Putting people first: Human development in millennial economies

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Preface

Ian Scott, Executive Director, Emerging Markets Symposium
April 2023

The original objective of this publication was to interpret the outcomes of nine symposia at Green Templeton College, Oxford, on human development in emerging economies. The symposia focused on a cohort of 20 Millennial economies (so-called because the cohort came into being just before and just after the Millennium). The cohort included Argentina, Brazil, Chile, China, Colombia, Egypt, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Peru, the Philippines, Poland, Russia, South Africa, Thailand, Tunisia and Turkey.

As a book-length draft of what is now a monograph neared completion in early 2020, it became increasingly clear that the COVID-19 pandemic announced by WHO on 11 March 2020 would have serious repercussions for Millennial economies. It also became clear that: (i) the impact of the pandemic would almost certainly affect its findings and conclusions; (ii) the work could not be completed in the absence of much more knowledge of the pandemic’s magnitudes, trajectories and consequences; (iii) there was no knowledge about when relevant data on the pandemic might become available; (iv) maintaining the original publication schedule would mean the analysis would be quickly outdated; and (v) publication would have to be delayed. As it turned out that was just as well.

First, because the short- and long-term consequences of the pandemic in Millennial economies were substantial (although less than initially feared). Second, because the enforced delay allowed time to recognise the virtues of brevity, which is why the planned book became a monograph. Third, because although its treatment of economic and social development in Millennial economies between 1980 and 2010 and its interpretation of policies and interventions that vastly reduced poverty while exacerbating inequity and inequality are largely unchanged, there are important differences between the partial draft of June 2019 and this final version.

The differences include:

• A revised assessment of the great recession (2007-09)
• A modified interpretation of why welfare and well-being in Millenial and advanced economies
  partially converged in the first decade of the new century and diverged in the next.
• An analysis of the impact of COVID-19 on Millenial economies.

The monograph has five parts. Part 1 is an introduction. Part 2 considers definitional and conceptual questions: what are emerging markets/Millennial economies; what were the conceptual underpinnings and specific objectives of the symposia; what do we mean by human welfare/well-being, human capital accumulation/formation and human development? Part 3 describes age-specific and generic determinants of human development in Millennial economies over the human life course. Part 4 is a historical (1945–2022) perspective on economic and social change in Millennial economies, which (i) explores issues of convergence, divergence, resilience and human development and (ii) assesses the socioeconomic impact of COVID-19. Part 5 explores issues of social and economic resilience in Millennial economies through c.2030.

Synopsis

This monograph explores five linked propositions. First, that sustainable economic growth, social coherence and political stability in Millennial economies are partially predicated on human capital formation/accumulation and human welfare/well-being (aka ‘human development’). Second, that public, private and civic initiatives to promote human development in these economies must balance national economic interests with principles of human equality and equity. Third, that the speed, scope and sustainability of human development are governed by political feasibility. Fourth, that the comparative advantages and disadvantages of economic and social systems are strongly influenced by cumulative and circular causation. Fifth, that seemingly immutable socioeconomic problems that cannot be resolved, can be attenuated.

These propositions were severely tested in 2019–21 when, in Millennial and other economies, the COVID-19 pandemic caused widespread economic and human damage. The damage included lost lives, jobs and earnings; disrupted education, health and social care; increased social and economic inequality and inequity within Millennial economies and between Millennial and advanced economies; and the partial unravelling of socioeconomic progress made in Millennial economies since c.1980.

The pandemic was many things. It was a harbinger of geo-environmental, geoeconomic and geopolitical threats to Millennial and other economies in the global contexts of international mistrust, resurgent autocracies, enfeebled democracies, weak bureaucracies and partially redundant architectures of international collaboration. It was a ‘canary in a coalmine’ warning that most Millennial economies had limited capabilities to anticipate and manage economic, social, political, environmental and medical threats to peace and prosperity. It was a reminder that post-COVID reconstruction would compete for resources with the pursuit of long-term growth, social coherence and stability in Millennial economies. And it was a powerful message that development strategies in Millennial economies must incorporate national resilience strategies focused on sound macroeconomic management, environmental conservation, adaptation and mitigation and coordinated social interventions in health and education.

This monograph blends our retrospective view of the outcomes of the 2009–18 series of EMS symposia with our assessment of the implications of the COVID-19 pandemic. Accordingly, readers may wish to read it in conjunction with reports on nine symposia on emerging market economies published by Green Templeton College between 2010 and 2018.

Part 1: Introduction

In 2006–07, emerging economies, also known as emerging markets, had been enjoying a good run. They were increasingly viewed as global economic players. Their collective performance evoked excitement that globalisation and the end of the Cold War offered the prospect of relatively rapid ‘convergence’ of living standards in emerging and advanced economies. Rapid growth in emerging economies was seen by advanced economies as positive for the world as a whole. The efforts of emerging economies to end poverty, many of them in China and India, were embraced as shared goals by the United Nations and other multilateral organisations. And emerging economies were increasingly seen as intellectually and even financially capable of propelling their own development.

In 2007–08, scholars at Templeton College, Oxford considered the futures of what they would later call the Millennial cohort of emerging economies against the background of: profound upheavals triggered by the global financial crisis of 2007–08; (ii) a perception that, in a glow of pre-recession optimism, the multilateral system had largely abandoned emerging economies; and (iii) speculation about what would replace the Multilateral Development Goals (MDGs). The scholars concluded that:

• The cohort was politically, economically and culturally diverse.
• Over the previous 20 years, sustained growth, job creation, rising incomes and public and private investments in healthcare, education, housing, infrastructure, sanitation, nutrition and social services had lifted more than a billion people in emerging economies out of poverty.
• In 2000, the cohort accounted for almost half the world’s population and 40% of its economy. As its geo-economic and political weights increased, it accounted for even larger shares of global population and GDP by 2020.

Many observers assumed that the effects of initial advantages and disadvantages, circular cumulative causation, and resilience to endogenous and exogenous shocks that had allowed high-performing emerging economies to form a recognisable cohort, would continue indefinitely. Others argued that the torrid pace of globalisation was politically unsustainable (political concerns in advanced economies came later). A chorus of economists warned policymakers about the clear and increasingly present dangers of ‘middle-income traps’. Experts cautioned that unaddressed domestic and foreign issues could prevent Millennial economies from emulating the emerging economies of the 1950s, 60s and 70s. And more than a few analysts wondered if, when and how their living standards and those of advanced economies would eventually converge.

The Emerging Markets Symposia

In light of these concerns and conjectures, the Templeton scholars hypothesised that:
‘Without diversified and accelerated human development, Millennial economies will fail to sustain economic growth, social coherence and political stability, escape middle income traps or converge with advanced economies.’

They suggested their hypothesis should be considered by authorities from governments, businesses and civil societies (including academia) in emerging and advanced economies. Seeking financial support, they turned to the C&C Alpha Group, a London-based holding company, which very generously funded a ten-year series of multidisciplinary symposia managed by the newly created Emerging Markets Symposium (EMS) at Green Templeton College.

At the time of the first symposium (December 2009), the shock of the world financial crisis was still raw. G7 leaders had reached out to other large economies and the EU to establish the ‘G20 leaders’ process’. Recognising that emerging economies were systemically significant, its leaders agreed that the G7 should engage with emerging economies to help rescue the global economy.

The G20 London Summit in May 2009 marked the apogee of solidarity. The slow (and, in most cases socio-economically regressive) recovery changed political sentiments towards globalisation. Those sentiments were exploited by populist parties on both sides of the Atlantic (with the notable exception of Canada). As the decade of the ‘noughties’ ended and the EMS series started, emerging economies faced a hostile global geopolitical setting, growing concerns over climate change and ecosystem breakdown, species destruction and, in some cases, intensifying and potentially destabilising human development challenges at home.

Conclusions

This monograph’s core conclusions are as follows.

• Economic and social development in Millennial economies since c.1980, particularly in the first decade of the 21st century, were distinguished by:
  • the unprecedented speed and scale of economic, social, cultural, demographic and spatial change;
  • the development of national, corporate, communal and individual capacities, capabilities and competencies;
  • the partial convergence of human well-being in advanced and Millennial economies.
• The least vulnerable Millennial economies entered the 2007–09 recession later and came out of it earlier than those that were more vulnerable.
• Post-recession:
  • most Millennial economies suffered from the direct and indirect consequences of declining productivity;
  • human well-being in advanced economies and vulnerable Millennial economies diverged.
• Whereas many observers see the post-war history of human welfare in advanced economies as long periods of improvement followed by declining expectations and pessimistic views on the future, others (e.g. Fisher, 2022) point to relative optimism based on recent improvements in living conditions in Millennial economies.
• The COVID-19 pandemic:
  • was a devastating event for which the world was less well prepared than it could have been;
  • revealed that although some Millennial economies coped better than others, none were unscathed;
  • served as a reminder that, in varying degrees, Millennial economies were vulnerable to future epidemic diseases and environmental and geopolitical shocks that could disrupt, destroy or damage prospects for global peace, trade and governance;
  • emphasised that growth, coherence and stability in Millennial economies would largely depend on strengthening collective and separate resilience to future shocks through human development strategies that included: (i) comprehensive public health services, (ii) coordinated primary healthcare systems, (iii) primary education systems articulated with secondary and, in turn, tertiary systems in which public, private and civic sector employers play strategic and supportive roles.

Conclusions on health

The main conclusions on health are as follows.

• Having become old before they could become rich, Millennial economies must now address the consequences of declining rates of human reproduction and increasing longevity.
• Health outcomes in Millennial economies improved substantially (in some cases vastly) over four decades (1980–2020). None achieved parity with advanced economies but some pioneered world-leading medical and clinical innovations (e.g. telemedicine in India).
• Qualitative and quantitative deficits in medical/nursing/technical skills in Millennial economies were exacerbated by significant net outmigration to advanced economies.
• Public health services in Millennial economies (as in many advanced economies) were and are generally (in some cases severely) underresourced and poorly coordinated.
• The COVID-19 pandemic was represented, interpreted and treated as a global event that affected almost every nation on earth. Some observers argued that it was a syndemic, rooted in the conflation of pathology and socio-economic deprivation and, like all syndemics, disproportionately affected developing economies, poor communities in emerging economies and the poorest communities in advanced economies. The pandemic/syndemic posed massive threats to world health, exposed underlying weaknesses in the efficacy, capacity and coordination of public health systems (including the lack of vaccine solidarity), and was a prime example of a ‘wicked problem’. Other threats include climate-related, ecological and disease outbreaks that must be addressed through multinational initiatives.

Conclusions on education

Most Millennial economies have had limited success in their efforts to:

• develop sufficiently robust primary education systems to anchor secondary and tertiary education strategies;
• integrate primary and secondary curricula;
• provide sound foundations for continuous productivity-enhancing learning to meet changing demands for workplace skills;
• compensate for continuous outflows of professional and technical skills to advanced economies by developing policies and strategies to encourage eventual migrant repatriation.

Conclusions on welfare and distribution

• Initial distributions of advantages and disadvantages between and within Millennial economies were accentuated through circular and cumulative causation processes.
• Income poverty in Millennial economies was closely linked to deficits in education, health, housing and related services, social inclusion, mobility and climate protection and greater inequities and inequalities than in advanced economies.
• By c.2010, some Millennial economies had managed to narrow but not close gaps in domestic income distribution and access to education, healthcare and other determinants of human welfare that separated them from advanced economies. Many of those gaps re-opened in the next decade.

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Contact

For more information about the report or the symposia contact Ruth Scobie.