Please help me with my economic development subject, i will provide resources at the bottom part. thank
Question:
Please help me with my economic development subject, i will provide resources at the bottom part. thank you and godbless. I hope someone can help me.
Question:
1. Briefly describe the various definitions of the term development encountered in the text. What are the strengths and weaknesses of each approach? Do you think that there are other dimensions of development not mentioned in the text? If so, describe them. If not, explain why you believe that the text description of development is adequate.
2. Why is an understanding of development crucial to policy formulation in developing nations? Do you think it is possible for a nation to agree on a rough definition of development and orient its strategies accordingly?
3. Why is a strictly economic definition of development inadequate? What do you understand economic development to mean? Can you give hypothetical or real examples of situations in which a country may be developing economically but may still be underdeveloped?
Resources:
Because the term development may mean different things to different people, it is important that we have some working definition or core perspective on its meaning. Without such a perspective and some agreed measurement criteria, we would be unable to determine which country was actually developing and which was not. This will be our task for the remainder of the chapter and for our first country case study, Brazil, at the end of the chapter. Kindly click this link for additional resources. https://drive.google.com/file/d/1kN1GP1vV3aU716O_km_n18woPj3pGm47/view?usp=sharing
Traditional Economic Measures In strictly economic terms, development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of "real" per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population?how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture's share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either "trickle down" to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to "getting the growth job done." Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).
The New Economic View of Development The experience of the first decades of post-World War II and postcolonial development in the 1950s, 1960s, and early 1970s, when many developing nations did reach their economic growth targets but the levels of living of the masses of people remained for the most part unchanged, signaled that something was very wrong with this narrow definition of development. An increasing number of economists and policymakers clamored for more direct attacks on widespread absolute poverty, increasingly inequitable income distributions, and rising unemployment. In short, during the 1970s, economic development came to be redefined in terms of the reduction or elimination of poverty, inequality, and unemployment within the context of a growing economy. "Redistribution from growth" became a common slogan. Dudley Seers posed the basic question about the meaning of development succinctly when he asserted: The questions to ask about a country's development are therefore: What has been happening to poverty? What has been happening to unemployment? What has been happening to inequality? If all three of these have declined from high levels, then beyond doubt this has been a period of development for the country concerned. If one or two of these central problems have been growing worse, especially if all three have, it would be strange to call the result "development" even if per capita income doubled.6 This assertion was neither idle speculation nor the description of a hypothetical situation. A number of developing countries experienced relatively high rates of growth of per capita income during the 1960s and 1970s but showed little or no improvement or even an actual decline in employment, equality, and the real incomes of the bottom 40% of their populations. By the earlier growth definition, these countries were developing; by the newer poverty, equality, and employment criteria, they were not. The situation in the 1980s and 1990s worsened further as GNI growth rates turned negative for many developing countries, and governments, facing mounting foreign-debt problems, were forced to cut back on their already limited social and economic programs. But the phenomenon of development or the existence of a chronic state of underdevelopment is not merely a question of economics or even one of quantitative measurement of incomes, employment, and inequality. As Denis Goulet forcefully portrayed it: Underdevelopment is shocking: the squalor, disease, unnecessary deaths, and hopelessness of it all!...The most empathetic observer can speak objectively about underdevelopment only after undergoing, personally or vicariously, the "shock of Gross domestic product (GDP) The total final output of goods and services produced by the country's economy, within the country's territory, by residents and nonresidents, regardless of its allocation between domestic and foreign claims. Find more at http://www.downloadslide.com 18 PART one Principles and Concepts underdevelopment." This unique culture shock comes to one as he is initiated to the emotions which prevail in the "culture of poverty." The reverse shock is felt by those living in destitution when a new self-understanding reveals to them that their life is neither human nor inevitable....The prevalent emotion of underdevelopment is a sense of personal and societal impotence in the face of disease and death, of confusion and ignorance as one gropes to understand change, of servility toward men whose decisions govern the course of events, of hopelessness before hunger and natural catastrophe. Chronic poverty is a cruel kind of hell, and one cannot understand how cruel that hell is merely by gazing upon poverty as an object.7 Development must therefore be conceived of as a multidimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty. Development, in its essence, must represent the whole gamut of change by which an entire social system, tuned to the diverse basic needs and evolving aspirations of individuals and social groups within that system, moves away from a condition of life widely perceived as unsatisfactory toward a situation or condition of life regarded as materially and spiritually better. No one has identified the human goals of economic development as well as Amartya Sen, perhaps the leading thinker on the meaning of development
Amartya Sen's "Capability" Approach
The view that income and wealth are not ends in themselves but instruments for other purposes goes back at least as far as Aristotle. Amartya Sen, the 1998 Nobel laureate in economics, argues that the "capability to function" is what really matters for status as a poor or nonpoor person. As Sen puts it, "the expansion of commodity productions...are valued, ultimately, not for their own sake, but as means to human welfare and freedom."8 In effect, Sen argues that poverty cannot be properly measured by income or even by utility as conventionally understood; what matters fundamentally is not the things a person has?or the feelings these provide?but what a person is, or can be, and does, or can do. What matters for well-being is not just the characteristics of commodities consumed, as in the utility approach, but what use the consumer can and does make of commodities. For example, a book is of little value to an illiterate person (except perhaps as cooking fuel or as a status symbol). Or as Sen noted, a person with a parasitic disease will be less able to extract nourishment from a given quantity of food than someone without parasites. To make any sense of the concept of human well-being in general, and poverty in particular, we need to think beyond the availability of commodities and consider their use: to address what Sen calls functionings, that is, what a person does (or can do) with the commodities of given characteristics that they come to possess or control. Freedom of choice, or control of one's own life, is itself a central aspect of most understandings of well-being. A functioning is a valued "being or doing," and in Sen's view, functionings that people have reason to value can range from being healthy, being well-nourished, and well-clothed, to being mobile, having self-esteem, and "taking part in the life of the community."9 Functionings What people do or can do with the commodities of given characteristics that they come to possess or control. Find more at http://www.downloadslide.com CHAPTER 1 Introducing Economic Development: A Global Perspective 19 Sen identifies five sources of disparity between (measured) real incomes and actual advantages:10 first, personal heterogeneities, such as those connected with disability, illness, age, or gender; second, environmental diversities, such as heating and clothing requirements in the cold or infectious diseases in the tropics, or the impact of pollution; third, variations in social climate, such as the prevalence of crime and violence, and "social capital"; fourth, distribution within the family?economic statistics measure incomes received in a family because it is the basic unit of shared consumption, but family resources may be distributed unevenly, as when girls get less medical attention or education than boys do; fifth, differences in relational perspectives, meaning that some goods are essential because of local customs and conventions. For example, necessaries for being able, in Adam Smith's phrase, "to appear in public without shame," include higher quality clothing (such as leather shoes) in high-income countries than in low-income countries. In a richer society, the ability to partake in community life would be extremely difficult without certain commodities, such as a telephone, a television, or an automobile; it is difficult to function socially in Singapore or South Korea without an e-mail address. And minimal housing standards to avoid social disgrace also rise strongly with the average wealth of the society. Thus, looking at real income levels or even the levels of consumption of specific commodities cannot suffice as a measure of well-being. One may have a lot of commodities, but these are of little value if they are not what consumers desire (as in the former Soviet Union). One may have income, but certain commodities essential for well-being, such as nutritious foods, may be unavailable. Even when providing an equal number of calories, the available staple foods in one country (cassava, bread, rice, cornmeal, potatoes, etc.) will differ in nutritional content from staple foods in other countries. Moreover, even some subvarieties of, for example, rice, are much more nutritious than others. Finally, even when comparing absolutely identical commodities, one has to frame their consumption in a personal and social context. Sen provides an excellent example of bread, the most basic of commodities. It has product "characteristics" such as taste and nutrition such as protein; and it helps to meet conventions of social exchange in the sense of breaking bread together. But many of these benefits depend on the person and her circumstances, such as her activity level, metabolism, weight, whether she is pregnant or lactating, nutrition knowledge, whether she is infected with parasites, and her access to medical services. Sen goes on to note that functioning depends also on (1) "social conventions in force in the society in which the person lives, (2) the position of the person in the family and in the society, (3) the presence or absence of festivities such as marriages, seasonal festivals and other occasions such as funerals, (4) the physical distance from the homes of friends and relatives..."11 In part because such factors, even on so basic a matter as nutrition, can vary so widely among individuals, measuring individual well-being by levels of consumption of goods and services obtained confuses the role of commodities by regarding them as ends in themselves rather than as means to an end. In the case of nutrition, the end is health and what one can do with good health, as well as personal enjoyment and social functioning. Indeed, the capacity to maintain valued social relationships and to network leads to what James Foster and Christopher Handy have termed external capabilities, Find more at http://www.downloadslide.com 20 PART one Principles and Concepts which are "abilities to function that are conferred by direct connection or relationship with another person." But measuring well-being using the concept of utility, in any of its standard definitions, does not offer enough of an improvement over measuring consumption to capture the meaning of development.12 As Sen stresses, a person's own valuation of what kind of life would be worthwhile is not necessarily the same as what gives pleasure to that person. If we identify utility with happiness in a particular way, then very poor people can have very high utility. Sometimes even malnourished people either have a disposition that keeps them feeling rather blissful or have learned to appreciate greatly any small comforts they can find in life, such as a breeze on a very hot day, and to avoid disappointment by striving only for what seems attainable. (Indeed, it is only too human to tell yourself that you do not want the things you cannot have.) If there is really nothing to be done about a person's deprivation, this attitude of subjective bliss would have undoubted advantages in a spiritual sense, but it does not change the objective reality of deprivation. In particular, such an attitude would not prevent the contented but homeless poor person from greatly valuing an opportunity to become freed of parasites or provided with basic shelter. The functioning of a person is an achievement. Sen provides the example of bicycling "[B]icycling has to be distinguished from possessing a bike. It has to be distinguished also from the happiness generated by [bicycling]... A functioning is thus different both from (1) having goods (and the corresponding characteristics), to which it is posterior, and (2) having utility (in the form of happiness resulting from that functioning), to which it is, in an important way, prior."13 To clarify this point, in his acclaimed 2009 book, The Idea of Justice, Sen suggests that subjective well-being is a kind of psychological state of being?a functioning? that could be pursued alongside other functionings such as health and dignity. In the next section, we return to the meaning of happiness as a development outcome, in a sense that can be distinguished from conventional utility. Sen then defines capabilities as "the freedom that a person has in terms of the choice of functionings, given his personal features (conversion of characteristics into functionings) and his command over commodities."14 Sen's perspective helps explain why development economists have placed so much emphasis on health and education, and more recently on social inclusion and empowerment, and have referred to countries with high levels of income but poor health and education standards as cases of "growth without development."14a Real income is essential, but to convert the characteristics of commodities into functionings, in most important cases, surely requires health and education as well as income. The role of health and education ranges from something so basic as the nutritional advantages and greater personal energy that are possible when one lives free of parasites to the expanded ability to appreciate the richness of human life that comes with a broad and deep education. People living in poverty are often deprived?at times deliberately? of capabilities to make substantive choices and to take valuable actions, and often the behavior of the poor can be understood in that light. For Sen, human "well-being" means being well, in the basic sense of being healthy, well nourished, well clothed, literate, and long-lived, and more broadly, being able to take part in the life of the community, being mobile, and having freedom of choice in what one can become and can do.
Three Core Values of Development
Is it possible, then, to define or broadly conceptualize what we mean when we talk about development as the sustained elevation of an entire society and social system toward a "better" or "more humane" life? What constitutes the good life is a question as old as philosophy, one that must be periodically reevaluated and answered afresh in the changing environment of world society. The appropriate answer for developing nations today is not necessarily the same as it would have been in previous decades. But at least three basic components or core values serve as a conceptual basis and practical guideline for understanding the inner meaning of development. These core values?sustenance, self-esteem, and freedom?represent common goals sought by all individuals and societies.19 They relate to fundamental human needs that find their expression in almost all societies and cultures at all times. Let us therefore examine each in turn.
The Central Role of Women
In light of the information presented so far, it should come as no surprise that development scholars generally view women as playing the central role in the development drama. Globally, women tend to be poorer than men. They are also more deprived in health and education and in freedoms in all its forms. Moreover, women have primary responsibility for child rearing, and the resources that they are able to bring to this task will determine whether the cycle of transmission of poverty from generation to generation will be broken. Children need better health and education, and studies from around the developing world confirm that mothers tend to spend a significantly higher fraction of income under their control for the benefit of their children than fathers do. Women also transmit values to the next generation. To make the biggest impact on development, then, a society must empower and invest in its women. We will return to this topic in more depth in Chapters 5 through 9 and 15.
The Three Objectives of Development We may conclude that development is both a physical reality and a state of mind in which society has, through some combination of social, economic, and institutional processes, secured the means for obtaining a better life. Whatever the specific components of this better life, development in all societies must have at least the following three objectives: 1. To increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health, and protection 2. To raise levels of living, including, in addition to higher incomes, the provision of more jobs, better education, and greater attention to cultural and human values, all of which will serve not only to enhance material wellbeing but also to generate greater individual and national self-esteem 3. To expand the range of economic and social choices available to individuals and nations by freeing them from servitude and dependence, not only in relation to other people and nation-states, but also to the forces of ignorance and human misery
The Future of the Millennium Development Goals In September 2000, the 189 member countries of the United Nations at that time adopted eight Millennium Development Goals (MDGs), committing themselves to making substantial progress toward the eradication of poverty and achieving other human development goals by 2015. The MDGs are the strongest statement yet of the international commitment to ending global poverty. They acknowledge the multidimensional nature of development and poverty alleviation; an end to poverty requires more than just increasing incomes of the poor. The MDGs have provided a unified focus in the development community unlike anything that preceded them.27 The eight goals are ambitious: to eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria, and other diseases; ensure environmental sustainability; and develop a global partnership for development. The goals are then assigned specific targets deemed achievable by 2015 based on the pace of past international development achievements. The goals and targets are found in Table 1.1. Appropriately, the first MDG addresses the problem of extreme poverty and hunger.
Conclusions
Development economics is a distinct yet very important extension of both traditional economics and political economy. While necessarily also concerned with efficient resource allocation and the steady growth of aggregate output over time, development economics focuses primarily on the economic, social, and institutional mechanisms needed to bring about rapid and large-scale improvements in standards of living for the masses of poor people in develop - ing nations. Consequently, development economics must be concerned with the formulation of appropriate public policies designed to effect major eco - nomic, institutional, and social transformations of entire societies in a very short time. As a social science, economics is concerned with people and how best to provide them with the material means to help them realize their full human potential. But what constitutes the good life is a perennial question, and hence economics necessarily involves values and value judgments. Our very concern with promoting development represents an implicit value judgment about good (development) and evil (underdevelopment). But development may mean dif - ferent things to different people. Therefore, the nature and character of develop - ment and the meaning we attach to it must be carefully spelled out. We did this in section 1.3 and will continue to explore these definitions throughout the text. The central economic problems of all societies include traditional ques - tions such as what, where, how, how much, and for whom goods and services should be produced. But they should also include the fundamental question at the national level about who actually makes or influences economic decisions and for whose principal benefit these decisions are made. Finally, at the inter - national level, it is necessary to consider the question of which nations and which powerful groups within nations exert the most influence with regard to the control, transmission, and use of technology, information, and finance. Moreover, for whom do they exercise this power? Any realistic analysis of development problems necessitates the supple - mentation of strictly economic variables such as incomes, prices, and savings rates with equally relevant noneconomic institutional factors, including the nature of land tenure arrangements; the influence of social and class strati - fications; the structure of credit, education, and health systems; the organi - zation and motivation of government bureaucracies; the machinery of public administrations; the nature of popular attitudes toward work, leisure, and self-improvement; and the values, roles, and attitudes of political and economic elites. Economic development strategies that seek to raise agricultural output, create employment, and eradicate poverty have often failed in the past because economists and other policy advisers neglected to view the economy as an interdependent social system in which economic and noneconomic forces are continually interacting in ways that are at times self-reinforcing and at other times contradictory. As you will discover, underdevelopment reflects many individual market failures, but these failures often add up to more than the sum of their parts, combining to keep a country in a poverty trap. Govern - ment can play a key role in moving the economy to a better equilibrium, and in many countries, notably in East Asia, government has done so; but all too often government itself is part and parcel of the bad equilibrium. Find more at http://www.downloadslide.com CHAPTER 1 Introducing Economic Development: A Global Perspective 29 Achieving the Millennium Development Goals will be an important milestone on the long journey to sustainable and just development. Although progress has been substantial, many of the interim targets remain unachieved?nor do the MDGs include all of the critical objectives of development. The emerging Sustainable Development Goals, planned as the MDGs' successor after 2015, will be even more ambitious, including the full eradication of extreme poverty. Despite the great diversity of developing nations?some large, others small; some resource-rich, others resource-barren; some subsistence economies, others modern manufactured-good exporters; some private-sector oriented, others to a large degree run by the government?most share common problems that define their underdevelopment. We will discuss these diverse structures and common characteristics of developing countries in Chapter 2. The oil price shocks of the 1970s, the foreign-debt crisis of the 1980s, and the twenty-first-century concerns with economic globalization, economic imbalances and financial crises, global warming, and international terrorism have underlined the growing interdependence of all nations and peoples in the international social system. What happens to life in Caracas, Karachi, Cairo, and Kolkata will in one way or another have important implications for life in New York, London, and Tokyo. It was once said that "when the United States sneezes, the world catches pneumonia." A more fitting expression for the twenty-first century would perhaps be that "the world is like the human body: If one part aches, the rest will feel it; if many parts hurt, the whole will suffer." Developing nations constitute these "many parts" of the global organism. The nature and character of their future development should therefore be a major concern of all nations irrespective of political, ideological, or economic orientation. There can no longer be two futures, one for the few rich and the other for the very many poor. In the words of a poet, "There will be only one future?or none at all."
1.3 What Do We Mean by Development? Because the term development may mean different things to different people, it is important that we have some working definition or core perspective on its meaning. Without such a perspective and some agreed measurement criteria, we would be unable to determine which country was actually developing and which was not. This will be our task for the remainder of the chapter and for our first country case study, Brazil, at the end of the chapter. Traditional Economic Measures In strictly economic terms, development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of "real" per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population?how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture's share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in Values Principles, standards, or qualities that a society or groups within it considers worthwhile or desirable. Attitudes The states of mind or feelings of an individual, group, or society regarding issues such as material gain, hard work, saving for the future, and sharing wealth. Institutions Norms, rules of conduct, and generally accepted ways of doing things. Economic institutions are humanly devised constraints that shape human interactions, including both informal and formal "rules of the game" of economic life in the widely used framework of Douglass North. Income per capita Total gross national income of a country divided by its total population. Gross national income (GNI) The total domestic and foreign output claimed by residents of a country. It comprises gross domestic product (GDP) plus factor incomes accruing to residents from abroad, less the income earned in the domestic economy accruing to persons abroad. Find more at http://www.downloadslide.com CHAPTER 1 Introducing Economic Development: A Global Perspective 17 which rapid gains in overall and per capita GNI growth would either "trickle down" to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to "getting the growth job done." Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP). The New Economic View of Development The experience of the first decades of post-World War II and postcolonial development in the 1950s, 1960s, and early 1970s, when many developing nations did reach their economic growth targets but the levels of living of the masses of people remained for the most part unchanged, signaled that something was very wrong with this narrow definition of development. An increasing number of economists and policymakers clamored for more direct attacks on widespread absolute poverty, increasingly inequitable income distributions, and rising unemployment. In short, during the 1970s, economic development came to be redefined in terms of the reduction or elimination of poverty, inequality, and unemployment within the context of a growing economy. "Redistribution from growth" became a common slogan. Dudley Seers posed the basic question about the meaning of development succinctly when he asserted: The questions to ask about a country's development are therefore: What has been happening to poverty? What has been happening to unemployment? What has been happening to inequality? If all three of these have declined from high levels, then beyond doubt this has been a period of development for the country concerned. If one or two of these central problems have been growing worse, especially if all three have, it would be strange to call the result "development" even if per capita income doubled.6 This assertion was neither idle speculation nor the description of a hypothetical situation. A number of developing countries experienced relatively high rates of growth of per capita income during the 1960s and 1970s but showed little or no improvement or even an actual decline in employment, equality, and the real incomes of the bottom 40% of their populations. By the earlier growth definition, these countries were developing; by the newer poverty, equality, and employment criteria, they were not. The situation in the 1980s and 1990s worsened further as GNI growth rates turned negative for many developing countries, and governments, facing mounting foreign-debt problems, were forced to cut back on their already limited social and economic programs. But the phenomenon of development or the existence of a chronic state of underdevelopment is not merely a question of economics or even one of quantitative measurement of incomes, employment, and inequality. As Denis Goulet forcefully portrayed it: Underdevelopment is shocking: the squalor, disease, unnecessary deaths, and hopelessness of it all!...The most empathetic observer can speak objectively about underdevelopment only after undergoing, personally or vicariously, the "shock of Gross domestic product (GDP) The total final output of goods and services produced by the country's economy, within the country's territory, by residents and nonresidents, regardless of its allocation between domestic and foreign claims. Find more at http://www.downloadslide.com 18 PART one Principles and Concepts underdevelopment." This unique culture shock comes to one as he is initiated to the emotions which prevail in the "culture of poverty." The reverse shock is felt by those living in destitution when a new self-understanding reveals to them that their life is neither human nor inevitable....The prevalent emotion of underdevelopment is a sense of personal and societal impotence in the face of disease and death, of confusion and ignorance as one gropes to understand change, of servility toward men whose decisions govern the course of events, of hopelessness before hunger and natural catastrophe. Chronic poverty is a cruel kind of hell, and one cannot understand how cruel that hell is merely by gazing upon poverty as an object.7 Development must therefore be conceived of as a multidimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty. Development, in its essence, must represent the whole gamut of change by which an entire social system, tuned to the diverse basic needs and evolving aspirations of individuals and social groups within that system, moves away from a condition of life widely perceived as unsatisfactory toward a situation or condition of life regarded as materially and spiritually better. No one has identified the human goals of economic development as well as Amartya Sen, perhaps the leading thinker on the meaning of development. Amartya Sen's "Capability" Approach The view that income and wealth are not ends in themselves but instruments for other purposes goes back at least as far as Aristotle. Amartya Sen, the 1998 Nobel laureate in economics, argues that the "capability to function" is what really matters for status as a poor or nonpoor person. As Sen puts it, "the expansion of commodity productions...are valued, ultimately, not for their own sake, but as means to human welfare and freedom."8 In effect, Sen argues that poverty cannot be properly measured by income or even by utility as conventionally understood; what matters fundamentally is not the things a person has?or the feelings these provide?but what a person is, or can be, and does, or can do. What matters for well-being is not just the characteristics of commodities consumed, as in the utility approach, but what use the consumer can and does make of commodities. For example, a book is of little value to an illiterate person (except perhaps as cooking fuel or as a status symbol). Or as Sen noted, a person with a parasitic disease will be less able to extract nourishment from a given quantity of food than someone without parasites. To make any sense of the concept of human well-being in general, and poverty in particular, we need to think beyond the availability of commodities and consider their use: to address what Sen calls functionings, that is, what a person does (or can do) with the commodities of given characteristics that they come to possess or control. Freedom of choice, or control of one's own life, is itself a central aspect of most understandings of well-being. A functioning is a valued "being or doing," and in Sen's view, functionings that people have reason to value can range from being healthy, being well-nourished, and well-clothed, to being mobile, having self-esteem, and "taking part in the life of the community."9 Functionings What people do or can do with the commodities of given characteristics that they come to possess or control. Find more at http://www.downloadslide.com CHAPTER 1 Introducing Economic Development: A Global Perspective 19 Sen identifies five sources of disparity between (measured) real incomes and actual advantages:10 first, personal heterogeneities, such as those connected with disability, illness, age, or gender; second, environmental diversities, such as heating and clothing requirements in the cold or infectious diseases in the tropics, or the impact of pollution; third, variations in social climate, such as the prevalence of crime and violence, and "social capital"; fourth, distribution within the family?economic statistics measure incomes received in a family because it is the basic unit of shared consumption, but family resources may be distributed unevenly, as when girls get less medical attention or education than boys do; fifth, differences in relational perspectives, meaning that some goods are essential because of local customs and conventions. For example, necessaries for being able, in Adam Smith's phrase, "to appear in public without shame," include higher quality clothing (such as leather shoes) in high-income countries than in low-income countries. In a richer society, the ability to partake in community life would be extremely difficult without certain commodities, such as a telephone, a television, or an automobile; it is difficult to function socially in Singapore or South Korea without an e-mail address. And minimal housing standards to avoid social disgrace also rise strongly with the average wealth of the society. Thus, looking at real income levels or even the levels of consumption of specific commodities cannot suffice as a measure of well-being. One may have a lot of commodities, but these are of little value if they are not what consumers desire (as in the former Soviet Union). One may have income, but certain commodities essential for well-being, such as nutritious foods, may be unavailable. Even when providing an equal number of calories, the available staple foods in one country (cassava, bread, rice, cornmeal, potatoes, etc.) will differ in nutritional content from staple foods in other countries. Moreover, even some subvarieties of, for example, rice, are much more nutritious than others. Finally, even when comparing absolutely identical commodities, one has to frame their consumption in a personal and social context. Sen provides an excellent example of bread, the most basic of commodities. It has product "characteristics" such as taste and nutrition such as protein; and it helps to meet conventions of social exchange in the sense of breaking bread together. But many of these benefits depend on the person and her circumstances, such as her activity level, metabolism, weight, whether she is pregnant or lactating, nutrition knowledge, whether she is infected with parasites, and her access to medical services. Sen goes on to note that functioning depends also on (1) "social conventions in force in the society in which the person lives, (2) the position of the person in the family and in the society, (3) the presence or absence of festivities such as marriages, seasonal festivals and other occasions such as funerals, (4) the physical distance from the homes of friends and relatives..."11 In part because such factors, even on so basic a matter as nutrition, can vary so widely among individuals, measuring individual well-being by levels of consumption of goods and services obtained confuses the role of commodities by regarding them as ends in themselves rather than as means to an end. In the case of nutrition, the end is health and what one can do with good health, as well as personal enjoyment and social functioning. Indeed, the capacity to maintain valued social relationships and to network leads to what James Foster and Christopher Handy have termed external capabilities, Find more at http://www.downloadslide.com 20 PART one Principles and Concepts which are "abilities to function that are conferred by direct connection or relationship with another person." But measuring well-being using the concept of utility, in any of its standard definitions, does not offer enough of an improvement over measuring consumption to capture the meaning of development.12 As Sen stresses, a person's own valuation of what kind of life would be worthwhile is not necessarily the same as what gives pleasure to that person. If we identify utility with happiness in a particular way, then very poor people can have very high utility. Sometimes even malnourished people either have a disposition that keeps them feeling rather blissful or have learned to appreciate greatly any small comforts they can find in life, such as a breeze on a very hot day, and to avoid disappointment by striving only for what seems attainable. (Indeed, it is only too human to tell yourself that you do not want the things you cannot have.) If there is really nothing to be done about a person's deprivation, this attitude of subjective bliss would have undoubted advantages in a spiritual sense, but it does not change the objective reality of deprivation. In particular, such an attitude would not prevent the contented but homeless poor person from greatly valuing an opportunity to become freed of parasites or provided with basic shelter. The functioning of a person is an achievement. Sen provides the example of bicycling "[B]icycling has to be distinguished from possessing a bike. It has to be distinguished also from the happiness generated by [bicycling]... A functioning is thus different both from (1) having goods (and the corresponding characteristics), to which it is posterior, and (2) having utility (in the form of happiness resulting from that functioning), to which it is, in an important way, prior."13 To clarify this point, in his acclaimed 2009 book, The Idea of Justice, Sen suggests that subjective well-being is a kind of psychological state of being?a functioning? that could be pursued alongside other functionings such as health and dignity. In the next section, we return to the meaning of happiness as a development outcome, in a sense that can be distinguished from conventional utility. Sen then defines capabilities as "the freedom that a person has in terms of the choice of functionings, given his personal features (conversion of characteristics into functionings) and his command over commodities."14 Sen's perspective helps explain why development economists have placed so much emphasis on health and education, and more recently on social inclusion and empowerment, and have referred to countries with high levels of income but poor health and education standards as cases of "growth without development."14a Real income is essential, but to convert the characteristics of commodities into functionings, in most important cases, surely requires health and education as well as income. The role of health and education ranges from something so basic as the nutritional advantages and greater personal energy that are possible when one lives free of parasites to the expanded ability to appreciate the richness of human life that comes with a broad and deep education. People living in poverty are often deprived?at times deliberately? of capabilities to make substantive choices and to take valuable actions, and often the behavior of the poor can be understood in that light. For Sen, human "well-being" means being well, in the basic sense of being healthy, well nourished, well clothed, literate, and long-lived, and more broadly, being able to take part in the life of the community, being mobile, and having freedom of choice in what one can become and can do. Capabilities The freedoms that people have, given their personal features and their command over commodities. Find more at http://www.downloadslide.com CHAPTER 1 Introducing Economic Development: A Global Perspective 21 Development and Happiness Clearly, happiness is part of human well-being, and greater happiness may in itself expand an individual's capability to function. As Amartya Sen has argued, a person may well regard happiness as an important functioning for her well-being.15 In recent years, economists have explored the empirical relationship across countries and over time between subjectively reported satisfaction and happiness and factors such as income. One of the findings is that the average level of happiness or satisfaction increases with a country's average income. For example, roughly four times the percentage of people report that they are not happy or satisfied in Tanzania, Bangladesh, India, and Azerbaijan as in the United States and Sweden. But the relationship is seen only up to an average income of roughly $10,000 to $20,000 per capita, as shown in Figure 1.2.16 Once incomes grow to this point, most citizens have usually escaped extreme poverty. At these levels, despite substantial variations across countries, if inequality is not extreme, a majority of citizens are usually relatively well nourished, healthy, and educated. The "happiness science" findings call into question the centrality of economic growth as an objective for high-income countries. But they also reaffirm the importance of economic development in the developing world, whether the objective is solely happiness or, more inclusively and persuasively, expanded human capabilities.
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