Economic Crises and Human Development: A Comparison of Developed versus Developing Countries

In this study, we examine the impact of the 2008 Global Crisis on the Human Development Index (i.e. HDI) values of Developed versus Developing Countries. We have a comprehensive sample of 174 countries. Over the 1980 to 2013 period, while there has been a gradual and consistent improvement in the index values, this improvement has slowed down sharply after the 2008 crisis. Our tests for the overall sample confirm that there is a significant slowdown in the rate of improvement in HDI values after 2008. When we divide our sample into “Very high HDI”, “High HDI”, “Medium HDI”, and “Low HDI” country groups, and run our tests, we are seeing that for all subgroups, there has been a significant slowdown in the improvement rate. Our findings show that while the slowdown is sharper for “Very high HDI”, “High HDI”, and “Medium HDI” groups, for “Low HDI” group the slowdown is relatively softer. We conclude that it is essential for both developed and less developed countries to take precautions regarding human development issues before a crisis hits.