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Abstract
This paper examines the observed impact of past economic downturns on human development indicators in 29 countries of the region. We estimate empirical elasticities of key human development indicators covering demographics, crime, epidemiology, unemployment, and poverty with respect to changes in per-capita purchase power parity (PPP) gross domestic product. Based on published gross domestic product growth projections from the IMF, we then project the likely impact on the human development indicators in coming years for the countries in the region. The results suggest that the adverse impact of past downturn in income on poverty, public health, mortality, and suicide and homicide rates is likely to be considerable, long-lasting, and to affect the poorest disproportionately. Based on our results, we argue that policy-makers will need better and more timely data to provide the evidence base for policies; and that those policies need to take into account the looming substantial backslide in human development indicators stemming from the global economic crisis.
Acknowledgements
Opinions expressed in the article are those of the authors, and may not reflect the position of UNDP, the UNDP Regional Center in Bratislava, and of members of the Board of the UNDP. We thank Pedro Conseicao, Zsolt Darvas, Justin Kagin, Namsuk Kim, András Simon, Ben Slay, Aaron Smith, Jens Wandel, and Yi Wu for very helpful comments on earlier drafts of this paper. We thank Michaela Pospíšilová and Alessandra Bravi for excellent research assistance. Any remaining errors are our own.
Notes
We are obliged not to disclose these data to others.
The extrapolation, both backward and forward, of data series for internationally comparable absolute income poverty rates (share of those living under $5 and $2.5 per day in constant prices at PPP exchange rates) was performed on the basis of percentage changes for nationally defined absolute poverty measures that were closely correlated with the internationally comparable measures in periods when both were available. Such operations to bridge short gaps (of at most four years) were performed for Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, the FYR of Macedonia, Moldova, Poland, Romania, Russia, Serbia, Tajikistan, Turkey, Ukraine, and Uzbekistan. For the Czech Republic, Slovak rates of change were used backwards for 1992 only; and for Tajikistan, Kyrgyz rates of change were used for 1994–1997.
We used the –xtbond2– routine in Stata 11. See Roodman Citation(2006) for more details.
The incidence of diseases has a very broad range of coefficients on lagged values—one tentative observation was that those for viral diseases tended to be lower than for other diseases.
In most cases the peak and bottom years were chosen on the basis of the level of per-capita PPP GDP. However, in cases where this resulted in patently counterintuitive average elasticity estimates (either because of missing data for human development indicators in critical periods, multiple inflection points in their path, or because lags were likely involved), we chose the peak or bottom years based on the development of the human development indicator. In most cases the deviation of resulting extreme points was no more than two years.
Uniformity refers to results being the same for any specification; that is, full panel, sub-panel for periods of declines or upswings, or PTB average elasticity estimates.
Available at www.esa.un.org/unpp.
The countries entering these averages were the ones that featured in the panels used for the econometric estimates for each human development indicator (see notes to ). As a robustness check we have also calculated unweighted averages, and found that the resulting charts were very similar.