Effect of Logistics Performance Index on Human Development Index: An Application to Logistics Sector

Abstract

Human Development Index (HDI) has been subject to a lot of criticism over time, with the idea that it does not fully reflect human development, and has been complemented with different indicators in various studies. Despite its importance, especially considering the requirements of the era, logistics has not been considered with HDI and, although there are many synthetic indices that combine different methods (i.e. DEA, MCDM etc.) with HDI, these indices are far from reaching logical results. Logistics is a fundamental activity in meeting all human needs, and therefore should be considered as a measure of countries' human development. Therefore, this study offers a revision of the HDI with special consideration to the logistics performances of countries. It is observed that infrastructure and timeliness indicators from these sub-indicators of Logistics Performance Index (LPI) have a significant effect on the HDI. Using the United Nations' HDI calculation method with the statistically significant indicators, Logistics-HDI (L-HDI) is developed and proposed as a new index. This study argues that L-HDI reflects the human development of countries more appropriately. The L-HDI will also offer better benchmarking than other synthetic indices in its scientifical field.