What Is Development? PDF

What is Development? Created @September 14, 2024 Tags Course 6 I. What is Development? 1. Mainstream economics From Adam Smith until the WW2, the term “material progress” was used...

What is Development? Created @September 14, 2024 Tags Course 6 I. What is Development? 1. Mainstream economics From Adam Smith until the WW2, the term “material progress” was used (instead of development) Economic development became policy objective in the 19th century, but it was generally referred to modernization or westernization, or industrialization → Binary conceptualization → Westernization is perceived as necessarily a good thing, and the opposite is bad 2. Marxism Marx’s “Capital” (1887) Marx used the word “development” in the sense in which it forms the key concept of his economic interpretation of history In Marx’s schema of thought, development was “the central theme. And he concentrated his analytical powers on the task of showing how the economic process, changing itself by the virtue of its own inherent logic, incessantly changes the social framework - the whole society in fact” → Development means the changes of the whole society 3. Heterodox View Joseph Schumpeter & Karl Marx “Development as historical economic process driven by its own inherent logic towards a whole change of society” (progress of system/ society) (Both agree that) transition from capitalism to socialism is inevitable What is Development? 1  Capitalism comes to its end because of: Schumpeter: monopoly and demise of competition Marx: class struggle 4. Colonial Development British historians of Empire in the 1920s saw development as “economic achievement in natural resources” → Development of resources (→ colonization is justified by colonizers that it is their burdens to develop colonies’ subject) Lilian Knowles & Lord Milner: development is driven by an activity of government Marx - society or an economic system develops VS Milner’s sense - natural resources developed 5. Development and Welfare In the late 19th century, the social well-beings of its people in colonies is recognized as an important dimension of development Main focus still: progress of colonies and the development of the material resources Welfare refers to the responsibility of colonial government to the native’s mental and physical well-being 6. Postwar Meaning (of development) Development became virtually synonymous with “growth” in per capita income in the less developed countries Standard textbook’s definition of economic development: “a sustained, secular improvement in material well-being, … reflected in an increasing flow of goods and services” “the reflected economic development and economic growth will be used to refer to a sustained increase in per capita income → 1950s: In economic terms, development is the capacity of a nation to generate and sustain an annual increase in its GNP of 5% or more Traditional economic measures: What is Development? 2  GDP: the market value of all final goods and services produced within a country in a given period of time GNP: the market value of all final goods and services produced by permanent residents of a country in a given period of time Common alternative index is “the rate of growth of income per capita (or per capita GNP)” Per capita GDP: the per-head value of all final goods and services produced within a country in a given period of time Per capita GNP: the per-head value of final goods and services produced by permanent residents of a country in a given period of time → converted to USD using the current exchange rate PPP Measure: the number of units a country’s currency required to purchase the same of basket of goods an services in the local market that a US$1 would buy in the USA. Under PPP, exchange rates should adjust to equalize the price of a common basket of goods and services across countries → 1970s: Dethronement of GNP in the 1970s and increasing emphasis on “redistribution from growth” Increasing emphasis on non-economic social indicators Economic development consists of the reduction or elimination of poverty, inequality and unemployment within the context of a growing economy 7. Amarty Sen: Development as freedom “Development can be seen as a process of expanding the real freedoms that people enjoy” Freedom as the means and the ends of development Development should not be seen simply as rising income levels but rather as an increase in individuals’ substantive freedoms and ability to make choices they value → Capability Approach Instrumental Freedoms: Political freedoms: civil rights, free speech, elections What is Development? 3  Economic facilities: opportunities for participation in trade and production, utilization of resources for consumption, production, exchange Social opportunities: education, health care Transparency guarantees: openness and freedom to deal with one another, guarantees of disclosure Protective security: unemployment assistance, famine relief Concepts of freedoms: Freedoms are linked together and can strengthen one another Political freedoms (free speech, elections) promote economic security Social freedoms (education, health facilities) promote economic participation Economic facilities (opportunities for participation in trade and production) generate personal abundance as well as public resources for social facilities Freedom includes: Processes: allow freedom of actions (eg: voting privileges, political and civil rights) Opportunities: available to people given their social circumstances (eg: capability to escape premature mortality, involuntary starvation) 8. Definition of Economic Development in 1990s World Bank in its 1991 WDR asserted that the “challenge of development is to improve the quality of life (QOL)” The improved QOL involves higher incomes, better education, higher standards of health and nutrition, less poverty, a cleaner environment, more equality of opportunities, greater individual freedom, and a richer cultural life Economic factors: Capital (money) Labor What is Development? 4  Natural resources Technology Established markets (labor, financial, goods) Non-economic factors: Attitudes toward life and work Public and private structures Cultural traditions Systems of land tenure, property rights Integrity of government agencies → “Development is a multi-dimensional process involving changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty” (Todaro and Smith) 9. Human Development Index (HDI) Initiated in 1990 an undertaken by UNDP in its annual series of HDRs HDI is based on 3 goals: Longevity Knowledge Standard of living HDI = 1/3 * Income index + 1/3 * Life expectancy index + 1/3 * Education index = 0 to 1 UNDP’s “Human Development Report” provides directions towards a more multi-dimensional measure of development than GDP per capita → pose intellectual and philosophical challenge to the World Bank’s World Development Report Rank 175 countries into 3 groups: Low human development = 0.00 - 0.499 Medium human development = 0.5 - 0.799 High human development = 0.8 - 1.00 What is Development? 5  → Sustainable Development Goals (2015-2030) aim to operationalize multi- dimensional approach to development 10. Multi-dimensional Approaches to Understanding Development Multidimensional approaches to development is twinned with a human rights-based approach Debate on development as a human rights started in early 1970s within the UN The Declaration on the Right to Development was adopted by the UN General Assembly in 1986 Human rights approach entered the mainstream only after being linked with Sen’s capability approach Vast similarities between action needed to increase people’s capabilities and human rights treaties already signed by governments Human rights approach as a strategy to putting political pressure on recalcitrant governments Full obligations to improve citizens’ capabilities Use of international law as a “stick” Opportunity to use international law as an instrument for citizens to claim rights Publication of 2006 UNHCR framework linking development and human rights as an important landmark Placed human rights considerations in the forefront of advancing development goals Poverty 1. Conceptualizing Poverty Measurement Subjective Objective: Multi-dimensions Single-dimension: Relative What is Development? 6  Absolute: Consumption Income Wealth Anchored 2. Absolute poverty Being below the minimum level of income required for physical survival Measurement: “Cost of basic needs” method: the poverty line is set by adding up the food expenditure sufficient to meet the caloric intake guidelines and the expenditure on other basic needs “One dollar line” (later $1.25 PPP/ person/ day) was set on the basis of the poorest countries’ national poverty lines Absolute poverty: US$ 1.9/ day Moderate poverty: US$ 3.2/ day 3. Relative poverty Poverty that does not threaten daily survival but in which an individual may not have the income necessary to fully participate or attain a standard of living adequate in his or her society Measurement: The share of individuals whose equivalized income after social transfers is below 50& or 60% of the national median equivalized income 4. Sen - Poverty as capability deprivation Poverty as un-freedom >< development as freedom Poverty must be seen as “the deprivation of basic capabilities” rather than merely as lowness of incomes, which is the standard criterion of identification of poverty The capabilities refer to “the substantive freedoms he or she enjoys to lead the kind of life he or she has reason to value” What is Development? 7  5. Income inequality Distribution of income, income inequality: measures of how the wealth of a country is distributed among its population - what share of wealth is owned by the rich, how much the poorest earn in comparison to the wealthiest Measure: Comparing income of different strata - the ave wealth of difference deciles (tenths) or quintiles (fifths) of the population The Gini coefficient (0-1) It is important to understand because: It forces us to confront injustice It constrains development It shows poverty can be eliminated through growth and greater commitments to social injustice through equality in the distribution of income Income inequality negatively impacts already disadvantaged ethnic, linguistics, and cultural groups Income inequality negatively impacts social capital (The extent to which individuals are willing to cooperate in the pursuit of shared goals thought to be essential to the development of a civic and democratic culture) Income inequality exists because of: Impact of colonial rule Neo-colonial economic relations Limitations of late industrialization processes Absence of social safety nets Regressive taxation 6. Labelling in international development Labels reflect the evolution of thinking about poverty, wealth and relationships among nations Labels do: What is Development? 8  Shape public policy-making Legitimate current practices Origin of the terms “development and underdevelopment” are traced back to US President Harry Truman (1949) Language and discourses of “development” illuminate deeper ideas and beliefs (ex: the state of not being developed) Old and improper labels: “Backward societies”: term implies that First World intervention is needed to overcome underdevelopment “Developing Countries”: implies that some countries are not yet “complete” “The Third World”: relic of the 20th century Cold War Implies regions and countries to be out of place Implies ideological competition (capitalism vs. Socialism) Newer labels: “Newly Industrialized Countries (NICs)”: emerging markets (Hongkong, South Korea, Singapore, Taiwan) “Emerging Economies”: Brazil, China, South Africa, Chile, Malaysia, Mexico, Thailand and Vietnam “Fourth World”: not commonly used except in reference to Poorest of the poor “Failed states” Aboriginal people societies Other labels: Two-thirds world / Majority world / Global South World Bank’s classification: based on GDP per capita Low-income countries Lower-middle income countries → Developing countries Upper-middle income countries What is Development? 9  High-income countries OECD high-income countries “Development” labels tend to be ethnocentric, mask power relations, and create only the illusion of reform → “It is always important to recognize the agency of those who have responded to, reacted to, and resisted being the objects of development “ (Crush, 1995) 7. Global ethics and international development Elimination of poverty is not a universally shared moral obligation Approaches to global redistributive justice (global ethics): 1/ Cosmopolitanism (FOR) Justice is owed to all people, everywhere, regardless of national borders Common values apply across humanity Responsibilities exist towards all of humanity Types of cosmopolitanism: Consequentialist ethic (Peter Singer) Contractarian ethic (Charles Beitz and Thomas Pogge) Rights-based ethic (Charles Johns and Henry Shue) 2/ Communitarianism (AGAINST) A nationalist approach Specific rights and duties are nation-based Specific rights and duties do not extend beyond national borders Global redistribution is pursued in one’s own interest, without consideration of any important moral obligation 3/ Libertarianism (AGAINST) Foundations of neoliberalism Individual right to private property, freedom and non-interference What is Development? 10  Oppose obligatory global redistribution, whether within one country or among countries Moral positions on redistributive justice, global poverty and int’l development implications: UN promotes universal human rights and duty to protect and assist people everywhere Millennium Development Goals All human life is of equal worth The promise of 0.7% of GNP to development assistance Service to human equality What is Development? 11