Understanding Economic Development
Introduction to Development
Development is a complex concept that involves understanding our aspirations for a
better life, both individually and as a society. It prompts us to think about essential
needs, how to improve living standards for everyone, and how to foster greater
equality. These questions are influenced by our past and can only be achieved
through democratic processes.
Different Perspectives on Development
What Development Promises
Diverse Goals: Different people have different ideas about what development
means. These goals are based on their individual circumstances and aspirations.
Conflicting Goals: Sometimes, the developmental goals of one person or group
can conflict with those of another. For example, building a dam for electricity might
displace tribal communities.
Income and Other Goals
Beyond Income: While people desire more income (through better wages, prices
for crops, etc.), they also seek non-material things like equal treatment, freedom,
security, and respect.
Quality of Life: The quality of life depends not only on material possessions but also
on these non-material aspects, which are often harder to measure.
A Mix of Goals: For individuals and nations, development involves a combination of
goals, including both material and non-material aspects.
Comparing Countries and States
Income as a Measure of Development
Average Income (Per Capita Income): This is a common measure used to
compare countries. It is calculated by dividing the total income of a country by its
total population.
o Formula:Per Capita Income=Total Income of a CountryTotal Population of th
e CountryPer Capita Income=Total Population of the CountryTotal Income o
f a Country
Classification: Countries are often classified based on their per capita income. For
instance, the World Bank categorizes countries into high-income, low-income, and
middle-income groups.
Limitations of Average Income:
o Distribution of Income: Average income does not reveal how income is distributed
among the population. A country with a high average income might still have
significant disparities, with a few very rich individuals and many poor people.
o Example: Consider two countries with the same average monthly income of
₹10,000.
Country A: Incomes are ₹9,500, ₹10,500, ₹9,800, ₹10,000, ₹10,200. This shows a
more equitable distribution.
Country B: Incomes are ₹500, ₹500, ₹500, ₹500, ₹48,000. Here, most people are
poor, and one person is extremely rich. Most people would prefer to live in Country
A.
Other Important Criteria for Development
Beyond Income: Just as individuals seek more than just income, countries need to
be assessed on criteria beyond average income.
Health and Education Indicators: These are crucial for understanding the quality
of life and development.
o Infant Mortality Rate (IMR): The number of children who die before the age of one
year per 1,000 live births. A lower IMR indicates better healthcare.
o Literacy Rate: The proportion of the population aged 7 and above who can read
and write. Higher literacy rates are associated with better development.
o Net Attendance Ratio (NAR): The percentage of students in a specific age group
(e.g., 15-17 years) attending school. This indicates educational access and
participation.
Comparing States (Example: Haryana, Kerala, Bihar):
o Haryana has a higher per capita income than Kerala.
o However, Kerala has a lower Infant Mortality Rate and a higher Literacy Rate and
Net Attendance Ratio compared to Haryana and Bihar.
o This highlights that money alone doesn't guarantee well-being.
Public Facilities
Collective Provision: Many essential goods and services are best provided
collectively, such as healthcare, education, and security.
Cost-Effectiveness: Collective provision is often cheaper and more effective than
individual provision. For instance, a public health system benefits everyone, reducing
the burden on individuals.
Dependence on Government: The availability and quality of public facilities often
depend on government spending and policies.
Human Development Index (HDI)
Broader Measure: Recognizing the limitations of income alone, the Human
Development Index (HDI) was developed by the UNDP.
Components: HDI considers a combination of:
o Health status (Life Expectancy at birth)
o Education levels (Mean Years of Schooling)
o Per capita income (Gross National Income - GNI - per capita, adjusted for
Purchasing Power Parity)
Significance: HDI provides a more holistic view of development by focusing on
people's capabilities and well-being.
Sustainability of Development
The Concept of Sustainability
Long-Term Perspective: Sustainable development means meeting the needs of the
present without compromising the ability of future generations to meet their own
needs.
Resource Management: It involves using resources in a way that ensures their
availability for the future.
Types of Resources
Renewable Resources: Resources that can be replenished by nature, such as
crops and plants. However, they can still be overused (e.g., groundwater).
Non-Renewable Resources: Resources that will eventually be exhausted because
they are not replenished at a rate comparable to their consumption (e.g., crude oil).
Issues Related to Unsustainability
Overuse of Groundwater: In many parts of India, groundwater is being overused,
leading to a decline in water levels. This threatens agriculture and water availability
for future generations.
Exhaustion of Natural Resources: Non-renewable resources like crude oil are
being consumed at a rapid rate. Global reserves are finite, and their depletion poses
challenges for countries dependent on them (like India, which imports oil).
Environmental Degradation: The consequences of environmental damage, such
as pollution, do not respect borders and affect everyone.
The Future of Development
Perennial Question: Development is an ongoing discussion. As societies and
individuals, we must continually assess our goals and how to achieve them in a way
that is equitable and sustainable.
Interconnectedness: Our future is linked, and sustainability is a crucial aspect of
ensuring a better future for all.