The human crisis

My colleague Justin Lin says that it is important not to let the global financial crisis become “a human crisis.” Nowhere is this truer than in Africa. Although spared the first-round effects of banking failures, Africa is already facing the second-round impacts of declining capital flows, slowing remittances, stagnating foreign aid and falling commodity prices and export revenues. The continent will almost surely experience a deceleration in growth. And if history is a guide, this deceleration will have an impact on human development.

In an exhaustive study of growth accelerations and decelerations, Jorge Arbache and John Page (my colleague and predecessor, respectively) show that the impact on human development is asymmetric. Child mortality, for instance, rises during decelerations, but hardly falls during accelerations. Primary school completion rates are substantially lower in countries experiencing growth decelerations, as is life expectancy. Disturbingly, they also find that official development assistance (either per capita or as a share of GDP) is lower during decelerations, meaning that it is pro-cyclical.