bank provides high-quality cross-country comparable statistics about development and people’s lives for almost all countries in the world. Because of its relevance as well as its accountability the unique collection of the World Development Indicators presented by the World Bank provides another significant source for statistics, definitions, and explanations that are preferably used by this paper.

Chapter Three The Impact of Economic Inequality on Human Development in Turkey and Brazil

By critically analysing and correspondingly comparing the impact of economic inequalities on human development outcomes in Turkey and Brazil this chapter provides a valuable explanation about how a country with lower levels of economic growth can reach higher achievements in human development related indices.

After indicating the level of GNI per capita as the crucial factor to comparing the economies of Turkey and Brazil, this chapter first compares GNI per capita achievements recorded in these two countries during the last decade with relevant figures in the HDI. The next section introduces the IHDI, an index where human development achievements of a country on key human development components such as healthcare, education, and income are discounted by the levels of inequalities among these components. Moreover, by a valuable comparison between achievements recorded in the HDI with relevant statistics in the IHDI this chapter provides a better understanding for the relation of human development outcomes and the levels of inequalities among each key human development component.

Finally, after a brief explanation about the term of economic inequality this chapter provides further methods to compare the scope of economic inequalities in Turkey and Brazil by using the Gini Coefficient and Lorenz Curve which enable the visualizing of the issue of economic inequality on a relatively simple but effective way. Therefore, this chapter presents the most important information as well as the most extensive analysis of this paper.

3.1 GNI per capita and Human Development Index in Turkey and Brazil

After indicating the level of GNI per capita as the crucial factor to comparing the economies of Turkey and Brazil, this section compares the levels of per capita GNI recorded in these two countries during the last decade with relevant statistics in the HDI. Therefore, this section provides valuable analysis about the link between these different statistics and enables for better understanding of further consideration in this paper.

3.1.1 Comparing the per capita level of GNI in Turkey and Brazil

Depending on the current level of per capita gross national income based on purchasing power parity (formerly GNI per capita), the World Bank classifies Turkey and Brazil as upper middle income countries. GNI is the generated value of all domestic firms together with any product taxes not included in the sum of output added by net income receipts from abroad. Although middle income countries are a diverse group by size and population, these countries are defined as having a GNI per capita of USD 1,026 to USD 12,475. According to the most recent figures presented by the World Bank the Turkish economy produced a GNI per capita of USD 10,950 in the year 2013. In the same year, the GNI per capita in Brazil reached a higher level of USD 11,690 (The World Bank, 2014).

The figures above inform us that the World Bank classifies countries depending on their current level of GNI per capita. Since the World Bank uses this indicator to classify countries, this paper makes use of this figure to decide that the economies of Turkey and Brazil are comparable. Moreover, by providing the current level of GNI per capita these data present a picture only related to the values in the year of 2013. However, to be able to better understand the relation between this figure and the value of the HDI it could be useful first to consider the level of GNI per capita in Turkey and Brazil for a longer period of time.

3.1.2 GNI per capita in Turkey and Brazil during the last decade

The graphs presented below were created using online tools from the World Bank as already described under `2.3 The World Development Indicators (WDI)` in order to illustrate and to compare the path of annually generated GNI per capita levels in Turkey and Brazil during the last decade.

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Details

Title
The Impact of Economic Inequality and Public Sector Corruption on Human Development
Subtitle
Comparative Case Study between Turkey and Brazil
College
University of Westminster
Course
International Economic Policy and Analysis
Author
Year
2015
Pages
35
Catalog Number
V288517
ISBN (eBook)
9783656889908
ISBN (Book)
9783656889915
File size
557 KB
Language
English
Tags
impact, economic, inequality, public, sector, corruption, human, development, comparative, case, study, turkey, brazil
Quote paper
Ferdi Ilkhan (Author), 2015, The Impact of Economic Inequality and Public Sector Corruption on Human Development, Munich, GRIN Verlag, https://www.grin.com/document/288517

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