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Development Economics Lecture 14

27.05.2024

end of globalization – human development index – least developed countries

This course has been a study of the economic problems facing developing countries in the last
75 years. We can discern roughly two periods. The first period is the three decades after the end
of the Second World War, when the global struggle between the developed capitalist states and
the socialist states created the conditions for states in developing countries in the capitalist
world-system to pursue national economic development aims. The second period is the four
decades in which the structure of international trade and finance underwent radical changes. In
this second period, changes in the policies of the developed countries substantially restricted
the ability of governments in developing countries to pursue national economic development.
The trend of the second period may be ending. The gradual economic decline of the US relative
to the EU and to China, the increasing economic and political competition posed by the BRICS
countries to the US and the EU (and the recent expansion of BRICS), attempts to de-dollarize
trade, and ideas such as establishing an Asian Monetary Fund indicate a slowdown in global
economic integration. Such developments may increase the policy options for developing
nations.
On the other hand, obstacles to economic development -as catching-up- are increasing. The
quantity of capital now necessary to build competitive manufacturing enterprises in key
industries (in electronics, in chemicals, even in the car industry) has grown to such levels that
states in most developing countries cannot possibly find sources for investment in such sectors.
The requirements of investment in these industries now pose much greater barriers to new
entrants than they did when South Korea and Taiwan were building these industries (Pirie 2013,
158, 159).
The effects of climate change and the degradation of ecosystems are creating additional
obstacles to economic development through destruction of homes, infrastructure and physical
capital; losses of harvests and decline in agricultural production. Developing country states that
are most affected by the climate crisis face difficult decisions on how to allocate scarce
resources between economic development and alleviating the suffering of the victims of the
crisis – or to seek more loans.
The brain drain
Another perpetual hindrance to economic development in developing countries is the
emigration of their educated skilled citizens.
The loss of educated people in a country decreases its ‘intellectual capital’. The emigration of
engineers reduces the capacity to absorb new technologies and to innovate in developing
countries. The emigration of university teachers weakens tertiary education systems.
Most importantly, emigration of nurses and doctors from developing countries affects the
general health and life expectancy in those countries. Infant mortality and vaccination rates are
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related to the numbers of medical personnel per thousand population. The highest emigration
rates of medical workers are observed in small island nations and low income countries in the
Caribbean and in Sub-Saharan Africa, where deficits of healthcare workers are estimated to be
most severe. That is, the greatest emigration of medical workers is occurring where there is the
greatest need for them.
A factor exacerbating the problem is a global shortage of health workers. Core country states
are trying to meet their deficits in health workers by importing them from the periphery. The
main destination countries for this type of emigration are the United States, the United
Kingdom, Germany, France, Sweden, Switzerland and other rich European countries. These
states implement various policies to attract foreign medical workers, such as offering permanent
residence and tax incentives.
Overall, the brain drain is a channel of unrequited resource transfers from developing countries
to developed countries. Scarce resources allocated to educating young people in poor societies
end up raising the welfare of rich societies (Vega-Muñoz, et al. 2021; Adovor et al., 2021).
Human development
If the main objective of economic development is to reduce human suffering from poverty, then
one should focus on the increasing inequality in income distribution within nations, as well as
between nations. In this course we did not focus on income distribution within nations, but
merely mentioned wages and working conditions in some contexts. Here we should mention
that the United Nations Development Program (UNDP) has been publishing annual Human
Development Reports since 1990, which go some way to reveal to what extent economic
resources are reflected in the general well-being of populations.
In each Human Development Report, Human Development Indices are published for individual
countries, based on the most recent data. The Human Development Index (HDI) is a statistic
reflecting a combination of one health and two education indicators in the country, and per
capita gross national income. The health indicator is life expectancy at birth in years. The two
education indicators are the expected years of schooling and the average years of schooling.
Life expectancy indicates the quantity and quality of public and private health services. Life
expectancy also reflects the general nourishment of the population, and the working conditions
and workplace safety standards in the country. The expected years of schooling statistic shows
the education prospects for the children of today. The average years of schooling shows the
average education level of the population. Per capita gross national income is said to measure
the ‘standard of living’.
The constituent data of the index ((life expectancy at birth, expected years of schooling, average
years of schooling and per capita GNI) are presented in the tables.
And in the human development table of each annual report, countries are ordered by their HDI.1
Besides countries’ ranking by their Human Development Indices, the tables also show the GNI
per capita rank minus human development rank for each country. In this statistic, some countries

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On the www.undp.org website the Human Development Reports are accessible as pdf files. At the end of each
report there is a table showing the latest HDI figures, beside many other useful tables. The contents of each
report focuses on a specific aspect of human development.
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with a relatively low per capita GNI rank (a large number in ranking) and a relatively high HDI
rank (a small number in ranking) have a positive number. And other countries with a relatively
high per capita GNI ranking (a small number) and a relatively low HDI ranking (a large number)
have a negative number. So these (GNI per capita rank - human development rank) figures show
to what extent the gross national incomes of the societies are reflected in the general welfare of
citizens, compared to other countries with roughly the same level of per capita GNI.
Table 14.1
Human Development Index and its components for selected countries (2021)
human life expectancy expected years means years GNI GNI per capita rank
HDI development at birth of schooling of per minus
rank index 2021 (years) (2021) (years) (2021) schooling (2021) capita* human development rank
1 Switzerland 0.962 84.0 16.5 13.9 66933 5
2 Norway 0.961 83.2 18.2 13.0 64660 6
19 Japan 0.925 84.8 15.2 13.4 42274 12
19 Korea (South) 0.925 83.7 16.5 12.5 44501 9
21 United States 0.921 77.2 16.3 13.7 64765 -14
35 Saudi Arabia 0.875 76.9 16.1 11.3 46112 -10
47 Argentina 0.842 75.4 17.9 11.1 20925 17
48 Türkiye 0.838 76.0 17.3 8.6 31033 -3
52 Russia 0.822 69.4 15.8 12.8 27166 -1
76 Iran 0.774 73.9 14.6 10.6 13001 15
77 Ukraine 0.773 71.6 15.0 11.1 13256 11
79 China 0.768 78.2 14.2 7.6 17504 -8
83 Cuba 0.764 73.7 14.4 12.5 7879 37
86 Mexico 0.758 70.2 14.9 9.2 17896 -16
87 Brazil 0.754 72.8 15.6 8.1 14370 -5
91 Azerbaijan 0.745 69.4 13.5 10.5 14257 -8
101 Uzbekistan 0.727 70.9 12.5 11.9 7917 18
106 Palestine 0.715 73.5 13.4 9.9 6583 21
114 Indonesia 0.705 67.6 13.7 8.6 11466 -11
118 Kyrgyzstan 0.692 70.0 13.2 11.4 4566 26
120 Venezuela 0.691 70.6 12.8 11.1 4811 20
174 Gambia 0.500 62.1 9.4 4.6 2172 -1
180 Afghanistan 0.478 62.0 10.3 3.0 1824 -2
183 Yemen 0.455 63.8 9.1 3.2 1314 1
186 Mali 0.428 58.9 7.4 2.3 2133 -11
191 South Sudan 0.385 55.0 5.5 5.7 768 -1
Source: Human Development Report 2021-2022. www.undp.org. (28.12.2023)
* 2021 GNI per capita at 2017 PPP dollars.

Table 14.1 presents data for 26 countries from the Human Development Index table in the
Human Development Report for 2021-2022.
China, with $17504 per capita GNI in 2021, was able to provide a longer life expectancy for its
citizens than the US, which enjoyed $64765 per capita GNI that year. Argentina, with $20925
per capita GNI, was able to achieve a longer expected schooling period than Japan, South Korea,
the US and Saudi Arabia, each of which had more than twice the per capita GNI of Argentina.
Focusing on the GNI per capita rank minus human development rank column in the table, Cuba,
Kyrgyzstan, Palestine, Venezuela, Uzbekistan, Iran, Japan and Ukraine stand out as countries
which realized higher human development levels than other countries with comparable per
capita GNIs.
To be sure, per capita GNIs can fluctuate from year to year, so the ranking difference figures
may be influenced -by a few units- by random macroeconomic factors. However, schooling and
life expectancy indicators are the result of long term policies.
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The table reveals that there is no one-to-one correspondence between per capita GNIs and the
general well-being of populations. A high level of GNI or GDP is not indispensable for ensuring
welfare for all members of a society if the available resources are used for that purpose.
It is noteworthy that, among the countries that achieved high human development -given their
per capita GNI- in the table above, Cuba, Venezuela and Iran have been subject to heavy US
economic sanctions for decades, and Palestine is a country under a strangling occupation since
1948.
Least Developed Countries
Finally, it should be noted that the content of this course reflects the perspective of an economist
of a middle income country. Hence the particular problems of the group of countries categorized
as the Least Developed Countries (LDCs) have not been addressed in this course. The disparity
between the LDCs and developing countries in general is increasing, as well as the gap in per
capita GDPs between LDCs and the developed countries. A comparison (in Tables 1.2 and 1.3)
of the changes in average per capita GDP ratios to high income countries of the middle income
countries and of the low income countries gives an idea of the increasing differences in per
capita GDPs between these groups of developing countries.1
Some writers who are concerned with global social justice argue that it is not fair to treat all
developing countries as a single group in international trade negotiations, regardless of their per
capita GDP levels. They hold that, not only developed countries, but middle income developing
countries also have a moral obligation to give special treatment to the Least Developed
Countries in trade, and that middle income countries should not object to the advanced
countries’ giving special trade advantages to the Least Developed Countries in addition to the
advantages they give to developing countries in general (Ó Laoghaire et al. 2022).
***
This concludes the course. I hope it was useful.

Sources
Adovor, E., M. Czaika, F. Docquier, Y. Moullane. 2021. Medical brain drain: How many, where
and why? Journal of Health Economics. 76. 1-16.
Ó Laoghaire, Tadhg, Thomas R. Wells. 2022. Trade Justice and the Least-Developed Countries.
The Journal of Political Philosophy. Volume 0. No. 0. 1-23.
Pirie, Iain. 2013. Globaliation and the Decline of the Developmental State. Ch. 6 in Beyond the
Developmental State: Industrial Policy into the 21st Century. Ben Fine, Jyoti Saraswati,
Daniela Tavasci (ed.). Pluto Press.
Vega-Muñoz, Alejandro, Paloma Gónzalez-Gómez-del-Miño, and Juan Felipe Espinosa-
Cristia. 2021. Recognizing New Trends in Brain Drain Studies in the Framework of Global
Sustainability. Sustainability. 13.

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The Least Developed Countries are a subgroup of the low income countries. World Bank data for the Least
Income Countries have not been presented in the tables in the course to avoid large tables.