Introduction to Development
The Meaning of Development
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All that is valuable in human society depends upon the opportunity for development accorded to the individual. - Albert Einstein
Development means many things to many people. Some use it to justify cutting down of trees, some use it to in the context of sustainability, and some others use it to further their own personal growth.
Economists often use the level of a nation’s per capita income as a measure for evaluating the overall level of development of a country.
But in order to truly begin to understand the meaning of development, we need to analyze it from every perspective.
The Economic growth perspective
Economic growth of a country is measured in terms of Gross Domestic Product (GDP), Gross National Product (GNP) and Gross National Income (GNI).
GNI is the total value of all income accruing to residents of a country, regardless of the source of that income, GDP measures the total value of all income created within the borders of a country, regardless of whether the ultimate recipient of that income resides within or outside the country and GNP is the market value of all the products and services produced in one year by labor and property supplied by the residents of a country. Unlike GDP, which defines production based on the geographical location of production, GNP allocates production based on ownership. GDP and GNI are measured in the currencies of the respective countries. Since value of each country’s currency is different, in order to bring them to a comparable measure, Purchasing Power Parity (PPP) is used. The dollar, currency of the United States, becomes the base prices for determining the purchasing power parity of GNI per capita in other countries.
Drawbacks
the value of home production, i.e. the value of output derived from the labor of women and children, as these are not valued by or exchanged in the market.
Improvements to GDP and GNI
The measure of Economic Welfare (MEW) and the Genuine Progress Indicator (GPI) were devised as alternatives to measure an economy’s “true” output and income.
MEW= value of GDP + value of leisure time+ value of unpaid work- value of environmental damage
GPI = A + B - C - D + I
A is income weighted private consumption
B is value of non-market services generating welfare
C is private defensive cost of natural deterioration
D is cost of deterioration of nature and natural resources
I is increase in capital stock and balance of international trade
These alternatives adjust GNI and GDP measures both for the omissions that contribute to human welfare not included in the traditional methodology for determining GNI or GDP, as well as those included values that adversely impact human welfare.
Sustainable Development
Human Development Index (HDI)
‘After many decades of development, we are rediscovering the obvious- that the people are both the means and the end of development’. (Haq, 1995)
The Human Development Index (HDI) is a composite index using “longevity, knowledge, and a decent standard of living” as the representative indicators for development. Additional choices, highly valued by many people, range from political, economic and social freedom to opportunities for being creative and productive, and enjoying personal self-respect and guaranteed human rights.
The actual index uses estimates of life expectancy at birth, the adult literacy rate, school enrolment ratios, and the PPP GDP per capita to calculate an HDI value for each economy. The value of the HDI index can vary between 0 and 1, with an HDI score closer to 0 indicating greater distance from the maximum to be achieved on the aggregate of the factors entering HDI, while the value of 1 indicates greater achievement relative to the maximum attainable on the variables that comprise the index and thus a higher level of human development. HDI gauges how far a country is from reaching, on average, the maximum value of the components that make up the HDI.
Human development has two sides: formation of human capabilities- such as improved health, knowledge and skills- and the use people make of their acquired capabilities- for leisure, productive purposes or being active in cultural, social and political affairs. If the scales of human development do not finely balance the two sides, considerable human frustration may result.
Amartya Sen on HDI
Adjustments to the HDI
The Gender-related Development Index (GDI) takes into account differences in the level of attainment of women and men on the values of the indicators that enter the HDI. In making such a correction for gender differences in life expectancy, education and income, every country suffers deterioration in the value of its gender-adjusted HDI, meaning in no country do women, on an average, score higher than or equal to men on the HDI components.
India’s ranking on the Human Development Index
The Human Development Report 2013 released by the United Nations Development Programme (UNDP), ranked the country at a low 136 among 186 countries on its human development index (HDI). With its index of 0.554, it is miles away from Norway, which is ranked number one with an HDI of 0.955
The Human Poverty Index
The weakness of HDI is that it does not indicate what is happening to the poorest members of society, except to the extent that this is reflected in the overall HDI value via, say, the impact of poverty on average life expectancy. The UNDP introduced in 1997 a Human Poverty Index (HPI) that utilizes slightly different variables from either HDI or GDI and hence is not directly comparable. Instead of life expectancy as a variable, the HPI includes the “percentage of people without sustainable access to an improved water source” and the percentage of children under five who are underweight” as variables entering the index. Lower value is better than the higher value because each variable is actually a “deprivation” indicator rather than an achievement indicator, as in the case of HDI or GDI variables.
Development as Capability Expansion
achievement of a person: what he or she manages to do or to be, and any such functioning reflects, as it were, a part of the state of that person. The included items may vary from each elementary functionings as escaping morbidity and mortality, being adequately nourished; undertaking usual movements etc., to many complex functionings such as achieving self-respect, taking part in the life of the community and appearing in public without shame. The capability of a person is a derived notion. It reflects the various combinations of functionings he or she can achieve. Capability reflects a person’s freedom to choose between different ways of living.
Human Rights and Development
The ideas of human development and those of human rights are linked in a compatible and complementary way. If human development focuses on the enhancement of the capabilities and freedoms that the members of a community enjoy, human rights represent the claim that individuals have on the conduct of individual and collective agents and on the design of social arrangements to facilitate or secure these capabilities and freedoms.
The human rights literature is concerned not only with the political and civil liberties, but also with rights to education, to adequate health care and to other freedoms that have received Development goes beyond these to imply changes in the structure of outputs and in the allocation of inputs by sectors. Growth is measured through GNI and GDP while overall development is measured through HDI or HPI.
Conclusion
Bhagwati roots for economic growth as a precursor to redistribution while Mr. Amartya Sen would prefer vice-versa (Sequencing of policies).
Mr. Bhagwati argues that without economic growth, financing the ever expanding areas of entitlement in the form of food security ordinance (which seeks to provide highly subsidized food to nearly 70 percent of population), right to work (MGNREGA), right to education and so on would be extremely difficult especially in the wake of the recent slowdown in economic growth, unsustainably high fiscal deficit and the falling rupee value.
But an important question here is- who is this development for? Is it for the wealthy upper class that controls the economy, is it for the humble farmer who sows so we can eat, or is it for the millions of impoverished people of India who lead a hand to mouth existence?
The answer to this question would lead us to the realization that it is impossible to imagine the idea of development while ignoring the needs of the vast majority of the people who lead deplorable lives due in part to the failure of the government to provide them the basic support.
Thus, development is not merely about how fast an economy grows, or how much per capita income a nation generates, it is rather about how well it is able to benefit the most deprived of the society.
