This paper describes the measuring of the efficiency with which national political-economic systems convert a given volume of material resources (GNP per capita) into human development for their citizens. A large sample of 61 developing countries is used, over the period 1980-95. The result is labelled RICE – relative income conversion efficiency.
Four main variables explain the variations in RICE: population density, location, the quality of government institutions and the extent to which governing elites are financially independent of their own citizens. The latter two variables correlate with RICE in strikingly contrasting ways. Countries with governance institutions attractive to international investors and lenders tend to perform badly at converting material resources into human development ie. a negative correlation with RICE. Whereas, governments dependent on their own citizens for critical resources appear more effective at converting material resources into human development.
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