According to Jhinghan (2001), over the past fifty years, development economics has undergone many changes. The emphasis has shifted from growth in GNP per capita to the creation of employment, to redistribution of income, to basic human needs, to structural adjustment and sustainable development.
GNP Per Capita:
In 1950s, economic development had been identified with the growth of GNP/GNP per capita. The United Nations in a resolution set target rate of 5 per cent in GNP of LDCs (less developed countries) for the development decade of the 1960s. To achieve the targeted growth rate, economists in the LDCs suggested rapid industrialisation alongside with urbanisation. Thus it was believed that the gains from the growth of GNP per capita would automatically ‘trickle down’ to the poor in the form of increased employment and income opportunities. But the growth of GNP per capita failed to solve the problems of poverty, unemployment and inequalities.
Employment Creation
During the 1950s and 1960s, the LDC had high rate of growth of industrial production and of economic growth, but these rates failed to create enough employment.
Employment became a major policy issue of the LDCs and International agencies since the 1970s. The emphasis shifted from output or growth approach to income or poverty approach to the employment problem which laid emphasis on the quality rather than on the quantity of employment. Industrial development having failed to provide larger employment opportunities, increasing attention was paid on the adoption
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of employment generating schemes specifically directed towards the urban and rural poor so as to increase their productivity and incomes.
Income Inequality
According to Kuznets, it was believed that a high degree of inequality in the distribution of income had favourable effect on the economic growth in the early stage of development and as development gained momentum its benefits would automatically ‘trickle down’ to the lower income groups over the long-run. So this development approach emphasized the maximization of the growth rate of the economy by building up capital, infrastructure and productive capacity of the economy and leaving the distribution of income untouched.
Basic Human Needs
The basic human needs strategy laid emphasis on providing basic material needs in terms of health, education, water, food, clothing and shelter. The basic needs strategy had three components. First, it aimed at raising productivity and incomes of the rural and urban poor in labour surplus LDCs through labour-intensive production techniques by providing them basic needs. Second, it emphasised the removal of poverty by providing such public services as education, drinking water and health. Third, the government financed such public services. But in actuality, the focus was only on the second item- the delivery of the basic public services. As a result the basic strategy was criticised as a prescription of “count, cost, and deliver”, i.e. count the poor, cost the number of public services and deliver them to the poor. It was thus regarded as state action from top to bottom. Fourth, it was criticised for not providing the poor with productive assets and capital.
Stabilisation and Structural Adjustment
Many countries embarked on programmes of stabilisation and structural adjustments. Initially, stabilisation measures, supported by the IMF and World Bank, aimed at reducing inflation, both budget and trade deficits, cutting public spending, reducing wages and raising interest rates. But these measures often led to recession in some countries. moreover, these were short-term measures. Goaded by the World Bank and IMF, many developing countries switched to long-term structural adjustment programme. It is a domestically designed programme of reforms by following the policies of liberalisation, adjustment, and privatisation.
These “involve reducing the role of the state, removing subsidies, liberalising prices and opening economies to flows of inter national trade and finance.” These often include measures to reduce the fiscal deficit.
The majority of the LDCs are still pursuing structural adjustment
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programmes. But these have led to reduction in government spending on social services like health and education. Poverty and unemployment have increased and the concern for the poor has been pushed into the background.
Human Capabilities
According to Amartya Sen (1989), “at the core of human well-being is freedom of choice by enhancing people’s capabilities for attaining higher standards of health, knowledge, self-respect and the ability to participate actively in community life. GNP per capita and the supply of particular goods should not judge the standard of living of a society but by people capabilities i.e. what a person can or cannot do, can or cannot be. It is entitlements i.e. – the set of alternative commodity bundles that a person can command in society – that generate these entitlements. The relevant capabilities are: being free from starvation, from hunger, from under-nourishment; participation in communal life; being adequately sheltered and so on. The expansion of these capabilities implies freedom of choices – political, social, economical and cultural freedom.
Human Development
The UNDP incorporated Sen’s view in its first Human Development Report in 1990. According to it, human development goes beyond income and growth to cover all human capabilities – needs, aspirations and choice of the people. It defined human development as “a process of enlarging people choices” that are created by expanding human capabilities. Income is one of the choices, not the only choice. Rise in income is not the same thing as the increase as the increase in human capabilities. Besides higher income, poor people put a high value on adequate nutrition, access to safe drinking water, better medical facilities and school for their children, affordable transport, adequate shelter, secure livelihood and productive and satisfying jobs.
Sustainable Development
In 1987, the World commission on Environment and Development (Brundtland Commission) used a new concept of ‘sustainable development’. It defined the term sustainable development’ as “meeting the needs of the present generation without compromising the needs of the future generation”. Economic development must be sustainable, which means that it should “keep going”. The World Development Report 1999-2000 emphasises the creation of sustainable improvement in the quality of life for all people as the principal goal of development policy.
According to it, sustainable development has many objectives. Besides increasing economic growth and meeting basic needs, the aim
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of lifting living standards include a number of more specific goals: “better people’s health and education opportunities, giving everyone the chance to participate in public life, helping to ensure a clean environment, promoting intergenerational equity, and much more.” Thus meeting the needs of the people in the present generation is essential in order to sustain the needs of future generations.