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L E S S O N S F R O M PA S T C R I S E S
BOX 2.1
GLOBAL MONITORING REPORT 2010
Defining growth cycles in developing countries
The historical growth patterns considered in this study are derived from a dataset for 163 countries covering 1980–2008. A growth acceleration episode meets three conditions for at least three consecutive years: • The four-year forward-moving average growth rate minus the four-year backward-moving average growth rate exceeds zero for each year. • The four-year forward-moving average growth rate exceeds the country’s average growth rate, meaning that the pace of growth during accelerations is faster than the country’s trend. Thus the defi nition of episodes of growth acceleration (or deceleration) is endogenous to each country’s long-run rate of growth. • Average GDP per capita during the four-year forward-moving period exceeds the average during the four-year backward-moving period, ensuring
that the growth acceleration episode is not a recovery from a recession. A growth deceleration episode meets these three conditions in reverse. The framework is from Arbache and Page (2007), which extends the methodology in Hausmann, Pritchett, and Rodrik (2005) by examining both accelerations and decelerations and by making each country’s long-run growth rate endogenous. Testing the sample means of development indicators for significant differences during periods of growth acceleration and deceleration can show whether countries that experience more growth fluctuations face slower progress on the MDGs and identify how growth cycles affect changes in development indicators. Source: Arbache and Page 2007; Arbache, Go, and Korman 2010.
Economic downturns also have a disproportionate impact on girls relative to boys. Life expectancy of girls and boys increases by two years during good times but decreases by about seven years for girls and six years for boys during bad times. The primary education completion rate rises 5 percent for girls and 3 percent for boys during good times but decreases 29 percent for girls and 22 percent for boys during bad times. The female-to-male enrollment ratios for primary, secondary, and tertiary education rise about 2 percent during growth accelerations but fall 7 percent (primary), 15 percent (secondary), and 40 percent (tertiary) during decelerations. These differences may result from household time and resource allocations that favor boys over girls when household budgets shrink.1 The differential impact on child schooling and child survival is greatest in low-income countries, while gender differences are smaller in middle-income countries. Economic downturns also have different effects on the labor force
participation of women and men, with important implications for how families adjust to economic crises (box 2.2). Despite some commonalities, the relationship between growth volatility and development outcomes varies across countries and regions. Initial conditions, regional spillovers, trade arrangements, economic geography, and other factors are associated with how countries and regions respond to economic downturns. For example, human development indicators in Sub-Saharan Africa are among the lowest in the world: infant and under-five mortality rates are almost three times higher than the global average, life expectancy is 29 percent lower, primary school completion is 66 percent lower, and the ratio of female to male tertiary enrollment is about half the global mean. But the difference between the average level of social indicators in good and bad times is smaller for Sub-Saharan Africa than it is for developing countries as a whole (compare figures 2.1 and 2.2). This finding may imply that at low levels