The evolution of human development in Latin America

Leandro Prados de la Escosura has a thought provoking new working paper “Human Development as Positive Freedom: Latin America in Historical Perspective.”

The paper studies the evolution of human development (that is, a measure of development that tries to go beyond just per-capita income) in Latin America from the late 19th century until now.  de la Escosura reports a couple of interesting findings, namely, that

1. “Human development improved in Latin America during the last century and a half, especially between 1900 and 1980, when gains were significant and across the board. Remarkable progress in life expectancy and education occurred between 1938 and 1950, precisely at the time of an economic globalization backlash.”

2. “The last three decades have witnessed a widening in the absolute gap between developed countries and Latin America. Differences in the behaviour of human development dimensions help to explain it. In Latin America, life expectancy played a major role in human development gains and catching up, but only until the mid twentieth century. With completion of the first health transition, its dynamic role faded. A second wave of life expectancy gains comparable with those of developed countries has yet to take place. Instead, education was mainly responsible for long run.”

He goes on to explain the important questions that these findings raise:

“Why did life expectancy stop being the driving force of world human development as the first health transition was concluded? Why Latin America has been left aside from the second health transition? Is there a lack of public policies, or a polarizing effect of new medical technologies? Is it that health and education are highly income-elastic? To what extent did restricted access to health and education, as a result of income inequality, play a role?”

de la Escosura also has an interesting discussion of the anomaly that is Cuba, a country that ranks high on some human development indices because of high life expectancy rates and education levels, but clearly doesn’t have a high level of human development if we mean freedom of expression and opportunity.  de la Escosura agrees, offering the following caveat to his results :

“The case of Cuba presents an extreme contrast between the success in achieving ‘basic needs’ and the failure to enlarging people’s choices –the core of human development- as agency and freedom are curtailed by the political regime. Restrictions of individual choice in Cuba -as collectivization, forced industrialization, and political repression exemplify-, suggest that achievements in health and education could be, strictly speaking, depicted as ‘basic needs’ rather than as human development.”

Has Cuba sneaked the Washington Consensus past the US Embargo?

Ladies and Gentlemen: Cuba is open for bidness (except to the US who is still embargo-ing them. and why not, it’s worked so well the last 50+ years)!

Among other things, “Investment projects wholly funded by foreign capital would be explicitly allowed in all sectors except health care and education, something that is essentially unheard of today.”

Along with this, the legislature passed tax cuts and cut red tape.

All of these are undoubtably good ideas for Cuba. I guess we have not embargoed them from appropriating the Washington Consensus!

But my favorite bit is how Cuba’s VP and economy czar explained the move:

“Cuba needs from $2 billion to $2.5 billion a year in direct foreign investment to advance its socialist socio-economic model, prosperous and sustainable,”

He kinda pulled a William Westmoreland there, no? “In order to save our socialist model we have to destroy it”.

Of course, the proof will be in the economic pudding. It’s one thing to vote for a freer economy; it’s quite another to actually let it come to pass.