Update Country Report Curaçao 15 Oct 2018

Human development indicators provide a rough snapshot of the relative development status of countries around the world and their progress over time in addressing basic human needs. These indicators, as presented in a newly released update published by the UN Development Programme (UNDP), were largely stable for most Latin American and Caribbean countries in 2017 compared with the prior year. Most countries also remained in the "high development" category. However, when compared with five years ago, some saw their scores and relative global ranking decline, while others experienced modest improvement.

The UNDP assesses human development trends annually for 189 countries, and produces a Human Development Index (HDI) based on four basic indicators: life expectancy, expected years of schooling, mean years of schooling and per head gross national income. To measure human development more comprehensively, the UNDP also produces the Inequality-adjusted Human Development Index, the Gender Development Index, the Gender Inequality Index and the Multidimensional Poverty Index. However, it uses the HDI alone to generate its annual ranking of countries, and groups them in four categories, ranging from very high human development to low human development, depending on their underlying scores.

Only five countries are very highly developed

Within Latin America and the Caribbean, a mere five countries (out of 33 regional countries included in the 2017 rankings) are categorised as very high development. Of the remainder, 21 are high development, six are medium development and one is low development (that outlier being Haiti).

Most countries' scores (marked on a scale of zero-lowest development-to one-highest development) were stable or changed only marginally between 2016 and 2017. However, when comparing 2017 to 2012, nearly all countries in the region saw an improvement in their overall human development score, albeit in many cases a small one. They chalked up increases despite the region's sharp economic slowdown of 2015-16, which was largely triggered by the sharp decline of commodity prices starting in 2014. Even countries, such as Chile and Peru, that are highly reliant on commodity exports and prices to drive economic growth and fiscal revenue posted improved development scores. Positive changes in the scores were driven by income, health and education outcomes.

Rises and falls in the rankings

The notable exception to the rise in scores is Venezuela: its score has declined steadily since 2012, leading the country to plunge 16 spots in the overall global rankings (to number 78 in 2017) compared with five years earlier. This is the result of the policy failures and an economic crisis that has caused a massive contraction of the country's GDP as well as sharp deterioration of social conditions in the past few years. In the entire HDI rankings, only three countries have experienced a more severe decline: conflict-torn Syria (down 27 places), Libya (down 26 spots) and Yemen (down 20).

Other Latin American and Caribbean countries also declined in the overall rankings between 2012 and 2017, but to a more modest extent. These include the Bahamas (-7), Trinidad and Tobago (-7), Cuba (-5), Barbados (-4), Jamaica (-3), Belize (-3), El Salvador (-4), Argentina (-2), Panama (-1) and Mexico (-1). However, in these cases the slippage in the rankings resulted not from a drop in their nominal human development scores, but from faster improvement in other countries in the index.

Some Latin American and Caribbean countries rose in the ranks between 2012 and 2017, with the most notable cases including the Dominican Republic (+8), Brazil (+7), Ecuador (+4), Guatemala (+4) and Nicaragua (+3). The Dominican Republic's climb is explained by that country's surprisingly strong average GDP growth rates (more than 6% annually) of the past five years, making it the fastest-growing economy in the region. Brazil's enhanced performance comes despite a painful recession in 2015-16 that stalled improvement in human development, but nonetheless reflects better performance compared with 2012, partly the result of social and anti-poverty policies that will have bolstered its scores for life expectancy and schooling. That said, although attendance rates are higher now in Brazil, the quality of public schooling, which is not captured that well in the index, remains poor.

Inequality remains a large challenge

Although the HDI alone shows progress in human development over the past five years in most cases-in line with the overall global trend-the more comprehensive indices produced by the UNDP, such as the Inequality-Adjusted Human Development Index and the Gender Inequality Index, reveal that much still needs to be done to address problems such as income inequality, gender gaps, and the unequal distribution of outcomes in education and life expectancy. Illustrative of this, Latin America's overall regional HDI score actually falls by 22% when adjusted for inequality, particularly of income.

Such disparities will continue to fuel policy debate in Latin America, and in some cases will exacerbate social dissatisfaction over unmet expectations and discontent with the inability of the political establishment to deliver improvements. Hence, for reasons linked not only to economic development but also political stability, policymakers will be under pressure to keep human development needs near their top of their agendas.