Chapter 1 The concept of development.pdf

Chapter 1

THE CONCEPT

OF DEVELOPMENT

AMARTYA SEN*

Harvard University

Contents

The background

Production, growth, and development

Characteristics, functionings, and living

Freedom and capability

Weights and rankings

Values, instruments, and objects

Conclusion

References

*For helpful discussions and comments, I am most grateful to Hollis Chenery, T.N. Srinivasan and

Paul Streeten.

Handbook of Development Economics, Volume L Edited by H. Chenery and T.N. Srinivasan

A, Sen

1. The background

"The French grow too fast", wrote Sir William Petty in 1676. Whether or not this

was in fact the first recorded expression of what is clearly a traditional English

obsession, it was certainly a part of one of the earliest discussions of development

economics. Petty was concerned not merely with the growth of numbers and of

incomes, but he also took a broad view of development problems, including

concern with the exact content of the standard of living. Part of his statistical

analysis was meant "to show" that "the King's subjects are not in so bad a

condition as discontented Men would make them". While Petty had estimated

national income by using both the "income method" and the "expenditure

method", he had also gone on to judge the conditions of people in a broad

enough way to include "the Common Safety" and "each Man's particular

Happiness"3

Petty is regarded, with justice, as one of the founders of modern economics,

and specifically a pioneer of quantitative economics. 2 He was certainly also a

founder of development economics. Indeed, in the early contributions to eco-

nomics, development economics can hardly be separated out from the rest of

economics, since so much of economics was, in fact, concerned with problems of

economic development. This applies not only to Petty's writings, but also to those

of the other pioneers of modern economics, including Gregory King, Francois

Quesnay, Antoine Lavoisier, Joseph Louis Lagrange, and even Adam Smith. An

Inquiry into the Nature and Causes of the Wealth of Nations was, in fact, also an

inquiry into the basic issues of development economics.

The fact that in the early writings in economics there was this noticeable

congruence of development economics and economics in general is a matter of

some interest, especially in the context of investigating the nature of "the concept

of development". Interest in development problems has, traditionally, provided

one of the deepest motivations for the pursuit of economics in general, and this

broad basis of development economics has to be borne in mind when investigat-

: Political A rithmetick, in which these passages occur, was written by Petty around 1676 but it was

published posthumously in 1691. The text could be found in Hull (1899, vol. I). The passages referred

to can be found on pages 241-242, 311.

2It may be remembered that it was Petty, the anatomist and musicologist, turned economist, who

had insisted at the Royal Society that in discussions in the society, "no word nlight be used but what

marks either number, weight, or measure" [Hull (1899, vol. I, p. lxiv)]. Those who complain about the

"recent craze" for mathematical economics might have to put up with the fact that the recent times

began a long time ago.

Ch. 1: The Concept of Development

ing the details of the concept of development. Having started off, tightly, with an

ell, development economics can scarcely settle for an inch.

It is not hard to see why the concept of development is so essential to

economics in general. Economic problems do, of course, involve logistic issues,

and a lot of it is undoubtedly "engineering" of one kind or another. On the other

hand, the success of all this has to be judged ultimately in terms of what it does

to the lives of human beings. The enhancement of living conditions must clearly

be an essential- if not the essential-object of the entire economic exercise and

that enhancement is an integral part of the concept of development. Even though

the logistic and engineering problems involved in enhancing living conditions in

the poor, developing countries might well be very different from those in the rich,

developed ones, there is much in common in the respective exercises on the two

sides of the divide [on this see Bauer (1971)].

Sometimes development economists have been rather protective of their own

domain, insisting on separating development economics from the rest of eco-

nomics. While the underlying motivation behind this effort is easy to understand,

it is important not to make too much of the divide, nor to confuse separateness

with independence. Tools of standard economics may have much fruitful use in

development economics as well, even when the exact problems addressed happen

to be quite specialized. It is, however, arguable that for one reason or another, a

good deal of standard economics has tended to move away from broad issues of

poverty, misery and well-being, and from the fulfilment of basic needs and

enhancing the quality of life. Development economists have felt it necessary to

emphasize and justify their involvement with these-rather "old-fashioned"-

problems, even though the relevance of these problems is by no means confined

to development economics. There are also institutional differences that separate

out the logistic issues in developing countries from those of developed ones, in

the pursuit of economic development and the enhancement of living conditions.

Certainly, the systematic differences in institutional features is a matter of

great moment in arriving at policies and deriving practical lessons regarding what

is to be done. But the first issue- the emphasis on development objectives- is not

a matter only for development economics as such, but of importance for

economics in general [see Hirschman (1970)]. In this respect, too, insisting on a

sharp division between development economics and other types of economics

would be rather counter-productive. Development economics, it can be argued,

has to be concerned not only with protecting its "own" territory, but also with

keeping alive the foundational motivation of the subject of economics in general.

The literature on the "concept of development"-whether explicitly put forward

or discussed by implication- has to be examined in this broad perspective related

to economics in general, rather than only in terms of "development economics"

narrowly defined.

A. Sen

2. Production,.growth, and development

The close link between economic development and economic growth is simulta-

neously a matter of importance as well as a source of considerable confusion.

There can scarcely be any doubt that, given other things, an expansion of

opulence must make a contribution to the living conditions of the people in

question. It was, therefore, entirely natural that the early writings in development

economics, when it emerged as a subject on its own after the Second World War,

concentrated to a great extent on ways of achieving economic growth, and in

particular increasing the gross national product (GNP) and total employment

[see Rosenstein-Rodan (1943), Mandelbaum (1945), Dobb (1951), Datta (1952),

Singer (1952), Nurkse (1953), Dasgupta (1954), Lewis (1955), Baran (1957),

Hirschman (1958)]. The process of economic development cannot abstract from

expanding the supply of food, clothing, housing, medical services, educational

facilities, etc. and from transforming the productive structure of the economy,

and these important and crucial changes are undoubtedly matters of economic

growth.

The importance of "growth" must depend on the nature of the variable the

expansion of which is considered and seen as "growth". The crucial issue,

therefore, is not the time-dimensional focus of growth, but the salience and reach

of GNP and related variables on which usual measures of growth concentrate.

The relation between GNP and living conditions is far from simple.3 To illustrate

the problem, figures for GNP per head and life expectancy at birth in 1984 are

given in Table 1.1 for five different countries, namely, China, Sri Lanka, Brazil,

Mexico, and South Africa. South Africa, with about seven times the GNP per

Table 1.1

GNP and life expectancy

Life expectancy at

GNP per head,

at birth,

1984

(U.S. Dollars)

(years)

China

310

Sri Lanka

360

Brazil

1,720

Mexico

2,040

South Africa

2,340

Source: World Bank (1986).

3For discussions on this, see Adelman and Morris (1973), Sen (1973), Adelman (1975), Grant

(1978), Morris (1979), Kakwani (1981), Streeten (1981), Streeten et al. (1981), Stewart (1985), Anand

and Harris (1986).

Ch. 1." The Concept of Development 13

head of China and Sri Lanka, has a substantially lower expectation of life than

the latter countries. Similarly, Brazil and Mexico also with many times the

income of China and Sri Lanka have achieved considerably less in longevity than

these two much poorer countries. To point to this contrast is not, of course, the

same thing as drawing an immediate policy conclusion as to exactly what should

be done, but the nature of the contrast has to be borne in mind in refusing to

identify economic development with mere economic growth. Even though an

expansion of GNP, given other things, should enhance the living conditions of

people, and will typically expand the life expectancy figures of that country, there

are many other variables that also influence the living conditions, and the concept

of development cannot ignore the role of these other variables.

•Life expectancy is, of course, a very limited measure of what has been called

"the quality of life". Indeed, in terms of what it directly measures, life ex-

pectancy is more an index of the "quantity" of life rather than of its quality. But

the forces that lead to mortality, such as morbidity, ill health, hunger, etc. also

tend to make the living conditions of the people more painful, precarious, and

unfulfilling, so that life expectancy may, to some extent, serve as a proxy for

other variables of importance as well. Furthermore, if we shift our attention from

life expectancy to these other important variables, the relationship with GNP per

head does not become any more immediate. Indeed, some of the variables related

to living conditions, e.g. the prevalence of crime and violence, may sometimes

have even a perverse relationship with average material prosperity.

This is a problem that applies not only to the poor, developing countries, but

also to the richer ones. In fact, various studies of perception of welfare done in

western Europe have suggested a rather limited role of real income in self-assess-

ment of personal welfare [see van Praag (1978), Allardt (1981), van Herwaarden

and Kapteyn (1981), Erikson, Hansen, Ringen and Uusitalo (1986)]. Reliance of

self-assessment based on questionnaire information does, of course, have some

problematic features also, but nevertheless there is enough evidence here to

question the rather straightforward connection between material prosperity and

welfare that is sometimes taken for granted in standard economic analysis.

In drawing a distinction between development and growth, a number of

different sources of contrast have to be clearly distinguished from each other.

First of all, insofar as economic growth is concerned only with GNP per head, it

leaves out the question of the distribution of that GNP among the population. It

is, of course, possible for a country to have an expansion of GNP per head, while

its distribution becomes more unequal, possibly even the poorest groups going

down absolutely in terms of their own real incomes. Noting this type of

possibility does not question the relevance of income considerations as such, but

argues against taking only an aggregated view of incomes. Undoubtedly, some of

the cases in which achievements in living conditions fall far behind what might be

expected on the basis of average per capita GNP (e.g. in South Africa, and to a

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