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In the 2000 HDI Report, Batanes was ranked in 5th place, down from 3rd in 1997 and 2nd in 1994. Batanes ranked 1st in income, 6th in education but 50th in health or life expectancy among the provinces in 1997.
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I. Introduction

Human development is the process of increasing people's choices by expanding their human capabilities and opportunities, and at the same time, raising the level of their achieved well-being in a sustainable manner. Human development therefore focuses on people and the satisfaction of their basic needs.

The United Nations Development Program (UNDP) conceptualized the human development index (HDI) in 1990 to serve as a composite measure reflecting the most important dimensions of human development. It measures how well a country has performed, not only in terms of real income growth, but also in terms of social indicators of people's ability to lead a long and healthy life, to acquire knowledge and skills, and to have access to the resources needed to afford a decent standard of living.

With assistance from the UNDP, the Human Development Network (HDN) initiated HDI estimation in the Philippines. This group is a partnership of academics, representatives from non-government organizations, and government officials acting in their personal capacity. HDN introduced the use of the HDI as a yardstick of progress in the country and across regions in 1994. Three years later, HDN extended this by coming out with HDI estimates at the provincial level for the years 1990 and 1994. The Philippines thus became one of the first countries to use HDI for subnational assessments to gauge the level of development at the local level.

After the launch of the 1990 and 1994 HDI by province, then President Fidel V. Ramos instructed the National Statistical Coordination Board (NSCB) to include the index in the system of designated statistics to ensure the regular generation of the HDI series to be used to track variations across provinces. This presidential directive paved the way for the institutionalization of the HDI estimation within the NSCB.

In May 1997, the HDN and the NSCB signed a Memorandum of Understanding to effect the transfer of responsibility for the computation and publication of the HDI from the former to the latter. As a first step towards institutionalization, the NSCB, with technical assistance from the HDN, prepared the provincial HDI estimates for 1997, together with updates for 1994. The NSCB is initially targeting to come out with provincial HDIs every three years to jibe with the release of the results of the Family Income and Expenditure Survey (FIES) of the National Statistics Office (NSO). This survey generates the income data for the computation of the HDI.

II. Indicators Used in the Estimation of the HDI

The provincial HDI is constructed using the average of three development outcomes for each province. These include:

1. health as measured by life expectancy;

2. level of knowledge and skills as measured by the weighted average of functional literacy and combined elementary and secondary net enrolment rate; and

3. access to resources as measured by the level of real per capita income.

III. Definition of Terms

Combined Enrolment Rate --- derived in this report as the ratio of the sum of elementary and secondary enrolment in the corresponding age group that should be enrolled at those levels to the sum of corresponding school age population

Consumer Price Index --- measures the average changes in the retail prices of a fixed basket of goods and services usually purchased by households for their consumption (NSCB 1999)

Functional Literacy -- represents a significantly higher level of literacy that includes reading, writing, and numeracy skills. These skills must be sufficiently advanced to enable the individual to participate fully and effectively in activities commonly occurring in his life situation that require a reasonable capability beyond oral and written communication (NSCB 1999)

Life Expectancy -- refers to the average number of years a person is expected to live from the time of his/her birth; also referred to as life expectancy at birth (NSCB 1999)

Net Enrolment Rate -- pertains to the ratio in a given year of enrolment at a given level of education in the age group which should be enrolled at that level to the corresponding population; also referred to as a participation rate (NSCB 1997)

Real Per Capita Income -- derived by deflating the average per capita income data generated from the Family Income and Expenditures Survey (FIES) using the corresponding provincial consumer price index with 1994 as the base year.

IV. Computation of the HDI

Operationally, any progress or change in human development is measured by an index called the ""Human Development Index"" or HDI. This index attempts to measure the complex concept of human development by tracking the progress of three selected aspects of human life mentioned above. As an index that tries to capture and simplify description of human development, it can evolve through time depending on the availability of data and emerging needs.

In the Philippines, the HDI is measured by taking the average of (1) life expectancy; (2) weighted average of functional literacy and combined elementary and secondary net enrolment rate; and (3) real per capita income. That is,

HDI = (I1 + I2 + I3 ) / 3

where

a) I1 = life expectancy index

I1 = ( H -- Hmin ) / (Hmax -- Hmin)

where

H = life expectancy at birth (in years) by province
Hmax = 85 years
Hmin = 25 years

Note: The minimum and maximum values adopted for life expectancy at birth are based on the values being used by UNDP and HDN.

b) I2 = education index

I2 = 2/3 (E1) + 1/3 (E2)

where

E1 = (Lit -- Litmin) / (Litmax-- Litmin) = index for functional literacy by province
Litmax= 100
Litmin = 0

E2 = (Enrol -- Enrolmin) / (Enrolmax-- Enrolmin) = index for combined elementary and secondary net enrolment rate by province
Enrolmax = 100
Enrolmin = 0

c) I3 = income index

I3 = (Y -- Ymin) / (Ymax - Ymin )

where

Y = real per capita income by province

for 1994, Ymax = Php37,070
Ymin = Php 6,533

for 1997, Ymax = Php48,930
Ymin = Php 8,181

for 2000, Ymax = Php44,357
Ymin = Php 5,960

Note: The maximum and minimum values set for the income indicator are the highest and lowest values of real income per capita actually attained by the provinces for a particular reference year. As suggested by the Human Development Network (HDN), the National Capital Region was treated as one of the provinces in determining the maxima and minima. Hence, the NCR real income figures were adopted as the maximum values in the computation of the HDI for all provinces for the three reference years.

V. Data Sources, Limitations and Revisions in 2000 Report

It has to be emphasized that data limitations really do pose constraints on estimating the HDI. Within each component index, there may already be data limitations and one who is estimating the HDI may have more than one way in addressing the constraint. It may be through some modeling techniques, use of proxy indicators, or by using assumptions based on some studies. Other techniques may also exist but the choice of strategy really depends on the estimator.

For this report, the NSCB still used the same methodology used in the 1997 report as described above, except for revisions in the life expectancy and education indices as new data became available. It should also be noted that in 1997, the province of Kalinga-Apayao was split into Kalinga and Apayao. Thus, for 1997 and 2000, separate indices were computed for them. The proceeding discussions elaborate the data sources and data limitations in the computation of the life expectancy, education and income indices for 2000.

A. Life Expectancy

In the previous 1997 report, the life expectancy figures for 1994 and 1997 were estimated using the results of the study of Cabigon and Flieger, 1999. For this report, the life expectancy figures disaggregated by sex were taken from the 1995 Census-Based National, Regional and Provincial Population Projections of the National Statistics Office (NSO) to estimate life expectancy index for 1994, 1997 and 2000. Consequently, the life expectancy index for 1994 and 1997 were revised. For 1994, however, the life expectancy figures used were those of 1995.

The 1994 population was estimated using the computed 1990-1995 annual average growth rate of NSO available at the regional and provincial levels and the household population of the 1995 Census of Population.

On the other hand, the 1997 population was obtained from the 1995 Census-Based Regional and Provincial Population Projections while the 2000 household population was obtained from the 2000 Census of Population. However, since disaggregation by sex of the 2000 Census of Population is not yet available for all provinces, the sex disaggregation structure of the household population in the 1995 Census of Population was used.

B. Education Index

Functional Literacy Rate

The source of the functional literacy rates used was the Functional Literacy, Education and Mass Media Survey (FLEMMS) conducted by the National Statistics Office (NSO) in 1994. Since then, no updates have been made on the rates. Thus, using the same literacy rates in this report is already a limitation in the estimation. Through the years, with the increase in the enrolment rate in the country, the functional literacy rates may have already improved to some extent. Thus, using the outdated rates there may be source of underestimation in the education index.

Combined Elementary and Secondary Enrolment Rates

The elementary and secondary enrolment rates were sourced from the Department of Education (DepEd). Due to non-availability of data for the SY 2000-2001, the enrolment figures used in this report are for SY 1999-2000. Thus, this poses another limitation on the computation of the HDI. With the increasing trend present in Philippine enrolment figures, using the SY 1999-2000 data may be a source of underestimation of the education index and consequently, the HDI.

Also, there was the need to revise the 1994 and 1997 education index to reflect SIARGAO, a municipality in Surigao del Norte; and to include Marawi City in Lanao del Sur and Cotabato City in Maguindanao.

C. Income Index

Data used for income was the average per capita income from the 1994, 1997 and 2000 Family Income and Expenditure Survey (FIES) conducted every three years by the NSO. This income was deflated using the provincial Consumer Price Index (1994=100) that was also sourced from the NSO. Source: National Statistical Coordinating Board