A Short History of the

evolution of Development
Thought
 Development-A pre-history
• The state of the backward regions in the world
in early 20th century
• The legacy of colonialism
• The League of Nations in the post 1 st world war
period and the mandate over newly available
territories
• Dual objectives of “moral and material
development” of the natives and the
development of the natural resources for the
benefit of the world
 After the Second World War
• The devastation of Europe and the
emergence of the USA and the USSR as
the two superpowers
• Beginning of reconstruction with the US
financed Marshall Plan
• Colonialism was losing its steam
• Most of the third world had developed
vibrant pro-independence movements
 President Truman’s Point Four and
Development
• Inaugural address by President Truman where
he said:
“Fourth, we must embark on a bold new program for
making the benefits of our scientific advances and
industrial progress available for the improvement and
growth of underdeveloped areas”
• Although this point was a last minute addition of
the speech writer, it brought about the first
formal recognition of the agenda of
‘development’
• Fourth, we must embark on a bold new program for making the benefits of
our scientific advances and industrial progress available for the
improvement and growth of underdeveloped areas.
• More than half the people of the world are living in conditions approaching
misery. Their food is inadequate. They are victims of disease. Their
economic life is primitive and stagnant. Their poverty is a handicap and a
threat both to them and to more prosperous areas.
• For the first time in history, humanity possesses the knowledge and the skill
to relieve the suffering of these people.
• The United States is pre-eminent among nations in the development of
industrial and scientific techniques. The material resources which we can
afford to use for the assistance of other peoples are limited. But our
imponderable resources in technical knowledge are constantly growing and
are inexhaustible.
• I believe that we should make available to peace-loving peoples the benefits
of our store of technical knowledge in order to help them realize their
aspirations for a better life. And, in cooperation with other nations, we
should foster capital investment in areas needing development.
• Our aim should be to help the free peoples of the world, through their own
efforts, to produce more food, more clothing, more materials for housing,
and more mechanical power to lighten their burdens.
• We invite other countries to pool their technological resources in this
undertaking. Their contributions will be warmly welcomed. This
should be a cooperative enterprise in which all nations work
together through the United Nations and its specialized agencies
wherever practicable. It must be a worldwide effort for the
achievement of peace, plenty, and freedom.
• With the cooperation of business, private capital, agriculture, and
labor in this country, this program can greatly increase the industrial
activity in other nations and can raise substantially their standards of
living.
• Such new economic developments must be devised and controlled
to benefit the peoples of the areas in which they are established.
Guarantees to the investor must be balanced by guarantees in the
interest of the people whose resources and whose labor go into
these developments.
• The old imperialism--exploitation for foreign profit--has no place in
our plans. What we envisage is a program of development based on
the concepts of democratic fair-dealing.
• All countries, including our own, will greatly benefit from a
constructive program for the better use of the world's human and
natural resources. Experience shows that our commerce with other
countries expands as they progress industrially and economically.
• Greater production is the key to prosperity and peace. And the key
to greater production is a wider and more vigorous application of
modern scientific and technical knowledge.
• Only by helping the least fortunate of its members to help
themselves can the human family achieve the decent, satisfying life
that is the right of all people.
• Democracy alone can supply the vitalizing force to stir the peoples
of the world into triumphant action, not only against their human
oppressors, but also against their ancient enemies-- hunger, misery,
and despair.
• On the basis of these four major courses of action we hope to help
create the conditions that will lead eventually to personal freedom
and happiness for all mankind.
• If we are to be successful in carrying out these policies, it is clear
that we must have continued prosperity in this country and we must
keep ourselves strong.
Development and Underdevelopment
• The advent of ‘underdevelopment’ as a concept
to replace ‘backwardness’
• ‘Underdevelopment’ implied more of incomplete
or unfinished development rather than the
absence of it
• Development therefore emerged as a transitive
verb which implied some active intervention
• Underdevelopment on the other hand was more
of a natural state to start with; it was not possible
‘to underdevelop’
The Transition from Colonialism
• The difference between the coloniser/colonised
dichotomy and the developed/underdeveloped one
• The question of sovereignty
• The involvement of external forces was possible but
not necessary
• The issue of well-being of the population was much
more central (albeit in an average sense)
• The exploitation of local resources for global
wellbeing was no longer an explicit agenda
• The new role of USA in the political economy of
development: the idea of neo-colonialism
 The Metric of Development
• The move from the rhetoric of ‘advanced’ or
‘civilised’ nations to developed ones
• Social, cultural or political parameters were
replaced by more ‘objective’ measure of
economic progress-GNP or per capita income
• The earlier hierarchy was almost perfectly
mapped into a new one which categorised
countries based on their precise level of
economic development
The Apparatus of International Development
• Demands from the third world countries: Asian-African
conference in Bandung, Indonesia(1955)
• Emphasis on mutual cooperation as well as need of
external assistance
• Recommendation of setting up UN Development Fund,
IFC
• Setting up special UN organisations (e.g. Expanded
Programme of Technical Assistance which later became
the UNDP)
• Reorienting existing organisations towards development(
ILO, World Bank)
• Development cooperation departments of the first world
countries (USAID, DFID etc)
 Development Economics: Birth
of a new field
• Traced back to several writings in the 1940s and 1950s
• Rosenstein-Rodan(1943), Lewis ( 1954), Nurkse (1951) and
Hirschman (1957)
• The key objective was to increase per capita income
through rapid capital accumulation via industrialization
• The analytical unit was the macroeconomy and sectors
within ( i.e. agriculture, industry etc)
• The role of state intervention was critical to remove the
bottlenecks that existed in way of industrialization
• Another salient feature of early development economics
was the role of physical and intellectual aid flowing from the
first world to the third world
Development Economics: How
is it different?
• Is development economics simply economic principles applied to poorer
countries?
• The pioneers of the early development economics would disagree
• The reality of underdeveloped societies in terms its structures and socio-
economic processes needed a distinct theoretical framework.
• For example, markets for various commodities did not exist or were not
functional as per the norms of standard economic theory
• Scarcity of physical and human capital and surplus of labour defined most
underdeveloped societies
• Very importantly, there was a clear mandate for development economics to
help countries ‘develop’. So, the policy dimension was intrinsic to this field
unlike traditional economics
 Development and Economic Growth

• The relation between growth and development

• Growth as development vs. growth as means to
development
• Development was conceived as something more
than growth but growth was central to attain
development
• Other aspects of well-being (besides income)
was important so long as it furthered the growth
objective (e.g. human capital theory)
 Looking beyond Growth
• The idea of social development: focussing on
social indicators as against economic ones
• Work of Hans Singer and other UN
organizations in 50s and 60s.
• Statistical documentation of social indicators on
health, education, nutrition etc
• However, the purpose was to check if these
indicators kept up with the movement in income
and not to focus policy on them
 First Words of Dissent
• Dudley Seers in 1969: Outright rejection of the growth
objective
• Advocated direct emphasis on poverty, inequality and
employment
• Mahbub-ul Haq in 1970:High growth does not guarantee
poverty reduction
• Admission that the growth goal was wrong
• Goals must be redefined to include different social
indicators
• Instead of growth being the means to end poverty,
poverty reduction should be targeted to bring about
growth
What should replace growth as the
major development objective?
Alternative 1: Employment
• The ILO in early 1970s decided on focussing on employment by
‘dethroning’ GNP
• Coming out of the ILO, this concern was natural
• Statistical evidence was compiled and employment missions were
led to help governments design employment strategies
• Missions to Kenya, Colombia and Sri Lanka
• Major findings included concentration of open unemployment in the
urban areas and the presence of increasing number of working poor
in the rural areas
• The exclusive focus on reducing unemployment was thus missing
the target
• The main issue was to increase productivity, to make employment
remunerative enough
• This makes the argument circular, as the main determinant of
income is productivity
 Alternative 2: Inequality and Poverty

• Direct emphasis on quality of life for the poor in

the developing countries and the connection of
poverty to distribution (McNamara, 1972)
• Growth of income among the poorest section of
the population
• Redistribution with growth (World Bank, 1974)
• Redistribution in the static context was infeasible
• Issues around absolute and relative poverty
• Emergence of the poverty line in the discourse
to identify the poor and direct attention towards
them
 Alternative 3: Basic needs
• Provide the minimum basket of food and other
basic requirements to the poor (ILO, 1975)
• “it is no longer acceptable in human terms or
responsible in political terms to wait several
generations for the benefits of development to
trickle down until they finally reach the poorest
groups” (ILO document, 1975)
• Debate around the possible trade-off between
pursuing the ‘basic needs’ approach and growth
Alternative 4: Human Development

• Based on the Capabilities approach of Sen

• Has put the spotlight on vital ‘functionings’ of life
like being healthy and educated and having
freedom of expression and association
• The most popular use of the approach is in
terms of the Human Development Indictors
(HDI) developed by the UNDP starting 1990
• It is one of the prime factors behind renewed
emphasis on the social sector in government
policy making
 Whither Economic Growth?: The
Reaction of the Developing Countries
• The problem with the employment led approach: the
focus on labour intensive production and possibility
of sacrificing productivity
• The problem with the poverty/inequality approach:
political status-quo in the way of redistribution
• The problem with basic needs: it was thought to be
detrimental to set up the productive base of the
economy and therefore to self-reliance
• Any problem that you can identify regarding the
capabilities approach?