The Development Debate a Multi Dimensional Approach

The conventional growth literature looks at development in terms of improved welfare. In welfare economics we evaluate the effects of welfare changes by means of the indirect utility function (the consumer is worse off if indirect utility function at a later date is lesser than that of an earlier date [v(p1,w)

The international discourse of development is how do measure development. Real classical economists would want debates on development to center around issues like levels of investment, savings, consumption and production. All economic theories of development, follow this path. Development of course here is measured in terms of economic indicators such as ”GDP growth rate etc. However, these conventional means of defining and evaluating development has been put to test. For instance, when we say economic growth was attained at 5 %, you very well know that it is possible for ten people to make an economy grow to that level against a population of 30 millions. And then, how did we arrive to it!

So the new nomenclatures advanced by people like Stiligz and Sen is we do not have to explain development models in the sense of economic indicators. Other than asking, how much the economy grew, why not ask:
-how many boreholes of water were constructed
-how many children were able to access schooling opportunities
-how many hospitals were constructed
-how free were elections and did the voices of the poor reign
-are institutions properly constituted and is the rule of law upheld.

In some countries, people are beginning to ask how happy are the people (Gross Domestic Happiness). Greece uses this methodology to compute their economic growth? Bhutan’s great resource at the moment is the happiness of its people. It is assumed, people are only happy when then they have access to the basic needs. (you can think of many other humanistic indicators).

Hernandos De Soto discusses reasons why capital does not reproduce itself (the failure of capitalism) in advancing countries. His other book the other path discusses at length about a key feature of developing economies as seen in the informal sector. According to Hernandos a key solution or hindrance to the development problem is property rights. Gustavo Gutierez a Latin American theologian sees liberation as an end which requires the widest possible set of opportunities. Accordingly Gustavo suggests that we replace the term development with liberation. Development according to Gustavo is purely an economic concept and does little in considering the person as a psycho, social, religious and somatic person. Gustavo’s writings have had a lot of influence in Latin America and the Catholic Church in general. It is unfortunate that Gustavo was later silenced by the Catholic church and could no longer continue his writings on liberation theology.

Armatya Sen on the other hand developed the capability approach which focuses on the ability to do and to be which he calls functionings. Hence to Sen development is an end while the capabilities which are a set of functionings are the means. Key in the capability approach are the conversion factors which are the relationships between the state (means) and the ability to achieve certain beings and ends. One recent important contribution to the development literature is Prof. Grzegorz Kolodko who suggests the Integrated Index of Socio Economic Well Being (ZIP). Kolodko’s index looks at the output level in the economy measured by ppp per capita, the well being of the population (health, satisfaction, expectation and education), environment and leisure time (cultural values). The index in assessing development goes beyond the normal economics confinement and integrates other important factors.

Development as can be seen is not a function of GDP growth or decline per se. It is more. It incorporates many other inputs as can be seen from the Kolodko’s index (health, satisfaction, expectation and education) and other development experts. Countries therefore in their endervor to develop should ask themselves practical questions. On the other hand the question of big plans or small searches come to the lime light too. At times conventional assumptions may need to be relaxed or changed, omitted in search for a development answer.