Thursday, 20 June 2019

Human Development in the Age of Globalisation

Leandro Prados de La Escosura is a professor
at the University of Charles III in Madrid
In a new EHES working paper, Leandro Prados de la Escosura (Universidad Carlos III and CEPR) analyses wellbeing which is widely seen as a multi-dimensional phenomenon affected not only by material goods, but also health, education, agency and freedom, environment, and security (Fleurbaey, 2009; Stiglitz et al., 2009). Among the multidimensional approaches to well-being human development has been defined as “a process of enlarging people’s choices” (UNDP, 1990; 10; 1993:105). The working paper is available here. This post has appeared in Vox.eu and it is reproduced here.

In a new paper, I approach long-term well-being with an augmented historical human development index (AHHDI) that combines new measures of achievements in health and education, material living standards, and political freedom (Prados de la Escosura, 2019). The AHHDI shows that world human development steadily improved over the last one-and-a-half centuries raising its level 5.3-fold since 1870. Still, the world average level remained below 0.5, on a 0-1 scale, in 2015.

Figure 1 Augmented Human Development* and Real Per Capita GDP Growth (%)          (excluding the income dimension)

Human development (excluding the income dimension) exhibits similar but slightly slower long-run growth than GDP per person (1.4% and 1.6%, respectively), throughout 1870-2015. A closer look reveals, however, that the pace at which human development progressed did not match that of real per capita GDP, with substantial discrepancies over 1913-1970 and since 2000 (Figure 1). During the phase of globalisation backlash (1914-1950), real per capita GDP growth slowed down across the board as commodity and factor markets disintegrated, while human development thrived, particularly in less developed regions. Conversely, in the post-1950 era, human development has advanced significantly less than real GDP per head.

These discrepancies derived from the fact that non-income dimensions have driven world human development gains over time (Figure 2). Life expectancy was the main contributor to human development progress over the 150 years, although its main contribution took place during 1914-1950 and the 1960s when it contributed half the human development gains. Education led the late nineteenth century advance and was a steady contributor to human development over the entire time span considered (but for the 1940s) and political freedom made substantial contributions in the 1900s and 1950s, and during 1980-2000.

Figure 2. Drivers of Augmented Human Development in the World, 1870-2015 (%)

Advances in Human Development were unevenly distributed across world regions. An absolute gap between the OECD and the Rest broadened throughout 1870-2010. In relative terms, however, the gap waned since the beginnings of the twentieth century, especially in its central decades and, again, from 1990 onwards so, by 2015, human development in the Rest represented over half that of the OECD, doubling its share a century earlier. The evolution of the Rest vis-à-vis the OECD in terms of human development is at odds with that in terms of per capita income, that presents a sustained deterioration, from nearly one-third of the OECD level in 1870 to less than 15 per cent in 2000.

Catching up to the OECD in terms of human development has taken place in the Rest since 1900 and, especially, in the 1930s, the Golden Age (1950-70), and during the last two decades of the twentieth century, with education making the single most important contribution over the long run (Figure 3). Longevity emerges as the main dimension behind catching up in the early twentieth century, the 1920s particular, when a large proportion of the Rest was under colonial rule, and especially, in the 1960s, at the time of active public policies across the board and China’s recovery from the Great Leap Forward debacle. Lastly, political freedom was the leading force behind catching up prior to World War I, in the 1930s and 1950s, and over 1980-2000.

Figure 3. Augmented Human Development Catching-up in The Rest 1870–2015 (%)
Why was the contribution of longevity to enhancing human development largely concentrated in 1920-1970? Health improvements can be depicted in terms of a health function (Preston, 1975; Easterlin, 1999). Movements along the function represent gains attributable to economic growth and result in improving nutrition -which strengthen the immune system and reduce morbidity (Fogel, 2004)- and increasing the public provision of health (Cutler and Miller, 2005). Outward shifts in the health function represent improvements in medical knowledge (Riley, 2005; Cutler et al., 2006). The advancement in medical knowledge originated in the discovery of the germ theory of disease (Preston, 1975) that led to the epidemiological or health transition in which persistent gains in lower mortality and higher survival were achieved as infectious disease gave way to chronic disease as the main cause of death (Omran, 1971). The germ theory of disease led to the introduction of new vaccines (since the 1890s) and drugs to cure infectious diseases (sulphonamides since the late 1930s and antibiotics since the 1950s), along chemicals such as DDT, instrumental in battling malaria (Easterlin, 1999; Jayachandran et al., 2010; Lindgren, 2016). However, the germ theory of disease had another far from negligible effect: the diffusion of preventive methods of disease transmission and knowledge dissemination which through schooling and low cost improvements in public health had a profound impact in less developed regions where low incomes precluded the purchase of the new drugs. As a result, mortality declined throughout the life course with special impact on infant mortality and maternal death (Riley, 2001). The epidemiological transition spread beyond the most advanced regions, namely, Western Europe, the European offshoots, and Japan (OECD hereafter), since the 1920s, a finding at odds with the view that dates health improvements outside the West only since the 1940s as the absence of drugs and the lack of concern of colonial rulers prevented it (Acemoglu and Johnson, 2007). By 1970, the epidemiological transition was largely exhausted helping to explain life expectancy’s declining contribution to human development thereafter.

Since 1990 a second health transition with result of better treatment of respiratory and cardiovascular disease and vision problems, has led to mortality falling among the elderly, helped by better health and nutrition in their childhood (Eggleston and Fuchs, 2012; Deaton, 2013). The diffusion of new medical technologies has resulted in longer and healthier life years (Mathers et al., 2001; Hay et al., 2017). This second health transition has been so far restricted to the OECD. The AIDS-HIV pandemic in Sub Saharan Africa and the collapse of socialism, plus the lack of public policies, help to explain life expectancy’s negative contribution to catching up in the Rest since 1990.

References:
Acemoglu, D. and Johnson, S. (2007), ‘Disease and Development: The Effects of Life Expectancy on Economic Growth’, Journal of Political Economy, 115: 925–985.
Cutler, D. and Miller, G. (2005), ‘The Role of Public Health Improvements in Health Advance: The Twentieth Century United States’, Demography, 42 (1): 1¬22.
Cutler, D., Deaton, A. and Lleras-Muney, A. (2006), ‘The Determinants of Mortality’, Journal of Economic Perspectives, 20 (1): 97¬–120
Deaton, A. (2013), The Great Escape. Health, Wealth and the Origins of Inequality (Princeton, NJ: Princeton University Press)
Easterlin, R.A. (1999), ‘How Beneficient is the Market? A Look at the Modern History of Mortality’, European Review of Economic History, 3: 257-294.
Eggleston, K.N. and Fuchs, V. (2012), ‘The New Demographic Transition: Most Gains in Life Expectancy Now Realized Late in Life’, Journal of Economic Perspectives, 26 (1): 137-156.
Fleurbaey, M. (2009), ‘Beyond GDP: The Quest for a Measure of Social Welfare’, Journal of Economic Literature, 47: 1029–1075.
Fogel, R.W. (2004), The Escape from Hunger and Premature Death, 1700–2010. Europe, American and the Third World (New York: Cambridge University Press).
Hay (2017), “Global, Regional, and National Disability-adjusted Life-years (DALYs) for 333 Diseases and Injuries and Healthy Life Expectancy (HALE) for 195 Countries and Territories, 1990–2016: a Systematic Analysis for the Global Burden of Disease Study 2016”, Lancet 390: 1260-1344.
Jayachandran, S., Lleras-Muney, A. and Smith, K.V. (2010), ‘Modern Medicine and the Twentieth Century Decline in Mortality: Evidence on the Impact of Sulfa Drugs’, American Economic Journal: Applied Economics, 2 (1): 118–146.
Lindgren, B. (2016), The Rise in Life Expectancy, Health Trends among the Elderly, and the Demand for Care. A Selected Literature Review, NBER Working Paper 22521
Mathers, C.D., Sadana, R., Salomon, J.A., Murray, C.J.L. and Lopez, A.D. (2001), ‘Healthy Life Expectancy in 191 Countries’, Lancet, 357: 1685–1691
Omran, A.R. (1971), “The Epidemiological Transition: A Theory of Epidemiology of Population Change,” Milbank Memorial Fund Quarterly, 49: 509-538.
Prados de la Escosura (2019), Human Development in the Age of Globalisation, CEPR Discussion Paper 13744.
Preston, S.H., (1975), ‘Mortality and Level of Development’, Population Studies, 29: 231–248
Riley, J.C. (2001), Rising Life Expectancy: A Global History (New York: Cambridge University Press).
Riley, J.C. (2005), Poverty and Life Expectancy: The Jamaica Paradox (New York: Cambridge University Press).
Stiglitz, J.E., Sen, A.K and Fitoussi, J.P (2009), The Measurement of Economic Performance and Social Progress Revisited: Reflections and Overview, http://www.stiglitz-sen-fitoussi.fr/en/documents.htm.
United Nations Development Programme [UNDP] (1990–2016), Human Development Report, New York: Oxford University Press. 

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