P 1 Scope and meaning of DE (OUSL)
- 1. DEVELOPMENT ECONOMICSDEVELOPMENT ECONOMICS Prof Upali VidanapathiranaProf Upali Vidanapathirana Department of Social StudiesDepartment of Social Studies The Open University of Sri LankaThe Open University of Sri Lanka April, 2014April, 2014
- 2. Topics for todayTopics for today DefinitionsDefinitions Why ‘development economics’ is different from ‘otherWhy ‘development economics’ is different from ‘other economics’economics’ Major attributesMajor attributes 55 Development is context specificDevelopment is context specific 66 Core valuesCore values 55 Objectives of DEObjectives of DE
- 3. Development EconomicsDevelopment Economics Concerned with rapid, large scale andConcerned with rapid, large scale and overarching improvements in levels of living foroverarching improvements in levels of living for the majority in Asia, Africa and Latin Americathe majority in Asia, Africa and Latin America These countries report frequent and deep-These countries report frequent and deep- rooted problems of under-developmentrooted problems of under-development Development is value based andDevelopment is value based and multidimensional and hence cannot bemultidimensional and hence cannot be effectively tackled by the traditional tools ofeffectively tackled by the traditional tools of economicseconomics
- 4. Nature of DENature of DE Traditional approach believes in theTraditional approach believes in the mechanism -market is suprememechanism -market is supreme All economic problems are answered byAll economic problems are answered by the ‘invisible hand of price’ in a value freethe ‘invisible hand of price’ in a value free mannermanner The questions and answers are aboutThe questions and answers are about ‘what is’ and it has no room for the‘what is’ and it has no room for the questions concerning ‘why’ and whatquestions concerning ‘why’ and what ‘should be’‘should be’
- 5. Is Real World Value Free ?Is Real World Value Free ? People hold attitudes, values and perceptionsPeople hold attitudes, values and perceptions that colour their answers to ‘what is’that colour their answers to ‘what is’ Most questions and answers are ‘value loaded’Most questions and answers are ‘value loaded’ Examples-Should students be given hostels?Examples-Should students be given hostels? Should graduates be given jobs by the state?Should graduates be given jobs by the state? Should the prices be controlled? These areShould the prices be controlled? These are matters for the state-not for the marketmatters for the state-not for the market When market fails in stopping recession andWhen market fails in stopping recession and environmental decay state intervenes-environmental decay state intervenes- recession package for Spain, Ireland etc.recession package for Spain, Ireland etc.
- 6. Development is Not Value FreeDevelopment is Not Value Free • ‘‘D’ is not only ‘What is’ but rather ‘Why it isD’ is not only ‘What is’ but rather ‘Why it is so’ and ‘What should be’so’ and ‘What should be’ • ‘‘D’ is reinforced or retarded by;D’ is reinforced or retarded by; a)a)attitudes towards life, work and power,attitudes towards life, work and power, b) system of bureaucracy, legal structure,b) system of bureaucracy, legal structure, administrative structure and systems, norms,administrative structure and systems, norms, c) land tenure, religion,c) land tenure, religion, d) influence of global forcesd) influence of global forces
- 7. Scope of development economicsScope of development economics Studying about developing countriesStudying about developing countries Studying about underdevelopmentStudying about underdevelopment Studying about diversityStudying about diversity Studying about multi-dimensionalStudying about multi-dimensional nature of developmentnature of development
- 8. Policy goals of developmentPolicy goals of development Real income growthReal income growth Reduction of inequalityReduction of inequality Reducing unemploymentReducing unemployment Reducing povertyReducing poverty Improving std of livingImproving std of living Changing social structuresChanging social structures
- 9. Metrics of Development-1Metrics of Development-1 GNP/GDP if growing faster than 5% itsGNP/GDP if growing faster than 5% its development (1950s and 1960s)development (1950s and 1960s) Lately it was modified with GNP per capita-Lately it was modified with GNP per capita- population growth (GY-GP) orpopulation growth (GY-GP) or ‘‘Real per-capita’ where GDP / P was deflated byReal per-capita’ where GDP / P was deflated by inflationinflation This approach was known as ‘growth first’This approach was known as ‘growth first’ If growth is given a chance its benefits willIf growth is given a chance its benefits will ‘trickle down’‘trickle down’
- 10. GDP grows over the yearsGDP grows over the years
- 11. Mere growth creates problemsMere growth creates problems
- 12. Popular definitions of developmentPopular definitions of development Changes in output and technical andChanges in output and technical and institutional structures of economiesinstitutional structures of economies (Kindlebeiger, 1965)(Kindlebeiger, 1965) Upward improvement of the entireUpward improvement of the entire social system (Myrdal, 1968)social system (Myrdal, 1968) Reducing poverty, inequality andReducing poverty, inequality and unemployment (Seers, 1970)unemployment (Seers, 1970)
- 13. Meaning of DevelopmentMeaning of Development ‘…‘…if poverty, unemployment, inequalityif poverty, unemployment, inequality have declined from high levels thenhave declined from high levels then undoubtedly there has been a period ofundoubtedly there has been a period of development…(Seers)development…(Seers) ‘…‘…but if all of them have been growingbut if all of them have been growing worse it would be strange to call the resultworse it would be strange to call the result ‘development’ even if per capita income‘development’ even if per capita income doubled’doubled’ ……Can mere growth accompanied by ‘aCan mere growth accompanied by ‘a reduction of poverty, unemployment,reduction of poverty, unemployment, inequality’ be called developmentinequality’ be called development……
- 14. CapabilitiesCapabilities Amartya Sen identified development in terms ofAmartya Sen identified development in terms of improvements in the capabilities and functioningsimprovements in the capabilities and functionings Freedom of people vary due to a) personal factors likeFreedom of people vary due to a) personal factors like ignorance b) command over commodities like lack ofignorance b) command over commodities like lack of fundsfunds Personal factors like mal-nutrition, poor health, lack ofPersonal factors like mal-nutrition, poor health, lack of education makes capability deprivationeducation makes capability deprivation Capabilities increase command over commodities orCapabilities increase command over commodities or functionings- say educated have better chance of beingfunctionings- say educated have better chance of being rich and one can acquire education or employment ifrich and one can acquire education or employment if she has financial (high income) or social capitalshe has financial (high income) or social capital (networking)(networking)
- 15. Definition of developmentDefinition of development Definition is difficult owing to context specific nature ofDefinition is difficult owing to context specific nature of the subjectthe subject Easy to develop a common framework for differentEasy to develop a common framework for different situationsituation Three core values are identified in this frameworkThree core values are identified in this framework This framework was effective during the past twoThis framework was effective during the past two decadesdecades It has been sufficiently flexible and adjustable to suitIt has been sufficiently flexible and adjustable to suit time/space variationstime/space variations
- 16. SustenanceSustenance Ability to meet ‘basic needs’ –food, shelter, health andAbility to meet ‘basic needs’ –food, shelter, health and protectionprotection This is an outcome of ‘entitlements’ having endowed’ orThis is an outcome of ‘entitlements’ having endowed’ or having ‘command over’ endowmentshaving ‘command over’ endowments This is called ‘deprivation’; one may be deprived ofThis is called ‘deprivation’; one may be deprived of income, job, security (food, income, shelter, medicineincome, job, security (food, income, shelter, medicine and clothing).and clothing). Absence of sustenance cause ‘deprivation’-its presenceAbsence of sustenance cause ‘deprivation’-its presence makes ‘development’makes ‘development’ Underdevelopment is capability deprivationUnderdevelopment is capability deprivation To find self-sustenance economies must progress;To find self-sustenance economies must progress; income growth is a necessary condition of develoincome growth is a necessary condition of develo
- 17. Self-esteem*Self-esteem* ‘‘Ability to stand up and say what is right and what isAbility to stand up and say what is right and what is not right’ according to one’s consciencesnot right’ according to one’s consciences It is the sense of ‘self-worth’ and ‘self respect’.It is the sense of ‘self-worth’ and ‘self respect’. It may be used by others to meet their own ends.It may be used by others to meet their own ends. Self worth is context specific; it is about acceptance,Self worth is context specific; it is about acceptance, identity and being part of the society in which one livesidentity and being part of the society in which one lives There are no universal values in self-worth/respectThere are no universal values in self-worth/respect Markets or products cannot make it universal-‘Rexona’,Markets or products cannot make it universal-‘Rexona’, ‘pizza’ or ‘Mc-Donald’ can not create universal self-‘pizza’ or ‘Mc-Donald’ can not create universal self- esteemesteem
- 18. Freedom*Freedom* Sen sees ‘Development as Freedom’ (1999)Sen sees ‘Development as Freedom’ (1999) Freedom here is about ‘freedom from servitude’ andFreedom here is about ‘freedom from servitude’ and increasing ability to make ‘informed choices’increasing ability to make ‘informed choices’ It’s a sense of emancipation- ‘French Revolution’;It’s a sense of emancipation- ‘French Revolution’; prevents alienation from material conditions of lifeprevents alienation from material conditions of life Landlessness, and social servitudes arise fromLandlessness, and social servitudes arise from cast/ethnicity/poverty- based conditionscast/ethnicity/poverty- based conditions They deny employment/housing/cultural acceptanceThey deny employment/housing/cultural acceptance Growth has to increase range of human choices –Growth has to increase range of human choices – what to read, with whom to associate, what religionwhat to read, with whom to associate, what religion to believe, which political idea to hold etc.to believe, which political idea to hold etc.
- 19. Objectives of Development*Objectives of Development* Therefore development aims at; a) increasing the availability of life sustaining goods-food, water, shelter, cloths, medicine at an affordable price b) increase the level of living by providing better education, employment, attention to cultural and human values to raise self esteem c) To expand the range of economic and social choices –eliminate dependence on others (groups/communities/countries)
- 20. Development is Multi-dimensionalDevelopment is Multi-dimensional