Thursday, 20 June 2013

Developing an Idea of Development

No two families are equally fortunate. Some have bigger homes, while some are more literate and educated than others. Some families are more dysfunctional than others, maybe due to failed marriages or angry adolescents. Others always meet for every Holi or Christmas or Eid to celebrate together. Even as individuals we are not all equally fortunate. Some of us cope with physical difficulties, while some  do not enjoy certain fundamental rights. While some of us have ample food to eat and clothes to wear, we always see some others in society that are without even these basic necessitates. Regardless of which country we live in, we can see these differences among people, households and communities. 

What is important to realize is that although the greatest strength of all humanity is its diversity, some parts of the world are unable to live up to their capabilities because they are poor. In reality, and if truth be told, we cannot really comprehend how much people’s lifestyles differ across nations and regions. To truly understand the differences in people’s preferences and options, one must travel to villages and small towns to observe how people in fact live. There are both subtle and distinct differences in the cultures of the rich and the poor. From the food people eat to the manner of transport that they use, we can observe differences.

We use these words very often- rich and poor.

 ‘Oh, look at those poor children who don’t go to school’.
‘When the rich wage war, it’s the poor who die’. 
‘The current government is focusing on helping the poor’.

What does it really mean to be poor? And what does it mean to be rich? The answer to this question is complex. Yet, our minds are able to quickly calculate a comparison between two people and tell who is poorer and who is richer.
If we think a little about these words- rich and poor, we will realize that these are relative terms. It is similar to how we compare people based on height (taller or shorter), weight (lighter or heavier), skin tone (dark or fair) and race (Mongolian or Aryan). However, we realize that in order to truly be able to compare people we must have a scale of measurement. Therefore, we compare height in meters and weight in kilograms and  we use a measuring rod and weighing machine.

Development Economics is the subfield of Economics that tries to calculate this poor-ness and rich-ness, better off ness and worse-off-ness, and even to some extent how-much-better-off-ness. This branch of Economics uses certain indicators that tell us the differences amongst cultures and countries. These indicators help us compare and differentiate different regions that are influenced by different geographic, political and economic conditions. Sometimes these indicators tell a different story from what is believed and sometimes it reinforces certain preconceived notions. Some of the major indicators are:-

·      Per Capita Income: - The National Income as divided by the total population. This tells us that if there was a perfect distribution, then what would be the average income of  a person living in a given country. The more the people, the less is their share of the total income. Since Norway ($96,591) has a higher per capita income than Ethiopia ($351), we may consider Norway as a  country richer than Ethiopia. 
Per Capita GDP: Darker areas indicate higher Per Capita GDP

·      Literacy Rate: - This indicator tells us what percentage of the population is able to read and write. It is an observation of the amount of basic education that people of a country have received. A country that has higher percentage of literate people (France-99%) is considered better off than a country that has only very small percentage of literate people (Somalia-38%).

A Good Education
·      Life Expectancy: - This figure tells us the average years of life that can be expected from a newborn baby. This indicator is affected most by the amount of health care and medical facilities that people of a country enjoy. Countries that have higher life expectancy (USA 77) are considered better off than the countries  that have lower life expectancy (India 65).

Adequate Healthcare

These indicators are a very useful way of comparing and measuring development. It is easy to understand  the reasons for this. We are able to contrast richness and poorness by observing income, health and education. We evaluate people on the basis of these three indicators. If a person is wealthy, healthy and able to read and write, she is truly rich. If she only has a large income but poor health and cannot read or write well, we pity her and consider her poor despite her large income. Similarly, any one indicator is not enough to make someone rich or poor. The people of the mountains often have clean air and pure water to drink. They might be healthier than people of the cities but since hilly areas are harder to connect to the world and building schools is difficult, they might have low education and low income.

In order to solve this difficulty, we take the help of the Human Development Index (HDI). This is basically a number that combines life expectancy, literacy and income to create a more holistic  indicator. We simply have to plug in values of life expectancy, literacy and per capita income into a formula and lo and behold we have an indicator that enables us to compare and contrast countries. Here is a list of countries compared ,using the HDI.

HDI Chart: The darker areas have higher HDI

HDI reveals a lot...

Usually we have certain established ideas about certain kinds of people and countries. We count off certain nations just because they have lower incomes. We often give lower weightage to education and health even though these are very important indicators. Once we begin to evaluate countries with education and health along with per capita income, we make some startling discoveries.

Cuba: A communist country which is passed off as not very successful and far behind even some developing countries, is in fact very high up on the HDI chart. Cuba’s healthcare system is very effective in raising the life expectancy to levels that are higher than those of developed countries. Its people on an average live up to 78 years of age, and that places it on the 38th  rank worldwide, in terms of life expectancy. 

Cuba is doing well.

China: The world's second largest economy that has been growing incredibly fast since the last two decades is actually not so far ahead of the rest of the world health. It stands 85th on the HDI chart and this shows that it has a lot more to do in the fields of education a Although Chinese incomes may be rising, there is still much to be desired for its education and medical services.

Russia: The age old giant that formed the core of the USSR and had much prominence  in the 20th century is now lagging behind at 62nd position on the HDI. This is mainly due to Russia's failing health care and medical facilities.

Kerala: Amidst the chaotic scenario of India lies a state that has been extremely successful in raising the standard of living. A person in Kerala enjoys a life expectancy of 74 years. 97% of the population in this state has received at least basic education and can read and write well. In these two fields, education and healthcare, Kerala has done outstandingly well.

Development is not Growth, but Growth is Development

Economic growth only relates to the increase in GDP. As we have understood in an earlier blog post, GDP is farther to human welfare than we believe. Growth accounts only for increase in national income, expenditure and production. What is much closer to the concept of human happiness is the concept of Development. Development is an all round approach to understanding human happiness and capabilities. Development not only looks at income, but also at quality of education, healthcare, life expectancy, political stability and many other factors that may influence a society. Development is a more open and complex idea, while growth is a much duller concept. There maybe a case where economic growth is incredibly high but increases in income does not translate into happiness. Growth is a much smaller concept and development a much larger one.

In the past decades, countries used to focus much more upon economic growth while ignoring other basic concepts. Development is a much newer concept that has gained  importance over growth in today’s times. Development lies in the upgrading of school education, with better teachers, equipment and ultimately learning. Development lies in better medical care with free hospitals that can treat a wide variety of illness and disease. Development lies in improving people’s lives and making life more worthwhile. A major part of the world suffers from hunger, income, disease etc. These parts of the world need development and not just growth.

Growth ain't for everyone!
Development is for everyone!