Factors affecting

Human Development Index (HDI) in

Vietnam
Lecturer: Dao Thanh Binh
Student: Tran Thi Thanh Loan
Tran Vu Tien
Pham Tra My
Vu Tuyet Nhung
Ho THi Minh Phuong
Ngo Thi Bich Hanh
Vu Thai Duy
Bui Hai Ngoc
Dinh Duy Quang
Tutorial: 4 BA-06
 Overview

 Introduction
 Model specification
 Data graph
 Results
 Conclusions and suggestions

Page  2 Econometrics
 Introduction

 HDI: a summary measure of human development

 HDI measures three basic dimensions of human development:
- a long and healthy life, as measured by life expectancy at birth
- knowledge, as measured by the adult literacy rate
- standard of living, as measured by GDP per capita
 HDI has had a significant impact on drawing the attention of
governments, corporations and international organizations to aspects of
development that focus on the expansion of choices and freedoms, not
just income.

Page  3 Econometrics
 Model specification
HDI = β1 + β2* GDP + β3*EDU + β4*LIE + u
 HDI: dependent variable
 GDP (Gross Domestic Product): dependent variable
- Y = C + I + G + NX
- GDP per capita = Y/ Population
 Educational attainment (EDU): dependent variable
- represented by the literacy rate
- considered as a crucial measure of a region's human capital since
literacy increases job opportunities and access to higher education.
 Life expectancy (LIE): dependent variable
- the average number of years a human has before death
- an important measure in its own right and can be a proxy measure for
many other issues such as healthcare, wealth, opportunities, and
education
Page  4 Econometrics
 Data graph

 HDI
Vietnam HDI through 1995-2006

0.800
0.682 0.688 0.704
0.700 0.664
0.688 0.691 0.709
0.600 0.557 0.671
0.539
0.500 0.560
0.540
0.400 HDI

0.300

0.200

0.100

0.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year

Page  5 Econometrics
 Data graph

 GDP per capital

Vietnam GDP index during 1995-2006

0.600
0.520 0.550
0.500
0.500 0.470
0.470 0.540
B illio n o f d olla rs

0.490 0.510
0.400

0.300 GDP

0.170 0.180 0.180

0.200

0.100
0.110
0.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year

Page  6 Econometrics
 Data graph

 Educational attainment
Vietnam Education index 1995-2006

0.850
0.840 0.840
0.840
0.830 0.830
0.830 0.820 0.820 0.820
0.820 0.810
P ercen t

0.810 0.800
0.800 0.810 literacy index
0.790
0.790
0.780
0.780
0.770
0.760
0.750

Year

Page  7 Econometrics
 Data graph

 Life expectancy
Vietnam Life Expectancy index 1995-2006

0.780
0.760
0.760
0.760
0.740 0.730

0.720 0.710 0.710 0.730

years

0.720
0.700 0.710 LE
0.680
0.680 0.670 0.690
0.680
0.660

0.640

0.620
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year

Page  8 Econometrics
 Data graph
Year HDI GDP Literacy Life
expectancy
1995 0.539 0.17 0.78 0.67
1996 0.540 0.11 0.79 0.68
1997 0.557 0.18 0.80 0.68
1998 0.560 0.18 0.81 0.69
1999 0.664 0.47 0.82 0.71
2000 0.671 0.47 0.83 0.71
2001 0.682 0.49 0.84 0.71
2002 0.668 0.50 0.84 0.72
2003 0.668 0.51 0.83 0.73
2004 0.691 0.52 0.82 0.73
2005 0.704 0.54 0.82 0.76
2006 0.709 0.55 0.81 0.76
Page  9 Econometrics
 Results

 Eview result table

Page  10 Econometrics
 Results

 Functional test
- Log – linear function:

Page  11 Econometrics
 Results

- Lin – log function:

Page  12 Econometrics
 Results

- Log – log function:

Page  13 Econometrics
 Results

 C.V1 (linear-linear) = 0.0044/0.6410= 0.0068

 C.V2 (log-linear) =0.0069 /0.4502= 0.0153
 C.V2 (linear- log) = 0.01/0.6410=0.0156
 C.V2 (log- log) = 0.0158/0.4502 = 0.035
=>best model linear-linear:
HDI =-0.021 + 0.3214* GDP + 0.384* EDU + 0.3144* LIE

Page  14 Econometrics
 Results

 Errors in the model:

- Multicolinearity:
+ happens when there is a functional relationship among
independent variables.
+ all coefficients are significant
=> don’t need to worry about this error

Page  15 Econometrics
 Results
- Heteroscedasticity: to check this error, Park-test is used
lnu^2 = β1 + β2*EDU
^Lne_sp= 22.0571 -42.157*EDU
H0 : β2 = 0 Heteroscedascity does not exist.
H1 : β2 ≠ 0 Heteroscedascity exists

From the table, P-value of β2> 0.05

=> β2 is not significant at 0.05
=> do not reject H0
=> there is no heteroscedascity

Page  16 Econometrics
 Results
- Autocorrelation: to check this error, use The Breusch-Godfrey (BG) test
H0 : no autocorrelation
H1: autocorrelation exists
BG-statistic: 1.204509 < X 2p=1 = 3.84146
(α=0.05).
=> do not reject H0
=> no autocorrelation

Page  17 Econometrics
 Results

 Discussion
^HDI= - 0.021 + 0.3214 * GDP + 0.384 * EDU + 0.3144 * LIE

+ β2, β3 and β4 at 5% level of significance, their P-value are all < 0.05
=> GDP, EDU, LIE have significant impact on HDI Index

+ R2 = 0.996975 => more than 99% of the variation of HDI index can be
explained by GDP, LIE, EDI indexes
=> very high level of fit between the regression line and the data provided.

Page  18 Econometrics
 Conclusions and suggestions

Conclusions:
 With the lowest CV, linear_linear was the best model
 All the coefficients are significant shows a significant impact of EDU, LIE,
and GDP indexes on HDI index
 With positive sign of coefficients, there is a positive relationship between
HDI indexes and the other three listed indexes.
Suggestions:
 Invest more in education
 Provide more health care service with good quality
 Apply suitable economic development strategy to increase GDP

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