DEVELOPMENT-notes

 

DEVELOPMENT

Every one of us continuously strives to achieve progress in our life. We wish to achieve our aims and satisfy our wants on a much larger scale than before. In the same manner an economy also continuously attempts to progress providing for more and more quantities of goods and services to the people and improving their awellZ-being. This process of enhancing society’s capacity to satisfy its needs on a larger scale is referred to as development. Economic development refers to increase in a country’s capacity to serve the economic interests of its citizens and overcoming economic problems such as poverty, unemployment, inequality, inflation, etc. 1. Development and Underdevelopment: Development: We use the word ‘development’ often in our daily lives usually to refer to the progress in a particular field or a segment of people, like rural development, social development, educational development, women and children development, etc. Whenever the economic activities in a country expand, it is called as economic development. However, the process of economic development is a complex phenomenon and not easy to define. According to Prof. Meier and Baldwin, “economic development is a process whereby an economy’s real national income increases over a long period of time”. The definition highlights three elements of economic development, viz., a) a process; b) an increase in real national income; and c) over a longer period. Let us discuss them briefly.

a) Process: The term ‘process’ here refers to the operation of the forces that bring about changes in supply of factors of production and, in the structure of demand for the products. Changes in factor supply take place due to discovery of additional resources, education and skill development, capital accumulation, population growth, adoption of better techniques of production, etc. Demand for products changes due to change in size and composition of population; level and distribution of income; tastes etc. These changes contribute to an increase in national income. b) Real National Income: National income is the total value of all goods and services produced in a country during one year. It is an important measure of development. Higher the national income, higher is the economic development and vice-versa. But the emphasis is on the word “real” which refers to the purchasing power of income. The prices have tendency to rise over time. When we estimate the income based on the increased prices, the values or incomes are inflated. We should remove that increased price effect to arrive at the ‘real’ increase in income. This price adjusted income reflects the true purchasing power of income. This emphasizes the importance of maintaining price stability in promoting development. c) Long Period: The increase in real national income should be sustained over a longer period, say for 10 years or more. Short term spurts in income are not considered as development. The changes in supply of factors of production and demand for goods and services should be continuous in order to bring about sustained increase in incomes over the longer period. Prof. Colin Clark defines economic development as “an improvement in economic welfare.” Economic welfare, in turn, is the availability of all those goods and services which are used by the individuals. Improving economic welfare of people also means reducing economic ills like poverty. Hence, we may describe economic development as “a process that extends over a long period, that which helps in reducing poverty and thereby helping a country to achieve self-sustained growth in income”. Over the period of time, the objectives of economic development have been broadened and now we hear about ‘inclusive’ and ‘sustainable development’. Ensuring that every person is benefitted by the process of development is inclusive development. Preserving natural resources and the environment for the benefit of future generations also, is sustainable development. Thus, the objectives of economic development can be stated as: increasing income; attaining equality; reducing poverty, unemployment and inequality; conserving resources and environment; and enhancing overall welfare of all. While USA, Canada, Japan, Germany, England, Australia, countries of Western Europe witnessed long term rise in incomesbefore 1950s; countries like Singapore, Hong Kong, Malaysia, China and many other countries have witnessed long term rise in incomes during post-1950s.

These countries are called as the developed countries of the world. Underdevelopment: The word ‘underdevelopment’ denotes a backward and stagnant situation where levels of living of people are low due to lower level of per capita income and lower productivity levels, apart from high population growth. According to the United Nations, an underdeveloped country is one whose real per capita income is lower than that of the USA, Canada, Australia and Western Europe. Emphasis here is on the low income level relative to the advanced countries. However, since the underdeveloped nations are capable of development and are making serious efforts to overcome their problems of low income and poverty, they are now called as the ‘developing countries’.

 The World Bank in its ‘World Development Report’ classifies the countries as high, medium and low income countries, and all countries with ‘middle’ and low income are referred to as developing countries. India is a prominent developing country that has recorded significant rise in income since 1990s. 2. Indicators of Development How do we measure economic development? Economists have advocated different indicators and the prominent one is based on the income generated in a country; and the rest using indicators other than income. Income Indicator: Income used here is the national income, which is defined as the income of all the people residing in a country. As described earlier, higher the income, higher is the development. However, economic progress in a country will be slower, if the population expands along with the increase in national income. Therefore, comparison of economic development between countries with different levels of population will not be correct. Hence, per capita income is being used as an indicator of development instead of national income. It is the average income of each individual in the country, which is calculated as national income divided by total population, in a given year.

Although this is a very popular and simple indicator, it does not consider the distribution of income among people as well as the availability of basic amenities like food, shelter, education, health or other similar social factors. Hence, attempts are made to extend the income measure by including other parameters of development. These are called as ‘alternative’ indicators, the prominent of which is the human development index (HDI). 3. Human Development Indicators It is increasingly felt that the primary purpose of all economic progress is enhancement of human welfare. It should help people to enjoy a decent quality of life; ensure adequate basic minimum amenities like food, shelter, clothing, education, health, social security, clean water, pure air and unpolluted environment. Mere increase in incomes may not guarantee all the above to all people. Mahabub Ul Haq, a Pakistani economist, inspired by the writings of Nobel laureate, Amartya Sen, argued that the most important requirements to enjoy a decent standard of living are: ability to lead a healthy and long life; being literate; and having income to purchase the minimum amenities. He called this as ‘human development (HD)’. Amartya Sen defines HD as expansion of capabilities of people.The core capabilities are health, education and purchasing power. But how do we measure HD? The United Nations Development Programme (UNDP) has used these ideas to construct an index known as the ‘Human Development Index (HDI)’. The core capabilities of a country’s population are defined, measured and combined to derive the composite HDI. While health is measured in terms of life expectancy; education is measured in terms of literacy attainments; and purchasing power through per capita income. The indicators used are shown in the figure below. The age till which the people of a country can expect to survive is called life expectancy. Availability of nutritious food, excellent health and hygiene facilities, clean environment etc. enables us to live longer. All these factors are represented in life expectancy. As the educational level rises, the country’s economic progress also improves. The educational achievement of a country is measured on the basis of two factors: the average period of schooling completed by individuals above 25 years, and the expected

period of school education that the children of 5 years might receive in their lifetime. The standard of living is measured with the help of per capita income. The average of these three indicators is the HDI. Figure 1: Indicators of Human Development Health Three dimentions Life expectancy Four indicators at birth Mean years of schooling Expected years of schooling Gross national imcome per capita Education Living standards You can measure the development of each individual indicator as well as the overall HDI. Similarly, you can also trace the growth in them and compare our country with other countries of the world. The HDI of India has been rising steadily. In 2014,

HDI was calculated at 0.586 and ranked at 135 out of 187 countries. The UNDP classifies the countries into three categories based on HDI as high medium and low HD countries. India is in middle group of human development. Figure 2: Progress in India’s Human Development As Figure 2 shows HDI of India in 2012 was calculated at 0.554 and placed at 136thrank out of 186 countries. This HDI value of 0.554 is the result of 65.8 years of life expectancy, $3203 of per capita income and 4.4 years of average years of schooling.You may also observe that, between 1980 and 2012, the components have improved resulting in improvement of India’s HDIfrom 0.344 to 0.554. But India’s HD attainment is very low ifwe compare it to the top 10 countries.

4. Gender Related Development The role of women in the developmental process is very significant. Women, who form half of the population, have the capability to work in all fields of the economic system. It is the duty of civilized society to provide social, economic, educational and political equality to women. After independence, our Constitution has assured equality of freedom and opportunities to both men and women. However, significant types of discrimination can still be seen and violence against women is frequently reported. This only suggests that women are not yet given equality in all spheres, making them secondary partners in economic growth.

 ‘If development is not engendered it is endangered’ - Human Development Report, 1994 Gender discrimination may be seen in various dimensions of Indian society, economy and polity. Sex ratio, the number of females for every 1000 males is the most important indicator which reveals the treatment meted out to women in a society. In India because of all round discrimination against females and preference for male child, the sex ratio was barely 945 in 2011. What is worse is, it is still lower in child (0 to 6 years) population. Activity: List out the reasons for adverse male-female ratio in India Similarly, the literacy rate among women was 65.46% in 2011 compared to 82.14% among men. This is so because even today some people think women do not need education and in some places adequate schooling facilities may not be available. If you look at the work place, women mainly work in unorganized activities (agriculture, construction, small scale industries, etc.) at lower wages than the men. It is also true that the women are not free to spend the income that they earn. With a low education, not many of them are seen in better and highly paid positions. In many households women eat last after the head and children have had food. This makes her malnourished and susceptible to many illnesses. With low nutrition but compelled to doing heavy work, makes her to fall sick often, which is usually ignored by the men folk. Especially, the health of pregnant women is very crucial because it affects the baby’s health also. India has very high rates of maternal (mothers dying during and after child delivery), infant (children below one year) and child (children below five years) death rates.

An evil practice of detecting the gender of the foetus and destroying it if found to be a female one, is growing. This is one of the major reasons for lower and declining sex ratio in the country. Representation of women in political bodies (panchayats, state assemblies and Parliament) is limited to the reserved strength. Even in sessions and meetings their presence is not felt. Hence, discrimination is observed in all fields. In order to promote participation of women in economic activities and thereby achieve economic empowerment, self help groups (SHGs) are being formed in all the villages and cities. A SHG is a group of women (usually 20) who come together to share their meagre resources, obtain external support, undertake business jointly and earn income.

 They are trained in managing accounts, handling bank transactions and skills to take up remunerative income generating activities. SHGs have been instrumental in helping women to earn, save and spend at their willingness. Their dignity and autonomy has increased. In recent years, many steps are initiated for empowerment of women. Empowerment may be described as the expansion in people’s ability to make strategic life choices in a context where this ability was previously denied to them. Empowerment is a process that infuses people with power i.e. access to resources; expands individual’s capacity and power of decision making i.e. autonomy. Many laws have been enacted to curb violence against women at home and at work places; to guarantee equal wages; providing reservation of seats in elected bodies; etc. All these measures will certainly help in bringing women to the mainstream of development