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Postcrisis Growth and Development
when commodity prices fell sharply as the crisis hit the world economy. In addition, they argue that the medium-term impact of external shocks tends to be larger in low-income countries because they have fewer policy options to help their economies rebound. Addressing the problems of low-income countries—and therefore giving voice to developing countries that are not members of the G-20— shifts the focus of policy makers to the mid- and long-term consequences of the crisis on human development outcomes. From the early 1990s until the outbreak of the crisis, the acceleration of economic growth in many developing countries tended to support significant progress in most human development indicators. In fact, when the crisis hit, global poverty had fallen by nearly 40 percent since 1990, and developing countries as a group were on track to reach the target of cutting poverty in half by 2015. Beyond poverty, progress on the MDGs has been uneven, with gains in certain targets and losses in others. For example, while many developing countries were on track to achieve gender parity in primary and secondary education, the progress has been slower in tertiary education, particularly in Sub-Saharan Africa and South Asia. The authors used historical examples and indirect evidence to assess the immediate effects of the current crisis. They find that, historically, the impact of economic cycles on human development indicators has been highly asymmetric; the deterioration in bad times is much greater than the improvement during good times. They find that vulnerable groups, particularly in poor countries, are disproportionately affected. For example, during contractions, female enrollment in primary and secondary education drops more than male enrollment, and once children are taken out of school, future human capital is permanently lowered. Go and Timmer also find that the declines during crises in public spending, household spending, and even aid flows are critically disruptive, while the increased spending during boom periods results in gradual improvements. The authors’ key finding is that human development impacts of a global crisis of the magnitude experienced in 2008–09 will be long lasting. The authors conclude by arguing that the crisis has interrupted the MDG progress, even if some of the effects will not be apparent for many more years and even though the rapid response of the global community helped avoid an even more negative
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