Calculation of the Human Development Index for Northern Cyprus Using Economic Measurements from the Post-Conflict Period

Ali Cevat Taşıran and Ceylan Ünver
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Ali Cevat Taşıran: Middle East Technical University, Northern Cyprus Campus, Department of Economics
Ceylan Ünver: Middle East Technical University, Northern Cyprus Campus, Department of Economics

Ekonomi-tek - International Economics Journal, 2016, vol. 5, issue 3, 1-20

Abstract: Development has always been treated as an economic phenomenon and linked to economic growth. Amartya Sen’s “capabilities” approach (Sen, 1985) introduced the concept of “human development” as progress towards greater societal well-being. The Human Development Index, the HDI, is a summary measure of average achievement in key dimensions of life: a long and healthy lifespan, being knowledgeable, and having a decent standard of living. The HDI relies on various proxies to demonstrate key capabilities: i.e., access to health, education, and goods. The HDI is the geometric mean of these three-dimensional indices. The HDI has been calculated by the United Nations Development Program (UNDP) since 1990 and serves as a measure of human well-being; it ranks countries on a scale between zero and one. Northern Cyprus (herein referred to as the Turkish Republic of Northern Cyprus, or the TRNC) has been ignored in such calculations, although the HDI has been applied to similar territories. Thus, the purpose of this paper is to calculate the HDI for the TRNC using observed series during its post-conflict era. At the same time, we discuss the Granger Causality of HDI in Northern Cyprus and Turkey. The finding indicates that the HDI of the TRNC has the ability to predict the HDI of Turkey, while its reverse is not true. The paper also examines the relationships between HDI and GNI according to separate Fixed-Effect Panel Models and Seemingly Unrelated Regression (SUR) Equations of HDI and GNI.

Keywords: Human Development Index; Granger Causality; Fixed-Effect Panel Data Models; SUR Estimates (search for similar items in EconPapers)
JEL-codes: C14 C30 C32 C33 I15 I25 O15 (search for similar items in EconPapers)
Date: 2016
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