Development

What is Developmental Economics?

Developmental economics is a branch of economics that deals with improving
the economic, social and monetary conditions of people, regions and countries.
It studies the transformation of poor countries into rich and prosperous ones.
While studying and measuring this level of development it uses factors such
as health, literacy, working conditions, domestic and international policies
among other things.

How can you measure change?

The way we live today is influenced by the past. We can’t desire for change
without being aware of this. It is therefore necessary to consider the
historical context of the economy, society and political situations before we
understand this change and how to bring this about to meet our needs and
hopes.

What can we say about development?

Depending on availability of resources and differences in their social,
environmental, political and economic conditions, their notion of development
and growth changes.
 Development Means Different Things for
Different People
Development for a person in a rural area will be different from development
for a person in urban areas. However these desires, needs may also be
conflicting. That is in achieving the development objectives of one person -
the desires of others may have to be compromised.

Development of a Dam may be useful for generation of electricity but it will

be destructive for the tribals whose villages will get submerged.

WHAT MAY BE DEVELOPMENT FOR ONE, MAY

NOT BE DEVELOPMENT FOR OTHER.

What are Goals of Development?

How do we measure it?
Development seeks to improve the overall quality of life or a person and it has
to meet more than just monetary(income) goals. To measure this we need
some indicators that help us measure:
• Income
• Health
• Education
• Equality
• Security
• Respect

Some of these factors can be measured, while others can’t be. This does not
mean they are not important indicators of development. Such as how would
you measure the notion of security? It may be different for people of
different strengths!!

When making decisions, it is expected of you

to weigh all your options.
For example, when changing a school you will look at not just the quality of
education but also the environment and other facilities such as sports, extra
curricular activities, discipline etc.

Similarly, when measuring development we have to do it by considering an

appropriate mix of all goals.

When a woman works, she becomes an active part of the economy and thus
her status and respect in the family also increases. Every person desires, not
just an increase in their disposable income but other benefits that come with
it such as quality life.

Development of Nations
Like different people have different notions and goals of development,
different nations also have different goals of development.

Development for India is different from development for North Korea

because of different social, political and economical conditions in the two
countries.
What should be the development goals for India?
- Are there poor people in India? - Income Equality (Purchasing Power)
- Are all people in India educated? - Literacy
- Are all people in India healthy? - Life Expectancy
- Is the environment pollution free? - Use of Clean Energy
- Are all social groups treated equally? - Reservation for SCs and STs
- Is India safe for Women? - Gender Equality
There can be several other goals and different people will have different
notions and their priority of these goals can also vary.

But if Different Countries/Regions/People have Different Development Goals

and Definitions, then how do we compare them?
What does it mean when we say a country is developed, developing or
underdeveloped? We categorize these countries by whose perspective?!

In a class for example, a student who is good in studies may not be good in sports, or one
who is very social may not be great in studies. Different students will have different
qualities and talents, but there are students who are able to balance all their goals and are
said to have overall development.

There are some characteristics that are considered more important than
others and we base on comparison based on these characteristics. This applies to
measurement of development too.

What factors do we consider for measurement of

Development and what indicators are used to measure
them?
Income - Average Income, Per Capita Income and Purchasing Power Parity
Health - Infant Mortality Rate, Life Expectancy and Body Mass Index (BMI)
Education - Literacy Rate, Net Attendance Ratio

Should we use National Income or Average Income

as an indicator for Income?

For measuring income levels, it is desirable to take the average income of a region rather
than the gross income as it helps in finding the purchasing power of an average person.

For example; Singapore being a small country has a GDP of $350 Billion and India has a GDP
of close to $3 Trillion. In absolute terms the GDP of India is greater than the GDP of
Singapore, but the population of Singapore is much less than the population of India and
therefore the average income is much higher in Singapore.

Countries with per capita income of US$ 12736 per annum and above
in 2013, are called rich countries and those with per capita income of US$ 1045 or less are
called low-income countries.
India comes in the category of low middle income countries because its per capita income in
2013 was just US$ 1570 per annum. The rich countries, excluding countries of the Middle
East and certain other small countries, are generally called developed countries.

Countries with higher average income have more equality and less
exploitation of poor people. There is therefore less crime in developed
countries such as Japan, Singapore and the Netherlands.

Lower Average Income usually translates to lower levels of other indicators. You can see
that Bihar has the lowest average income and that they have less disposable income to
spend on health and education and it translates into lower levels of health and education in
these states.

But it is not always true; the average income in Maharashtra is greater than
that of Kerala, but still Kerala has higher levels of literacy and better health
indicators.

Money in your pocket cannot buy all the goods and services that you may need to live well.
So, income by itself is not a completely adequate indicator of material goods and services
that citizens are able to use. There are certain goods that are collective such as a pollution
free environment, overall health of a community and availability of public facilities. Money
may not be able to buy this unless you shift to a place which already has these things.

Kerala has a low Infant Mortality Rate because it has adequate provision of
basic health and educational facilities. Similarly, in some states, the Public
Distribution System (PDS) functions well. Health and nutritional status of
people in such states is certainly likely to be better. Similarly, states that
have better educational facilities have better literacy levels. It is not just
income that can measure level of development

Countries with higher average income have more equality and less exploitation
of poor people. There is therefore less crime in developed countries such as in
Japan, Singapore and the Netherlands.

Lower Average Income usually translates to lower levels of other indicators.

You can see that Bihar has lowest average income and that they have less
disposable income to spend on health and education and this translates into
lower levels of health and education in these states.

But it is not always true; the average income in Maharashtra is greater than that of Kerala,
but still Kerala has higher levels of literacy and better health indicators.
Money in your pocket cannot buy all the goods and services that you may need to live well.
So, income by itself is not a completely adequate indicator of material goods and services
that citizens are able to use. There are certain goods that are collective such as a pollution
free environment, overall health of a community and availability of public facilities. Money
may not be able to buy this unless you shift to a place which already has these things.

Kerala has a low Infant Mortality Rate because it has adequate provision of
basic health and educational facilities. Similarly, in some states, the Public
Distribution System (PDS) functions well. Health and nutritional status of
people in such states is certainly likely to be better. Similarly, states that
have better educational facilities have better literacy levels. It is not just
income that can measure level of development

Measurement of Development of Countries -

Human Development Report
Human Development Index (HDI)
It is a composite index developed by the United Nations Development Programme (UNDP)
and released annually in its Annual Human Development Report. Major indicators of a
country's progress include life expectancy, literacy levels, and per capita income. The
world's countries are classified as Very High Developed, High Developed, Medium
Developed, and Low Developed.

Following indicators are used in its development:

Infant Mortality Rate : The number of children who die before reaching the
age of one as a percentage of 1,000 live births in a given year.

Literacy Rate: It quantifies the fraction of the population aged 7 and older
who are literate.

Net Attendance Ratio : It is the percentage of children in the age group 6-

10 who attend school as a proportion of all children in the same age group.

Body Mass Index (BMI) : Calculating one's body mass index is one approach
to determine if an adult is malnourished. It is calculated by dividing a person's
weight (in kilograms) by the square of their height (in metres).
If this number is less than 18.5 then the individual is regarded to be malnourished. If this
BMI is greater than 25, the individual is considered overweight.

The HDI was created to emphasise that people and their capabilities should
be the ultimate criteria for assessing the development of a country, not
economic growth alone.

The HDI can also be used to question national policy choices, asking how two countries with
the same level of GNI per capita can end up with different human development outcomes.

The Human Development Index (HDI) is a summary measure of average achievement in key
dimensions of human development: a long and healthy life, being knowledgeable and having a
decent standard of living. The HDI is the geometric mean of normalised indices for each of
the three dimensions.

Human Development Report published by UNDP compares countries based on the

educational levels of the people, their health status and per capita income.

Many improvements have been suggested in calculating HDI and many new components have
been added to the Human Development Report but, by prefixing Human to Development, it
has made it very clear that what is important in development is what is happening to
citizens of a country. It is people, their health, their well being, that is most important.

What is Sustainable Development?

Sustainable development means that development should take place without damaging the
environment and without compromising the needs of the future generation. That is use of
resources wisely and judiciously, so that these resources are available for the next
generation to use.
It was earlier believed that resources are inexhaustible and were used without any
restraint or limitation. This indiscriminate use of resources led to its depletion in nature
and has led to global ecological crises such as, global warming, ozone layer depletion,
environmental pollution and land degradation.

- It has increased competition among individuals, corporations and nations

to acquire these resources.
- An equitable distribution of resources has become essential for a
sustained quality of life and global peace.

If the present trend of resource depletion by a few individuals and countries continues,
the future of our planet is in danger.

Case of Ground Water in India (Renewable Source) - Groundwater is an

example of renewable resources. These resources are replenished by nature
as in the case of crops and plants. However, even these resources may be
overused. If we use more than what is being replenished by rain then we would
be overusing this resource.

The debate on development hence should be a continuous one and should

constantly question the balance between our needs and the resources that can
provide for them. The question of sustainability requires us to question our
way of progress and development.