A Causal Panorama of Cross-Country Human Development

I broadly summarize the theoretical and recent empirical literatures on human development. Using Gray and Purser’s 1970-2010 database of human development index (HDI) components (income, life expectancy, literacy, gross enrolment ratios) for 135 countries, together with indicators of the demographic transition, urbanization, technological change, sustainability, and institutions (15 variables), I construct a panel for the 1985-2010 quinquennia, and instruments for the same variables using the 1970-1980 data and conduct a descriptive dynamic analysis. I then analyze the matrix of causal interactions between the 15 variables, using three types of instrumented regressions for each matrix entry: a) levels regressions; b) growth regressions; c) growth regressions also containing the contemporary growth of independent variables. This analysis is repeated for 3 subsamples obtained according to HDI levels and another 3 according to technological levels. The Hausman and Sargan test results show a ranking of endogenous determination and indirect impacts of the variables on each other that vary qualitatively for levels and growth and across HDI and technological levels. Main results: the HDI distribution is broadly twin peaked and its dynamics vary substantively across HDI and technological levels. The main development transitions are broadly advancing at different stages: fertility, infant mortality, the dependency ratio, literacy, enrolment, life expectancy, urbanization. Also, there is a transition towards more democracy and less autocracy. However, at very low HDI levels income per capita decreased. The main policy suggestions for promoting the demographic and human development transition are to support: technology transfer to the poor, investments not supplied by the markets (human capital, urbanization, sustainability), the emergence of democracy, and global governance.