MANAGUA—Slowly but surely, Nicaragua is climbing out of the cellar of the UN’s Human Development Index—and by more than one step at a time.
According to the 2013 Human Development Report, released Tuesday morning in Managua, Nicaragua over the past 12 years is outpacing the Latin American average in its ascent up the human development index, averaging 1.1% growth per annum (compared to the Latin America’s average of .7% and the overall world average of .95%).
Nicaragua’s improved standing is due in great part to horrid starting point and substantial reductions in extreme poverty; the percentage of those earning less than $2.5/day has dropped from 59.1% in 1993 to 36.2% in 2009, according to the most recent data available in the UNDP report.
Nicaragua also has more people breaching the middleclass threshold—folks who live on $4-10/day (a UN classification known as “vulnerable”). The percentage of those who live with one foot in poverty but their eyes on a middleclassdom has increased from 19.7% to 32% over the past 16 years.
Nicaraguans who have made it over the hump to middleclass comforts (those earning $10-50/day) has grown from 5.7% to 8.8% since 1993, according to the UN report. Meanwhile, those who have graduated from extreme poverty to “moderate poverty” (earning $2.5-4/day) have increased from 15.2% to 22.2%.
Overall, Nicaragua has moved out of the UN’s lowest human development category and into the bottom half of “medium development countries,” ranking 129 out of 186 countries in the world, placing just behind Namibia and slightly ahead of Iraq.
In Central America, Nicaragua ranks penultimate ahead of only Guatemala (133). Panama (59) and Costa Rica (62) both qualify as “high human development countries.” Belize, ranked 96, is at the top of the medium human development category, followed by El Salvador (107), Honduras (120), Nicaragua (129) and Guatemala (133).
The top three countries in the world for human development are Norway (1), Australia (2) and the United States (3), whereas the Democratic Republic of Congo (186) and Niger (187) are in the worst shape on the planet.
Chile (40) has the highest human development ranking for Latin American countries, while Haiti (161) is bringing up the rear. In the entire Western Hemisphere, only Guatemala and Haiti have lower levels of human development than Nicaragua.
Middleclass varies from country to country
Nicaragua’s middleclass earns on average of 4-15% less money than middleclass workers in other Central American countries in the medium development range. According to the UN, the average middleclass worker in Nicaragua earns $538.9 per month, compared to El Salvador ($562.8), Guatemala ($621.3) and Honduras ($634.1).
Nicaraguans eking by in the “vulnerable” socio-economic category also earn less money than their Central American counterparts, according to the report.
Adding additional strain to Nicaraguans’ household incomes is the fact that the average family here has more dependents (3.8 people for each working poor person, and 2 people for every middleclass worker) than any other country in Central America.
Economist George Gray, regional director of the UNDP for Latin America and the Caribbean, says countries in the lower- and middle-development categories need to focus more on investment in health and education, job-creation, developing industrial capacities, investing in social policies and closing inequality breaches between rich and poor and men and women.
The World South rising
In global terms, there is an interesting economic shift occurring between the developed countries of the “World North” and the developing nations of the “World South.”
According to the UN report, the percentage of the global economy represented by G7 countries (United States, Japan, Germany, UK, France, Italy and Canada) is quickly approaching that of the so-called E7—or “emerging seven” economies (China, India, Brazil, Russia, Indonesia, Mexico and Turkey).
Just 13 years ago, the countries of the G7 represented 55.7% of the world’s economy, while the E7 accounted for only 15.4%. Today, the G7 represents 32.6% to the E7’s 28.5%.
By 2018, according to UN projections, those numbers will be inverted, with the E7 accounting for 33.2% of the world’s economy and the G7 representing a minority 29.2%. The economic balance between former colonial powers and “developing nations” hasn’t been tilted in the favor of the latter since the mid 19th century, during the first heyday of China, India and Brazil, according to the UN.
Since the global financial crisis of 2008, a stunning two-thirds of the world’s economic growth has occurred in developing countries, according to Gray.
With economic growth in developing countries comes increased trade. Commerce between the nations of the world south is practically on par with levels of trade between developed economies, according to the UN.
Yet despite the shifting global trends in economic growth and trade, global consumption trends remain grossly unbalanced, according to Gray.
“If everyone in the world consumed as much as people do in the United States, we would need seven planets to support everybody,” Gray said.