send mail to support@abhimanu.com mentioning your email id and mobileno registered with us! if details not recieved
Resend Opt after 60 Sec.
By Loging in you agree to Terms of Services and Privacy Policy
Claim your free MCQ
Please specify
Sorry for the inconvenience but we’re performing some maintenance at the moment. Website can be slow during this phase..
Please verify your mobile number
Login not allowed, Please logout from existing browser
Please update your name
Subscribe to Notifications
Stay updated with the latest Current affairs and other important updates regarding video Lectures, Test Schedules, live sessions etc..
Your Free user account at abhipedia has been created.
Remember, success is a journey, not a destination. Stay motivated and keep moving forward!
Refer & Earn
Enquire Now
My Abhipedia Earning
Kindly Login to view your earning
Support
Characteristics of less developed countries and obstacles to their development- Growth, Poverty and Income Distribution.
Use the term "Less Developed Countries" or "LDCs" for the world's poor countries and "More Developed Countries" or "MDCs" for the world's richer countries. The authors of our textbook use the term "developing countries" or "DVCs" for the poor countries and "Industrially Advanced Countries" or "IACs" for the richer countries.
'Development' and what it actually means. As with many 'good things' it is hard to define. It will always be difficult for large numbers of people to reach an agreement on the definitions of abstract concepts such as equity, justice, human rights, and development. However, most people recognise the existence of these concepts and would probably agree that they are desirable things that societies should strive towards.
Conceptual frameworks of this sort often consist of a set of principles or guidelines that establish minimum requirements for achieving desired goals. Whilst the individual is often the focus of such frameworks, there is usually also an implicit assumption that the interests of people as a whole take precedence over those of specific individuals. So, for instance, there should be justice for all rather than just a few, and human rights are for everyone and not just for those with the power to exercise them. One example of this sort of conceptual framework is the Universal Declaration of Human Rights. This was adopted by the General Assembly of the United Nations (UN) in 1948 and provides an extensive list of rights that all human beings should ideally be able to enjoy.
Development in two ways
Development goals include, for example, the elimination of hunger and poverty, universal access to education and healthcare, representative government, social stability and many others, including those listed in the United Nation's (UN) charter on human rights. In recent times, the most publicised development goals have been the Millennium Development Goals (MDGs). These were agreed by the United Nations at the Millennium Summit in September 2000 and aimed to be met by 2015.
Millennium goals
The Millennium Development Goals are an ambitious agenda for reducing poverty and improving lives that world leaders agreed on at the Millennium Summit in September 2000. For each goal one or more targets have been set, most for 2015, using 1990 as a benchmark:
like the UN charter on human rights, is primarily a wish list of desirable outcomes. Little is said about the specific processes by which individual targets are to be achieved - although some of the goals are necessary steps on the way to achieving other goals, which suggests that there is a certain amount of overlap between goals and processes. Good governance could, for example, be viewed as both a means to an end and an end in itself.
As 2015 approaches, there is growing reflection about what the MDGs have achieved and what should replace them, with some calling for an approach that is more tailored to the needs and circumstances of individual countries than the MDGs have been.
Processes
Development processes, then, concern the means by which development goals are reached. They might involve specific policies and strategies adopted by governments and other development agencies, or they may relate to wider forces of change outside the control of governments or individual organisations. Whilst it is relatively easy for people and governments to agree on broadly defined aims, it is often much harder to prioritise between them or reach agreement on how to achieve them.
Much of this module provides insights into different perspectives on the debates surrounding development processes by examining the theories (especially economic ones) and empirical evidence commonly underlying support for some processes and the rejection of others.
Economic versus human development
Distinctions are sometimes made between the concepts of economic development and human development (sometimes also referred to as social development). Economic development usually refers to improvements in material living standards and therefore to improvements in income, consumption, employment, savings and investment. It also concerns how resources are distributed between different people and the processes that influence this distribution. Ensuring that economic improvements benefit the majority rather than just the few is an important goal in development. This broad-based development is important for both ethical and economic reasons, as large inequalities can be an obstacle to further economic development (see Ravallion 2005). Economic development is also associated with improvements in technology and institutional change as well as changes in the structure of the economy as a country typically diversifies away from agriculture and expands its industrial and service sectors.
The concept of human development or social development usually involves a broader set of goals in which economic development is often seen as a means to an end rather than an end in itself. In human or social development the goals relate to quality of life issues, such as security, health, education, social stability, equality, empowerment, dignity, and so on. These are themselves seen as means for achieving a wider conceptualisation of 'development as freedom' (Sen 2001 p. 382), as these goals and means are necessary components of freedom (to live, to participate in society, to choose, to consume, etc). We explore the concepts of human and economic development in more detail later.
How much are our ideas about the processes of development influenced by our cultural and professional backgrounds? Most discussions of development present views that are dominated by economic and institutional perspectives, but it is important to recognise this. While these may attempt to recognise the importance of valuable insights from other perspectives, they are nevertheless often evaluated from and incorporated into a predominantly economic and institutional analysis.
A social development perspective, by contrast, not only has its own perspectives on development, it also evaluates economic and institutional analysis from a different angle. It thus puts more emphasis on social exclusion and inequality as features of under-development and poverty, questions the values underlying dominant economic development paradigms, and, for example, contrasts 'efficiency', 'needs', and 'rights' based development policy approaches (Derbyshire and Locke 2008). These different perspectives raise fundamental questions about development goals and processes.
Different perspectives may also arise from varied interests in or experience of agriculture, health, education, social development, economics, politics, water, urban development, or rural development; from different religious or cultural beliefs and values; from gender, age or ethnic differences; or from different social, educational, and cultural backgrounds.
Economic growth and development
We have started our discussion of development by addressing very broad issues relating to the concept of development. However, much of the literature and thinking about 'development' focuses on economics. Indeed 'development' and 'economic development' have often been treated as synonymous concepts. The economic development of a country or society is usually associated with (amongst other things) rising incomes and related increases in consumption, savings, and investment.
Of course, there is far more to economic development than income growth; for if income distribution is highly skewed, growth may not be accompanied by much progress towards the goals that are usually associated with economic development.
Economic growth
Economic growth can follow many different paths, and not all of them are sustainable. Indeed, there are many who argue that given the finite nature of the planet and its resources, any form of economic growth is ultimately unsustainable. We shall leave these debates for later. For now let us look at what exactly economic growth is and how it is measured.
Economists usually measure economic growth in terms of gross domestic product (GDP) or related indicators, such as gross national product (GNP) or gross national income (GNI) which are derived from the GDP calculation. GDP is calculated from a country's national accounts which report annual data on incomes, expenditure and investment for each sector of the economy. Using these data it is possible to estimate the total income earned in the country in any given year (GDP) or the total income earned by a country's citizens (GNP or GNI).
GNP is derived by adjusting GDP to include repatriated income that was earned abroad, and exclude expatriated income that was earned domestically by foreigners. In countries where inflows and outflows of this sort are significant, GNP may be a more appropriate indicator of a nation's income than GDP.
There are three different ways of measuring GDP;
1. the income approach
2. the output approach
3. the expenditure approach
The income approach, as the name suggests measures people's incomes, the output approach measures the value of the goods and services used to generate these incomes, and the expenditure approach measures the expenditure on goods and services. In theory, each of these approaches should lead to the same result, so if the output of the economy increases, incomes and expenditures should increase by the same amount.
Figures for economic growth are usually presented as the annual percentage increase in real GDP. Real GDP is calculated by adjusting nominal GDP to take account of inflation which would otherwise make growth rates appear much higher than they really are, especially during periods of high inflation.
Short-term versus long-term growth
A distinction needs to be made between short-term growth rates and longer term ones. It is quite normal for short-term growth rates to fluctuate in line with the business cycle. This can be seen in the two figures in 1.2.1 representing GDP growth in the US between 1930 and 2003.
According to the measures of GDP and growth shown here, growth in recent decades has fluctuated between zero and 5% per annum. Clearly, based on long-term trends, growth rates exceeding 5% (as measured here) would seem to be unsustainable. When politicians are talking about sustainable growth they are often referring to macroeconomic concerns relating to the cycle of boom and bust.
An economic boom involves high growth rates and is often accompanied by rising inflation. It is often followed by a period of lower growth rates and recession ('bust'). Sustainable growth in this context relates to stable growth rates that even out the fluctuations in the business cycle, thus avoiding high peaks and the large troughs associated with recessions. Note that this is different from the issues that environmentalists typically focus upon when they discuss the sustainability of economic growth.
Relationship between growth and development
Do high levels of GDP necessarily correspond with high levels of development? Not necessarily. It is not aggregate GDP that is important, but GDP per capita. Countries like China and India have much higher levels of GDP than, say, Singapore, New Zealand or Belgium, but few would suggest that the latter are economically less developed than the former.
Certainly, statistics reveal that the most developed countries are those with the highest GDP per capita. Clearly, though, GDP per capita doesn't tell the whole story. GDP per capita is calculated by dividing GDP by the population. It says nothing about how incomes are distributed or spent. Growth in GDP per capita could result from growth in the incomes of richer groups in society, with incomes of poorer groups remaining largely unchanged. It coincides with spending patterns that are skewed towards the rich and which exclude the needs of the poor. It doesn't necessarily follow that growth in per capita GDP will lead to a reduction in poverty or to broader social and economic development. Indeed, there are those who argue, rightly or wrongly, that in many countries economic growth is associated with increasing levels of poverty, rather than the reverse.
The relationship between economic growth and poverty is a hotly debated topic, about which people are very divided. Some people highlight the negative effect of growth on low income groups, stressing the need for new approaches to economic development that will allow the poor to benefit more from economic growth than they do at present. Others are more sanguine, believing that the benefits of current models for growth will eventually 'trickle down' to poorer groups in society, if they are not already doing so.
Inequality
Most development professionals now believe that growth, at least in poorer countries, is essential (but not always sufficient) for poverty reduction in the longer term. However, inequality is a potentially important factor in determining how quickly and effectively growth reduces poverty, with growth in countries that start out with high levels of inequality being less effective in reducing poverty than it would be were inequality less pronounced (see Ravallion 2005). A renewed interest in the role of inequality and efforts to reduce it appears to have entered the development discourse since the global economic crisis of the late 2000s.
Much of the debate in this area revolves around the values and ideals of those engaged in it, as well as the different theories on the subject. It also hinges upon interpretations of the empirical evidence. Poverty and income distribution are hard to measure, especially in developing countries where the capacity to gather and analyse data is often very weak. Consequently, the strength of the statistical relationship between growth, poverty and inequality remains the subject of heated debate. There is also controversy about the mechanisms by which economic growth may reduce poverty, the timing of these and the policy implications. This has been heightened by the 'bottom billion'.
The bottom billion
The bottom billion debate which revolves around the question of whether the poorest people (the bottom billion) are to be found in the poorest countries ( see Collier 2007) or in fast growing middle income countries (see Sumner 2010). The policy implications and the politics of tackling poverty depend greatly on which perspective is taken in this debate. Should, for example, international efforts to reduce poverty be focused on the poorest countries (much of sub-Saharan Africa plus various failed states) or on reducing poverty in more densely populated parts of the world (especially South Asia, but elsewhere too) where most of the world's poor now live, but where average incomes in the countries they live in are much higher than in low income countries? Some would argue that the poor in middle income countries should be the responsibility of the national government concerned and international efforts should be concentrated instead on countries where governments have far fewer resources at their disposal. Others argue that this is to neglect the plight of the majority of the world's poor people.
GDP and purchasing power parity
An additional problem with GDP as a measure of development occurs when one compares per capita GDP across countries. This problem arises because one US dollar in the United States or Europe, for example, does not buy the same amount of goods and services as it would do in, say, Africa or Asia. For many goods and services one dollar will purchase significantly more in a developing country than it will in a developed one. To overcome this difficulty, economists often use purchasing power parity (PPP) dollars when making cross-country comparisons of GDP. These are dollars that are adjusted to account for the differences in purchasing power between different countries.
Human development Index
The weaknesses inherent in the use of GDP as a measure of development have led to the creation of other measures. The most well known of these is the human development index (HDI) published on a regular basis by The United Nations Development Programme (UNDP) in its Human Development Report. The HDI is a composite index that rates countries according to their overall performance in relation to three criteria
These are related to fundamental freedoms to live and to participate in society.
UNDP publishes a number of different human development indicators, many of which are composites of other weighted indexes. The main indexes are
Calculating human development indicators
Sustainable development
In the world we live in today, it is not possible to discuss development without involving the concept of sustainability and sustainable development. Sustainability, like development, is a difficult concept to define.
The ecological science behind environmental sustainability and the forces that maintain or upset an ecological balance are not the subject of this module. This module is, however, concerned with the social and economic implications of 'environmental sustainability'; with the implications of failing to achieve environmental sustainability; and the relative costs and benefits of different strategies for pursuing environmental sustainability.
Sustainability cannot be examined in isolation from social and economic constraints. In addition to environmental sustainability we also need to consider economic sustainability and social sustainability.
Conceptually, these statements may seem straightforward enough. However, determining whether or not an activity is environmentally, economically or socially sustainable may not be easy at all, since it can be quite difficult to predict what future impact an activity will have on environmental, economic and social variables.
In relation to economic sustainability there is also the question of how costs and benefits are valued. Something that is economically sustainable under one set of prices may not be so under a different set of prices. The key point, though, is that if costs exceed benefits, the incentives to undertake the activity in question will be lacking, and whilst subsidies might help overcome this problem, the subsidies themselves may not be sustainable if there is insufficient will on the part of those who provide them.
The concept of sustainability also raises the question of for how long something can be sustained, as well as for how long it needs to be sustained. Are 'sustainable' activities only those which can be sustained indefinitely? Should the notion of 'sustainability' deter all activities that can't be sustained indefinitely, even if some of these can be sustained for long enough to warrant undertaking them in the first place? For example, the exploitation of non-renewable resources, such as oil and other fossil fuels, cannot by definition be sustained forever. Yet few would contend that in the pursuit of sustainable development we should immediately abandon all use of these resources.
The issue of sustainability becomes particularly complex when we start looking at the sustainability of whole economies or even the global economy. In this case it is not sufficient to examine the sustainability of individual activities in the manner suggested by the points listed previously. Whilst an individual activity may itself be sustainable, it may have the effect of reducing the sustainability of other activities. For example, the use of a river as a sink for a factory's effluent could possibly be sustained indefinitely. However, this activity may seriously undermine the sustainability of other activities associated with the river, such as fishing, domestic water supply, or recreational activities. Moreover, if the other users of the river take effective action against the factory, its polluting behaviour may not be economically or socially sustainable.
The concept of a sustainable economy or society raises difficult questions about what sort of things society wishes to sustain, how they should be sustained, and what are the costs and trade-offs involved in doing so. Does sustainable development require us to conserve the ecological balance within all ecosystems at all costs, or can some ecosystems be sacrificed as long as a critical balance is maintained within the wider ecosystem?
The Brundtland Report
One of the most significant and influential contributions to the sustainability debate was provided by what has come to be known as the Brundtland Report.
In 1983 the United Nations established a commission (The World Commission on Environment and Development) to investigate the relationship between the environment and the goals and processes of development. The commission was headed by Gro Harlem Brundtland and in 1987 published its findings under the title of Our Common Future*, which also came to be known as the Brundtland Report.
The report recognises that environmental and development concerns are closely interlinked
1. that policies aimed at fostering economic growth and development are not sustainable in the absence of efforts to protect and conserve the environment and
2. that efforts to conserve the environment, especially in poorer countries, are unlikely to be sustainable without proper attention being given to the needs of the poor and their relationship with the environment
How effective the Brundtland Report has been in bringing about real change is the subject of debate, as are its findings and recommendations. Nevertheless, the report was influential in drawing attention to the complex relationship between environment and development, and in highlighting the need for co-operation between environmentalists, on the one hand, and developmentalists, on the other. It also helped place the issue of sustainable development firmly on the international agenda, and few international statements on the environment or development are now made without reference to 'sustainability' and the issues raised by the Brundtland Report.
In the Brundtland Report sustainable development is defined as development which '... meets the needs of the present without compromising the ability of future generations to meet their own needs ...' WCED (1987) p. 8.
This much quoted statement illustrates an important principle of sustainable development, which is that of inter-generational equity. Intra-generational equity has long been recognised as a goal of development. What the Brundtland Report makes explicit is that future generations have as much right to fair treatment as current generations.
Growth and sustainability
Much of the literature and debate about sustainable development is concerned with the relationship that exists between economic growth, on the one hand, and sustainability, on the other. Analysts are greatly divided on this issue, especially with regards to long-term growth trends.
Most of the arguments revolve around the forms of development that are compatible with 'sustainability' and those which are not. There is a widespread view that at the global level past and present patterns of economic growth are environmentally and socially unsustainable. This view is especially strong amongst environmentalists and political activists, but also exists within development agencies and academia (see for example, Jackson 2009). Its essence is that continued growth will result in escalating ecological breakdown - above all because of the potentially catastrophic impacts of anthropogenic climate change (see Daly 1996 p. 253 and Meadows et al 2004 p. 362).
There is still uncertainty about how much global warming is likely to occur in response to different rates of greenhouse gas emission, as well as about the physical, economic, and social impacts of different climate change scenarios. Nevertheless, there is a consensus that if CO2 emissions continue to grow as they have done in the past the resulting climate change will cause massive social upheaval and bring to an end the increasing levels of consumption that have been a feature of global economic development over the past century or more. Such effects will be felt locally, nationally and globally although the worst of these effects are expected to be felt by the poor, especially those living in developing countries.
Many of the concerns about the sustainability of growth also relate to income distribution and poverty, both of which could be made worse if the more pessimistic predictions about climate change prove to be true. Those who link current patterns of growth with increasing inequality and deepening poverty see increasing social unrest and instability as a further threat to sustainable growth.
The triple-f crisis
Sustainability is typically associated with a degree of stability, whether in relation to the economy, environment, or social relations. The late 2000s and early 2010s has been marked by considerable instability. In economic terms that instability has manifested itself in sharp movements in the prices of food, fuel and financial assets. Together these shocks have come to be known as the triple-f crisis. Some see sharp rises in food and fuel prices as marking the start of new era of growing scarcity, both of food and fossil fuels. The scarcity is linked to both supply and demand factors with rapid economic growth in emerging economies, especially China and India, helping drive up the demand for both food and energy in the face of supply constraints.
As emerging economies industrialise their demand for energy increases. So, too, does their demand for grain as meat and dairy products (which require large amounts of grain to produce) begin to feature more prominently in people's diets due to rising incomes. The increased demand for grain also drives up demand for energy as agricultural production becomes ever more dependent upon fossil fuels, especially in the production of fertilisers. This dependence may explain why food and energy prices are more closely aligned than was the case in the past (Arshad and Hameed, 2009).
On the supply side, many interpret rising prices as an embodiment of concerns about the potential effects of global warming on global food production, and about diminishing rates of growth in food production as existing agricultural technologies begin to reach their full potential, as water scarcity increases, and as existing agricultural land is damaged by salinisation and over-intensification or is lost to urban development.
It is not just rising prices that are a problem. Sudden and sharp falls in prices can also cause difficulties when it comes to planning economic activity. Many critics of capitalism in its current form point to growing price volatility as evidence of its unsustainable nature and call for reforms that will reduce such instability.
Moving to a low-carbon economy
Whilst there is now much agreement on the goal of reducing CO2 emissions, there is far less agreement on the processes needed to achieve this goal. Few would dispute the need for greater energy conservation or the imperative of shifting the global economy out of fossil fuels and into renewable energy. However, controversy quickly emerges over the speed at which the transformation needs to take place and on the question of which sources of renewable energy are most sustainable. Nuclear energy is particularly controversial, although many pin their hopes on a future in which the world's energy supplies are met by nuclear fusion which does not suffer from the sme limitations as fission technologies with regards to safety and the availability nuclear fuel.
Probably the biggest disputes, however, are over the sort of economic institutions and structures that are needed for the move to a low carbon economy. Is continued growth needed in order to bring about the necessary technological transformations, and if so how should that growth be driven? A central question concerns the extent to which change should be driven by governments.
Opinions divide between
1. those who would like to see governments managing the process of change by actively encouraging and investing in particular technologies and
2. those who would prefer to see a more hands-off approach whereby governments enforce national and global emissions targets, but allow markets to determine how best to achieve them.
In addition to the above two, on the whole reformist, perspectives there are other more radical ones that question the future of global capitalism itself. Many (although not all) in this camp look instead towards a future involving much greater localism, greater national and local self-sufficiency, and ultimately a less consumerist culture than the one that has driven global economic growth in recent decades. How one might arrive at such a radical alternative to the present capitalist system is, however, unclear.
Global consumption patterns
Consumption lies at the heart of the sustainable development problem. At a global level consumption of natural resources is growing at an unsustainable rate. It is also highly skewed, with rich countries consuming a disproportionate amount of the earth's resources. In the pursuit of sustainable development there is clearly a case to be made for curbing the consumption of the rich whilst increasing the consumption of the poor. In the world's rich and/or rapidly growing countries excessive consumption poses the most serious threat to sustainable development; whilst in poor countries it is the lack of consumption that is the main problem.
In the latter, poor people are often unable to consume even the most basic of necessities. This represents a failure of development, but can have damaging environmental consequences too, as poverty often forces people to degrade their environment just to survive.
Measuring prosperity
As we noted earlier, GDP is the most commonly used measure of prosperity. However, if prosperity is also a function of environmental quality, then GDP suffers from some obvious weaknesses. A large proportion of the income measured by GDP is earned by exploiting and mining natural resources and the environment or involves damage to the environment. GDP does not account for the depreciation of the natural capital that is used to generate it, or for the damage caused by pollution, including the effects of greenhouse gases on global climate change. For some countries, steps have been taken to develop a parallel set of national accounts that do incorporate changes in environmental capital. However, the approach is still in its infancy and GDP remains the most widespread and influential indicator of an economy's performance.
There is also increasing interest in the measurement of happiness, following some evidence that reported happiness (what people say about their own happiness) does not actually rise once a certain level of income has been reached. The idea that societies should be seeking out increases in Gross National Happiness (GNH) rather than GDP (see Layard 2011) has gained increasing traction, at least conceptually, although the problem of how to measure happiness in an objective and policy-useful way remains unsolved.
The great recession
The unsustainable nature of past patterns of economic growth was the focal concern of the Brundtland Report in 1987, and is a concern that has certainly not diminished since that time. Politicians and the international community talk more loudly than ever about poverty and the need to address environmental and social issues. However, the political and economic difficulties of implementing the necessary policy reforms are substantial and it remains to be seen whether these can be overcome.
The global economic shocks of 2008 and the 'great recession' that followed it, with its epicentre at the heart of the world's richest economies, have thrown into question the sustainability of deeply entrenched development models based upon free markets, but have also added greatly to the political and economic challenges of bringing about change. The great recession has had profound effects not only on the livelihoods of millions of people, but also on the debate about economic development and how it should be pursued.
The debate is very divided. Many see the crisis as evidence of the failure of markets and the laissez-faire capitalism that held sway before the crisis, and as an opportunity to try out new alternative models. Yet there are others, especially in the United States, who blame the crisis on excessive government interference in markets. Whichever view one takes, the high level of public sector indebtedness and the need to cut budget deficits is putting pressure on governments in many rich countries to reduce their role in the economy. Whether the private sector does actually step in to take their place as an employer and supplier of services in areas that were previously the state's responsibility remains to be seen. The future of development thinking is likely to be influenced to some degree by the social and economic outcome of these upheavals.
The BRICs
Another impact of the great recession has been to hasten the convergence that has been taking place between the economic power of the world's richest countries and the emerging BRIC countries (Brazil, Russia, India, China). Whereas in the past the mainstream paradigm for development was always based upon western models, western dominance in setting the agenda is likely to diminish in the future as the BRICs become increasingly influential in international decision-making (Birdsall and Fukuyama 2011).
By: Jyoti Das ProfileResourcesReport error
Access to prime resources
New Courses