2. Economic Development – Basic Need Approach or Physical Quality of Life Approach

1. 2. Economic Development – Basic Need Approach or Physical Quality of Life Approach Lecture 7

2. Background To measure economic development the traditional approaches are concerned with, • increase in GNP,            • increase in per capita GNP. But with the passage of time a dissatisfaction developed against these measures. Rather these measures, it was emphasized to use the measures of "Employment and Distribution". But so many economists are of the view that criteria of 'Increase in Employment' is not a suitable index of economic development. It is so because that the unemployment which is found in UDCs is different from that unemployment which exists in DCs. Therefore, it will be least attracting to measure economic development with increase in employment.

3. In the same way, to link 'Redistribution of Income' with economic development may not be accepted as it may happen that poverty is existing in a country despite equal distribution of income, or unequal income distribution is co-existing with fall in absolute poverty. In such state of affairs the economic development would require the abolition of absolute poverty and adversity, which could be possible only if people get the 'Basic Needs' of life. Therefore, the economists use the criterion of basic needs to measure economic development. According to this approach if people are in a position to avail more amount of food, have better access to educational facilities, and have greater command over the civic amenities like water supply, water sewerage, health care and shelter etc., all such would represent economic development.

4. Therefore, according to this approach whether GNP and per capita GNP increase or not, whether a fairer distribution of income is made or not, the real matter lies with the 'Provision of Basic Needs or facilities to the people'. This index identifies the components of the produced goods and the segments of the society which are benefited by such goods and services. Therefore, if people fail to get more goods and services even GNP has gone up, it will not represent economic development. Therefore, for the sake of economic development we shall have to make such a measures whereby the availability of basic needs to the masses could be made sure.

5. Accordingly, to measure economic development we will have to select those measures which are concerned with the basic needs, despite certain differences. As in case of country like Pakistan the supply of doctors is increasing, but a common man fails to get medical facilities as the doctors are reluctant to go to small cities and villages, and majority of the doctors and medical services remain confine to big cities. In such situation, the increase in doctors and medical services will be of least benefit to the common men. Again, if the infant mortality rates are decreased in cities while such may not occur in case of rural areas.

6. Moreover, if in so many countries it is stressed upon to enhance education facilities • but the educational system is not made effective, • the defects of educational system are not removed • and the ratio of students to teachers is not improved, in such situation just expansion in educational facilities can not be accorded as an indicator of economic development. Thus, in spite of lot of flaws in the indicators of increase in education, health, water supply, level of calories and shelter, this measure of economic development presents a realistic picture of economic development than, GNP, GNP per capita and GNP redistribution methods. These measures represent the determination on the part of govt. regarding supply of social services. Thus, the basic needs approach presents a better explanation to remove poverty than the "Redistribution Theory".

7. Thus in the basic needs approach, the following aspects are analyzed: • (i) How much goods and services are produced? • (ii) What goods and services are being produced? • (iii) How goods and services are being produced? • (iv) What will be the effects of production and distribution on the society?

8. This shows that in this theory the 'Amount of goods and services' is of crucial importance and the increase in the quantity of goods and services will help in removing poverty. The increase in GNP per capita represents the rise in standard of living. But the criterion of 'Basic Needs' tells us what are the components of GNP and which segments of the society have utilized such components. This approach works like social indicators of economic development. We will have to define some better indicator for each basic need.

9. Important Needs Basically, the more important needs are concerned with the provision of foods, basic education, health services, water supply, water sewerage, residential facilities and infrastructure. On the basis of stipulated indicators regarding Basic Needs, we can make comparison between the countries. These indicators or measures will reflect the relative difference between the rich and the poor countries. Moreover, with these measures we can find that which countries are serious regarding provision of basic needs, and which are non serious.

10. Thus, according to the Basic Needs approach to economic development, following indicators can become helpful to measure economic development: • Health Standard: Here it is considered; • the life expectancy of the citizens of the country, (b) the infant mortality rates (IMR) in the country. (ii) Education Level: Here it is considered the 'Literacy Rate' in the country. Moreover, what is the enrolment ratio at primary level. (iii) Food Availability: Here it is considered that what is per capita food availability in the country. (iv) Water Supply: What is the percentage of the population which is getting the facility of clean water supply. (v) Water Drainage: Here it is assessed that what is the percentage of the population which is getting the facility of water drainage etc. (vi) Shelter And Residence: Here it is estimated that what is the ratio of the population who is having suitable shelter and residences.

11. Growth of GNP Versus Basic Needs Approach The growth of income (GNP) method identifies that path which leads to increase the real incomes of the poor people. As a result, they will become more productive, the value of their assets will increase, hence they will be able to have a basket of basic needs. This shows that because of increase in income people will eventually be able to have a greater command over goods and services, and their poverty could be eliminated. Therefore, whether it is of increase in GNP or of increase in basic needs both measures aim at elimination of poverty It is the GNP method which directly aims at abolition of poverty, while the basic needs approach indirectly aims at abolition of poverty.

12. The increase in basic needs like education, foods, health care, shelter, clean and piped water, and water drainage facilities will become helpful in increasing productivity. • Their health standards will improve, • their life expectancy will increase and • they will be able to work more diligently. Consequently, the outputs both the total as well as per head will increase. The proponents of basic needs approach give the following superiority over GNP approach:

13. The basic needs approach is better than income approach because most of basic needs are concerned with the supply of social services on the part of government. But for such all; govt. is in need of funds and such funds can be raised through imposing direct taxes or taxing the luxurious goods. In this way, on the one side, the unnecessary consumption will be controlled, and unequal income distribution could also be checked. Moreover, the efficiency of the middle and lower middle class will increase when they will be provided greater social services. In this way, the fruits of economic development could be availed ofby a majority of population.

14. (ii) It is not guaranteed that increase in incomes due to economic growth could be spent over better education, better residential facilities and better health care services etc. It happens that so many persons do not follow optimal behavior in respect of making expenditures on food and health care, particularly, those people whose class changes. As the case of Pakistani and Indian labor who earn a lot while migrating to Middle East, but they fail to spend more of their incomes on better fooding and lodging etc. Again, the farmers in these countries whose incomes increase when they grow 'Cash Crops', but they fail to spell their increased incomes on education, health water supply and water sewerage etc. Perhaps the income elasticity for these goods is lower. I n such situation, basic needs approach will present a better picture of economic development than GNP approach.

15. (iii) In so many cases the means and ways which lead to increase the incomes may air affect the level of foodings. As due to economic growth the women have to work out of their houses and there will be reduced 'Breast Feeding'. Consequently, the health standards of offspring's will be affected, though the incomes of the mothers have gone up. The economic development may lead to increase the production of cash crops at the cost of decrease in the production of food staples etc. In such situation, the economic development will lead to reduce the production and consumption of sugar, wheat and maize etc. Those lands which used to produce maize now will be utilized for dairy farms. In this way, the production of cheaper foods will come down. The hydro-electricity (HE) projects will lead to increase the income of the country, but the canal system in the country will promote water logging and salinity in the country. They will reduce the fertility of lands. As a result, the cost of HE projects may exceed their benefits.

16. (iv) It is not necessary that because of increase in incomes all the members of the family could equally benefit. Sometimes, the major share is taken away by the women and the children who have not contributed to earning, as the case of Pakistani and Indian men. In such situation, the division of income and food will not occur on the basis of work.

17. (v) The Income approach does not tell us that what will be the nature of produced goods. If along with increase in GNP those goods are produced or imported which are consumed by the rich class, then only a limited segment of the society will be benefited by increase in GNP. On the contrary, the basic needs approach selects the appropriate final goods and guides in respect of appropriate technique of production to produce such goods. In such situation, the employment opportunities will increase; income will be distributed equally; and optimum and a balanced demand for goods will come into being in the society.

18. (vi) In each society there are so many destitute orphans, old aged and ailing persons who do not contribute to national output of the economy, and they depend upon transfer payments. If even along with increase in GNP their poverty does not come down, then it will be better to use basic needs approach, rather GNP approach to measure economic development.

19. (vii) The increase in income or GNP only becomes possible due to increase in outputs of the society, whereas it ignores the production and consumption of immaterial goods. As GNP approach suggest that the immaterial goods and services like recreation, mental peace and participation in social and political affairs do not add any thing to national output. On the other hand, the basic needs approach includes even those immaterial factors which lead to increase human efficiency.

20. MILLENIUM DEVELOPMENT GOALS (MDGs)A global agenda for development

21. THE MDG FRAMEWORK • ISSUES FOR DISCUSSION

22. MDG FRAMEWORK • COMMITS INTERNATIONAL COMMUNITY TO AN EXPANDED VISION OF DEVELOPMENT • PROMOTES HUMAN DEVELOPMENT AS KEY TO SOCIAL AND ECONOMIC PROGRESS • CREATES GLOBAL PARTNERSHIP FOR DEVELOPMENT • CONSOLIDATES TARGETS ESTABLISHED BY INTERNATIONAL CONFERENCES INTO EIGTH ESSENTIAL GOALS • FIRST SEVEN MUTUALLY REINFORCING, AIMED AT REDUCING POVERTY IN ALL FORMS • EIGTH GOAL – GLOBAL PARTNERSHIP FOR DEVELOPMENT – IS ABOUT MEANS TO ACHIEVE FIRST SEVEN – “A GRAND BARGAIN”

23. The Millennium Development Goals [i] For monitoring country poverty trends, indicators based on national poverty lines should be used, where available. 23

24. The Millennium Development Goals(cont.) 24

25. The Millennium Development Goals(cont.) 25

26. The Millennium Development Goals(cont.) 26

27. The Millennium Development Goals(cont.) [i] The actual proportion of people living in slums is measured by a proxy, represented by the urban population living in households with at least one of the four characteristics: (a) lack of access to improved water supply; (b) lack of access to improved sanitation; (c) overcrowding (3 or more persons per room); and (d) dwellings made of non-durable material. 27

28. The Millennium Development Goals(cont.) • Net ODA, total and to the least developed countries, as percentage of OECD/DAC donors’ gross national income • Proportion of total bilateral, sector-allocable ODA of OECD/DAC donors to basic social services (basic education, primary health care, nutrition, safe water and sanitation) • Proportion of bilateral official development assistance of OECD/DAC donors that is untied • ODA received in landlocked developing countries as a proportion of their gross national incomes • ODA received in small island developing States as a proportion of their gross national incomes 28

29. The Millennium Development Goals(cont.) • Proportion of total developed country imports (by value and excluding arms) from developing countries and least developed countries, admitted free of duty • Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries • Agricultural support estimate for OECD countries as a percentage of their gross domestic product • Proportion of ODA provided to help build trade capacity) Debt sustainability • Total number of countries that have reached their HIPC decision points and number that have reached their HIPC completion points (cumulative) • Debt relief committed under HIPC and MDRI Initiatives • Debt service as a percentage of exports of goods and services 29

30. The Millennium Development Goals(cont.) 30

31. PROGRESS ACHIEVED • HALVING EXTREME POVERTY REMAINS (ED) WITHIN REACH LARGELY DUE TO EXTRAORDINARY SUCCESS IN MOST OF ASIA. BUT SOME IN SOUTH ASIA AND SUBSAHARIAN AFRICA REMAINS OFF TARGETS • GLOBAL ECONOMIC CRISIS COULD ENDANGER GAINS

32. PROGRESS ACHIEVED (CONT.) • OTHER SOCIAL GOALS – SOME PROMISE • PRIMARY SCHOOL ENROLMENT • 90% REACHED IN EIGTH OUT OF TEN REGION • GENDER PARITY 95% IN SCHOOL IN SIX OF TEN REGIONS • DEATH FROM MEASLES CUT ONE THIRD 2000-2006 • VACCINATION RATE 80% FOR CHILDREN IN DEVELOPING WORLD • 1.5 BILLION PEOPLE GAINED ACCESS TO CLEAN DRINKING WATER • ACCESS TO MEDICINES SPREADING • THANKS TO DEBT WRITE OFFS AND REDUCED DEBT SERVICE, SOCIAL SERVICES SPENDING UP

33. CONTINUING CHALLENGES • SOCIAL GOALS REMAIN IN JEOPARDY • MATERNAL MORTALITY STILL WAY HIGH (1/2 MILLION MOTHERS DIE EVERY YEAR AT CHILD BIRTH) • ONE QUARTER OF CHILDREN IN DEVELOPING COUNTRIES UNDERNOURISHED • HALF DEVELOPING WORLD POPULATION STILL LACK IMPROVED SANITATION • OVER ONE THIRD LIVE IN URBAN SLUMS AND ON AND ON

34. BREAKING NEWS! • DUE TO ECONOMIC CRISIS, “DEVELOPMENT EMERGENCY” DECLARED WHICH WILL PUT MDGs OUT OF REACH FOR MANY COUNTRIES • WHILE EMERGING ECONOMIES WILL GROW AT 1.5 PERCENT IN 2009, ANOTHER 55-90 MILLION WILL SLIP BACK INTO POVERTY • PER CAPITA INCOME WILL FALL IN SOME 50 POOR COUNTRIES, MOST OF THEM IN AFRICA • DISPARITIES WILL INCREASE AND VULNERABLE POPULATIONS WILL BE MOST AT RISK

35. OF INTEREST HERE: • ACCESS TO ESSENTIAL MEDICINES. IMPROVED FOR HIV/AIDS, MALARIA & TB; NOT FOR OTHER CHRONIC DISEASES • ACCESS TO NEW TECHNOLOGIES • TO INCREASE THE POTENTIAL OF TECHNOLOGY TO CONTRIBUTE TO DEVELOPMENT, WE NEED GREATER DIFFUSION OF APPRIATE NEW TECHNOLOGIES, INCLUDING ICT, AGRICULTURE, AND TO ADDRESS CLIMATE CHANGE

36. WHAT OF THE FUTURE? • DEVELOPMENT LANDSCAPE COULD BE VERY DIFFERENT • MORE COMPLEX • CLIMATE CHANGE ISSUES • OTHER CHRONIC DISEASE (CANCER, CARDIAC) • ODA REDEFINED • NEW DONORS, NEW ACTORS, NEW FORMS OF COOPERATION • LARGE UNFINISHED AGENDA • FOR NEXT GENERATION OF MDGs (MDGs+), TECHNOLOGY COULD BE KEY • NEW TARGETS, NEW INDICATORS • COULD THIS AGENCY PLAY AN IMPORTANT ROLE? IF SO, WHAT ISSUES?

37. ISSUES FOR DISCUSSION • GIVEN ITS UNIQUE MANDATE, IS AN MDG FRAMEWORK APPROPRIATE? NOW, AT THE NEXT STAGE? • HOW TO ADDRESS BROADER DEVELOPMENT AGENDA • ACCESS TO BROADER NATIONAL COUNTERPARTS • EFFECTIVE PARTNERSHIPS (WITHIN UN, EXTERNALLY) • RESOURCE LIMITATIONS? HOW TO EXPAND • PROGRAMME APPROACH • DIFFUSION OF TECHNOLOGIES • ARE NUCLEAR TECHNOLOGIES FOR DEVELOLPMENT A GLOBAL PUBLIC GOOD?