Concepts and indicators of development
GOAL
To describe the concepts of development and the indicators used to measure development.
OBJECTIVES
1. Analyse different conceptions of development.
2. Show the interrelatedness in different approaches to development.
3. Examine different indicators to development.
This week, we begin Module 2: Issues in Caribbean Development. This module introduces you to the concepts of development and how they have changed over time, those factors that hinder development in the Caribbean, and how people of the region and its institutions have shaped the Caribbean’s development.
Development is not purely an economic phenomenon but, rather, a multidimensional process involving reorganisation and reorientation of entire economic AND social systems. Development refers to the ‘’improvement in a country’s economic and social conditions’’. More specifically, it refers to improvements in ways of managing an area’s natural and human resources in order to create wealth and improve people’s lives. This definition is based on the more obvious distinctions in living standards between developed and less-developed countries.
SUSTAINABLE DEVELOPMENT
According to the Western Cape Education Department, South Africa, sustainable development is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Sustainable development implies economic growth together with the protection of environmental quality, each reinforcing the other. The essence of this form of development is a stable relationship between human activities and the natural world, which does not diminish the prospects for future generations to enjoy a quality of life at least as good as our own. Many observers believe that participatory democracy, undominated by vested interests, is a prerequisite for achieving sustainable development (Source: Mintzer, 1992).
ECONOMIC DEVELOPMENT
Economic development is the development of economic wealth of countries, regions or communities for the well-being of their inhabitants. From a policy perspective, economic development can be defined as efforts that seek to improve the economic wellbeing and quality of life for a community by creating and/or retaining jobs and supporting incomes and the tax base.
HUMAN DEVELOPMENT
Human development is defined as the process of enlarging people’s freedoms and opportunities and improving their wellbeing. Human development is about the real freedom ordinary people have to decide who to be, what to do, and how to live. The human development concept was developed by economist Mahbub ul Haq.
HUMAN DEVELOPMENT PARADIGM
■ People are the means and end of development – quality of their lives.
■ Development is about broadening people’s choices.
■ That poverty and income inequality prevents a better quality of life.
Development is achieved through the eradication of the barriers to the four keys of development: equity, productivity, empowerment, sustainability.
INDICATORS OF DEVELOPMENT
Factors affecting growth and development: ■ Rate of investment.
■ Rate of increase in the working population. ■ Technical training and education. ■ Government expenditure. ■ Migration.
STANDARD OF LIVING
This refers to those factors that indicate the country’s wealth, that is, the quantity of goods and services consumed, including quality of food and types of houses. A country may have expensive goods and services, such as luxury automobiles, but we must look deeper than the material measurements of a country’s wealth and assess whether the general population benefits from this wealth. In other words, we must assess the quality of life.
INDICATORS FOR A COUNTRY’S STANDARD OF LIVING
■ Level of consumption of goods and services. ■ Average disposable income of the population. ■ Level of national ownership of capital equipment. ■ Access to modern technology.
■ Level of investment in research and technology.
INDICATORS FOR A COUNTRY’S QUALITY OF LIFE
■ Extent of security involved [level of crime]. ■ Availability of health, educational and recreational facilities. ■ Diet and nutrition.
■ Life expectancy.
■ Rate of infant mortality.
■ Access to public utility sectors – electricity and portable water.
GNP (gross national product) is the value of output [goods and services] produced by a country, plus any income derived from abroad. GNP per capita is obtained by dividing the GNP by the population. This indicates the average income of citizens and is used to classify countries as high-, middle- and low-income. It does not indicate economic development.
GDP (gross domestic product) is the total market value of the output [goods and services] of the country in a given year.
Economic growth refers to an increase in the value of goods and services produced by the country within our time period.
HDI (human development index) is a normalised measure of life expectancy, education, and income indices to rank countries into four tiers of human development. “The basic purpose of development is to enlarge people’s choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and a sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.”
There are six basic pillars of human development: equity, sustainability, productivity, empowerment, cooperation and security.
■ Equity is the idea of fairness for every person, between men and women; we each have the right to an education and healthcare.
■ Sustainability is the view that we all have the right to earn a living that can sustain our lives and have access to a more even distribution of goods.
■ Productivity states the full participation of people in the process of income generation. This also means that the government needs more efficient social programmes for its people.
■ Empowerment is the freedom of the people to influence development and decisions that affect their lives.
■ Cooperation stipulates participation and belonging to communities and groups as a means of mutual enrichment and a source of social meaning.
■ Security offers people development opportunities freely and safely with confidence that they will not disappear suddenly in the future.
PPP (purchasing power parity) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to
services in the two countries, and uses that to calculate an implicit foreign exchange rate.
Gini coefficient is commonly used as a measure of inequality of income or wealth. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality. When used as a measure of income inequality, the most unequal society will be one in which a single person receives 100% of the total income and the remaining people receive none; and the most equal society will be one in which every person receives the same income.
Productivity is an average measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs of capital, labor, land, energy, materials, etc). At the national level, productivity growth raises living standards because more real income improves people’s ability to purchase goods and services, enjoy leisure, improve housing and education, and contribute to social and environmental programmes. Productivity growth is important to the firm because more real income means that the firm can meet its (perhaps growing) obligations to customers, suppliers, workers, shareholders, and governments (taxes and regulation), and still remain competitive or even improve its competitiveness in the market place.
Good governance is a term used to describe how public institutions conduct public affairs and manage public resources. Governance is the process of decision-making and the process by which decisions are implemented for the greater good. The concept centres around the responsibility of governments and governing bodies to meet the needs of the masses as opposed to select groups in society. Eight criteria are: 1) Participation, equity, and inclusiveness
2) Rule of law.
3) Separation of powers.
4) Free, independent and responsible media. 5) Government legitimacy.
6) Accountability.
7) Transparency.
8) Limiting the distorting effect of money in politics.
REFERENCE
CAPE Caribbean Studies, Mohammed, Jennifer.