The pandemic’s stark legacy: widening inequality between countries

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The gap in health, education and wealth between the world’s most and least-developed economies has reached its highest level in almost a decade, as high levels of post-pandemic debt limited poorer countries’ ability to invest.

The latest Human Development Index, a UN initiative, signals that the coronavirus pandemic ended two decades of convergence between the world’s most and least developed economies.

The development gap between the top and bottom groups of countries last year returned to the same levels as 2015, widening at a record pace over the preceding two years, according to the report released on Wednesday by the UN’s Development Programme.

The gap between countries that score low on the development index, such as Nigeria and Pakistan, and the medium group, which includes Kenya and India, also increased sharply, rising 17 per cent between 2021 and 2023.

UNDP administrator Achim Steiner said the widening inequality reflected a lack of fiscal space in many developing countries to address the downturn after the cost of Covid-19 left them burdened with debt.

“Dozens of countries in the developing world are paying more servicing the interest on their debt than they have available to spend on education or health,” he said. “We now see very serious divergence, particularly for the bottom 20-30 developing countries. We are not on the trajectory we were on 10 years ago.”

All members of the OECD group of developed economies recovered to 2019 levels in last year’s index, but some 18 of the 46 least developed countries still scored below their pre-pandemic levels.

Slower income growth drove the divergence. Average gross national income per capita grew at twice the rate for OECD members as it did for least-developed countries, rising 4 per cent between 2019 and 2023. 

The fastest wealth accumulation occurred in developing countries in east Asia and the Pacific, however, where gross national income per capita rose 15 per cent over the past four years, while average wealth in sub-Saharan Africa fell 1 per cent.

Overall, the global HDI scores reached a record high in 2023, but remained three years behind where they were projected to have been without the pandemic.

Across almost all regions, health and education outcomes have recovered, according to the index, but slower progress in the lowest-ranked countries has extended the gap with wealthier countries.

But Norbert Schady, chief economist for human development at the World Bank, said the effect on education might be greater than the report suggested. That is partly because, for example, the development index looks at school attendance rather than learning outcomes.

“The biggest effects [were] on very young children in terms of their cognitive and language development and . . . massive learning losses that were highly correlated with the extent to which schools were closed for long periods,” he said.

“There is likely some recovery, but nowhere near the amount it would take to get these children back on track. The effects of this will ripple out for many years, possibly even for decades.”

Education spending made up only 3 per cent of pandemic stimulus packages on average and less than 1 per cent in poorer countries, according to the World Bank.

Increased inequality has led to greater polarisation in societies and support for authoritarian governments, according to Steiner. He said this polarisation was fuelling a “dangerous” narrative supporting reductions to global trade and interdependence. 

“We’re living through an age where global interdependencies are being reshaped, but they’re actually more intense than ever before,” he said. “This gridlock is paralysing us when it comes to challenges such as climate change. If we’re not careful, it could really throw the world backwards.”