Growth versus Development

• Economic growth may be one aspect of economic development but is not the same

• Economic growth:– A measure of the value of output of goods and services

within a time period• Economic Development:– A measure of the welfare of humans in a society

National Income – Problems• Reliability of data?

– How accurate is the data that is collected?• Distribution of income?

– How is the income distributed is income more evenly spread?• Quality of life?

– Can changes in economic growth measure changes in the quality of life?

• Impact of exchange rate?– Difference in exchange rates can distort the comparisons – need

to express in one currency, but which one and at what value?• Black/informal economy?– Some economic activity not recorded – Some economic activity is carried out illegally – Work of the non-paid may not be considered

Human Development Index (HDI)

• HDI – A socio-economic measure• Focus on three dimensions of human welfare:• Longevity – Life expectancy• Knowledge – Access to education, literacy rates• Standard of living – GDP per capita: Purchasing

Power Parity (PPP)

When India may catch up or surpass China's over-10 per cent growth rate

CHINA INDIA

LIFE EXPECTENCY AT BIRTH 73.5 64.4

INFANT MORTALITY RATE 17 PER 1000 50 PER 1000

UNDER 5 MORTALITY RATE 19 66

ADULT LITRACY RATE 94 65

MEAN YEARS OF SCHOOLING IN YEARS 7.5 4.4

LITERACY RATE FOR WOMAN 99 <80

World Development Reports of the World Bank and Human Development Reports of the United Nations

GNP per capita is not a good predictor of valuable features of our lives

Bangladesh India

GNP per capita (PPP) in Rs. 1550 3250

LIFE EXPECTENCY 66.9 64.4

MEAN YEARS OF SCHOOLING 4.8 4.4

THE PROPORTION OF UNDERWEIGHT CHILDREN 41.5 43.5

FERTILITY RATE 2.3 2.7

UNDER 5 MORTALITY RATE 52 66

INFANT MORTALITY RATE 41 50

female literacy rate among young Bangladeshis is actually higher than the male rate, whereas young females still do much worse than young males in India.

China spends 1.9 % of GDP on health care, the proportion is 1.1 % in India.• reliance of many poor people across the

country on private doctors with little training• possibility of fraud and deceit is very large• Large masses of these people who make up

this country has very little improvement

Green Economy• A green economy is:

• One of several approaches, visions, models and tools available to each country to achieve sustainable development

• Moto: Sustaining and advancing economic, environmental and social well being .

• Need: 1. Current Brown economic development , the main agenda is to just

increase GDP, this comes with potential irreversible costs2. 60 percent of the world’s ecosystem services were found to be

degraded or used unsustainably3. Income inequality – between 1990 and 2005, rose in more than

two thirds of countries.4. New markets and industries to create long term jobs5. Its not just the greenhouse gases but as a society we have realised

that we have reached planetary limits

Green economy (contd.)• Flaws :

– Overvaluation of Services: Polluting agents and purifying agents both contribute to GDP

– Missing Markets : Does not account for the services provided by nature

• Basically, there are not sufficient mechanisms to ensure that polluters pay the full cost of their pollution

• Examples: – Korea allocates 2% of GDP to invest in the green sector– China increased its Wind Capacity by 64% in 2010– Interface Flor Ltd. uses its waste products as manufacturing

products

A green economy should:

• Respect national sovereignty on natural resources• Be supported by an enabling environment and

well functioning institutions• Take into account the needs of developing

countries• Effectively avoid conditionality or constitute a

barrier to international trade• Address the concern about inequality and

promote social inclusion• Help bridge the technological gap and promote

sustainable consumption and production

Merits

• Provides an opportunity to enhance ecosystem services, and enable growth and sustainable livelihoods for the poor

• Reforms and improvements in the global economic frameworks and structures.

• Recognizing the economic and social value of the environment besides its intrinsic environmental worth.

Demerits• Green GDP does include uncounted losses, so it avoids the

problem of overestimating our wealth, but it fails to account for the potentially much larger benefits of innovation.

• Green economy” concept is hijacked by countries and used to promote trade protectionist policies. Developed countries may use this as a principle or concept to justify unilateral trade measures against the products of developing countries.

• It may pressurize developing countries to take on one-dimensional environmental measures rather than sustainable development policies.

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