Alternative Models of Development

Siby K. Joseph

 Part -1

 While introducing the concept of development we have seen how this evolved in the post- second world war period. But one has to keep in mind that the world we live in today is entirely different from the post-war economy of 1944. The inadequacies and limitations of the mainstream development model developed in the post war economy have become more and more evident   than ever before. It led to search for alternative models and concepts of development even within the basic framework of mainstream economics. Even though for decades the Gross Domestic Product (GDP) remained as the main criterion in the hands of economists to measure economic development or growth of a country nowadays there is a growing realization that it is the high time to leave GDP behind. As a result of this realization exclusive pursuit of economic growth and rising incomes are no longer considered as main goals of development.   A number of new concepts and ideas of development emerged within the framework of mainstream economics and these became part of policies and programmes of economies of different countries. The very approach to development was questioned by leaders and economists of many countries. It led to the emergence of new ways of development thinking and practices.  These are gaining ground all over the globe and enrich the very idea of development. This type of thinking is very much evident in the concept of Doughnut Economics and the findings of Stiglitz-Sen-Fitoussi Commission and other similar concepts and ideas.

Doughnut Economics  

The concept of Doughnut Economics was developed by British Economist Kate Raworth in 2012. According to her, economic growth is measured only by an increasing GDP, ignoring the finite nature of earth’s resources and the consequences of our actions.  She wanted to create an economic model fit for the 21st century based on the premise that "Humanity’s 21st century challenge is to meet the needs of all within the means of the planet.” The seven chapters in the book discuss ways to think like a 21 st century economist.1. Change the goal—from GDP to the Doughnut.2. See the big picture—from self-contained market to embedded economy.3. Nurture human nature—from rational economic man to social adaptable humans. 4. Get savvy with systems—from mechanical equilibrium to dynamic complexity.5. Design to distribute—from ‘growth will even it up again’ to distributive by design. 6. Create to regenerate—from ‘growth will clean it up again’ to regenerative by design. 7.Be agnostic about growth—from growth addicted to growth agnostic.

Stiglitz-Sen-Fitoussi Commission 

The very approach to development was questioned by leaders and economists of many countries. It led to the emergence of new ways of development thinking and practices.  These are  gaining ground  all over the globe  and enrich the very idea of development. This  type of thinking is very  much evident from the findings  of the Stiglitz-Sen-Fitoussi Commission. In February 2008, the  then President of the French Republic, Nicholas Sarkozy,  was  not satisfied with the statistical information about the economy and the society and approached  Joseph Stiglitz (Chair, Columbia University-President of the Commission), Amartya Sen , (Chair Adviser, Harvard University-Advisor) and Jean Paul Fitoussi ( French economist and  Sociologist- Coordinator  ) to create a Commission, to identify the limits of GDP as an indicator of economic performance and social progress. Subsequently it was known as “The Commission on the Measurement of Economic Performance and Social Progress” (CMEPSP) or  Stiglitz-Sen-Fitoussi Commission. 

The Commission observed. “The time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being. And measures of well-being should be put in a context of sustainability... emphasizing well-being is important because there appears to be an increasing gap between the information contained in aggregate GDP data and what counts for common people’s well-being.” For details see J. Stiglitz, A. Sen, J.P Fitoussi. Report by the Commission on the Measurement of Economic Performance and Social Progress  2008.

Gross National Happiness

As early as 1972, the Fourth King of Bhutan, Jigme Singye Wangchuck, stated that Gross National Happiness is more important than Gross National Product. It later became part and parcel of Bhutan’s policy of development. It comprises an index which is used to measure the collective happiness and well-being of a population. Gross National Happiness is instituted as the goal of the government of Bhutan in the Constitution enacted on 18 July 2008.  Article 9 ‘Principles of State Policy’ reads as follows. “The State shall strive to promote those conditions that will enable the pursuit of Gross National Happiness.” The concept of GNH has four pillars: good governance, sustainable socio-economic development, cultural preservation, and environmental conservation. Later the four pillars have been further classified into nine domains to depict GNH values. The nine domains are: psychological wellbeing, health, education, time use, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards. Thirty-three indicators categorized under nine domains of GNH Index. In 2011, The United Nations General Assembly passed a Resolution "Happiness: towards a holistic approach to development" urging member nations to follow the example of Bhutan and measure happiness and well-being and calling happiness a "fundamental human goal”. Many countries of the world accepted it as a policy of their respective governments.

 

The Human Development Index (HDI)

The Human Development Index (HDI) is another important concept developed by Mahbub ul Haq, an economist at the World Bank in the 1970s, and later as minister of finance in Pakistan. The Human Development Index developed by Mahbub ul Haq was further fine-tuned with inputs from Amartya Sen and Martha Nussbaum. The founder of Human Development Report, Haq explained the very purpose of development in the following words: “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 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.” This index is considered a major advancement on the narrow growth-centered notion of development. In 1990, Haq published the first Human Development Report, which was commissioned by the United Nations Development Programme. The Human Development Index “is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.”  The health dimension is assessed by life expectancy at birth, the education dimension is measured by mean of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita.

 In the course of time we may take up  concepts and models like Inclusive Development Index, Institutional Economics, Specific Diseconomy, Post development Theory  and the  earth centric approach to development. 

 

  It is based on the presentation made by Dr. Siby K. Joseph , Director, IFPNP, Sevagram Ashram Pratishthan, Wardha, MS, India