Examining the determinants of Human Development Index in South Africa: an econometric model.

Abstract

South Africa's Human Development Index (HDI) has shown a slight decline since 2020, reflecting challenges in sustaining improvements in health, education, and income outcomes. This research the determinants of HDI in South Africa using annual data from 1991 to 2021. The analysis is structured into three types of explanatory variables: economic metrics (GDP, FDI, CPI), demographic metrics (GINI, birth rate, population increase), and policy-related factors (trade openness and ICT accessibility). The Auto-Regressive Distributed Lag (ARDL) model is used to evaluate relationships in the short-run as well as in the long-run. The findings from the ARDL bounds test on cointegration show that there is a long-term relationship between the variables. Over time, population growth is positively and significantly linked to HDI, whereas trade openness and ICT access show significant negative correlations. Other factors such as GDP, FDI, CPI, GINI, and the fertility rate were determined to have statistically insignificant long-term impacts on HDI. In the short term, economic indicators have a negative and significant relationship with HDI. Demographic and policy-related indicators revealed no statistically significant short-term relations. The findings indicate a varied range of factors influencing human development, with policy elements showing more significant long-term effects compared to short-term influences. The findings suggest the need for more targeted social investments and institutional reforms, particularly in areas where development inputs do not translate into HDI gains. The study highlights the importance of evaluating both structural and policy dimensions when assessing long-term human development trends in South Africa. The results suggest a need for more focused social investments and institutional changes, especially in regions where development efforts do not lead to HDI improvements. The research emphasizes the need of considering both structural and policy aspects when analysing long-term human development patterns in South Africa.