Human Development as an alternative development

paradigm

Frances Stewart

Supplement to ED LN2, From Google, Accessed March 17, 2013

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Introduction to Human Development

• Aim to provide brief overview of historical evolution of ideas leading to HD.

• Note key antecedents – Basic Needs (BN) and Capabilities.

• Contrast between these.• Present main features of HD approach• What difference does it make?• HD and economic growth• Dimensions of HD beyond the HDI• How does it relate to other dominant strategies

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The logic of changing strategies

• Not just a matter of fashion.

• A cyclical rational process – starts with ‘facts’ of situation; gives rise to theories and to new policies; policies affect situation; hence new ‘facts’.

• There is a dialectical or cyclical interaction between events, thought, policies and events.

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The ‘facts’ –starting point

Theories

Policies

Policy impact

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A more complex view

– ‘facts’ not objective; depends on whose lenses are used.

– Interests powerful.– Development theories borrow heavily from thought

in advanced countries, especially because of dominant role of West in advanced education; and in International Financial institutions.

– Theory is very persistent – colours how facts are viewed.

– No single view.

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The ‘facts’ –starting point

Theories

Policies

Policy impact

Interests and politics

Advanced country thinking

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 YEARS

 DOMINANT STRANDS IN DEVELOPED COUNTRYTHINKING

 DOMINANT THEMES IN DEVELOPMENT ECONOMICS

 1950S1960S

 KEYNESIANISM

 GROWTH. PLANNING AND INDUSTRIALISATION

 1970S

 A. KEYNESIANISM   B. MARXISM  C. NEO-CLASSICAL REVIVAL

MONETARISM AND NEO-CLASSICAL ECON.

 A.-EMPLOYMENT;REDIST. WITH GROWTH;BASIC NEEDS-B. DEPENDENCY

 -C.THE ROLE OF PRICES and the MARKET in RESOURCE ALLOC. 

1980S 

 PRO-MARKET AND ANTI-STATE; MONETARISM IN MACRO-POLICY;NEW POL.ECON. CAPABILITIES

 LATE 1980S-MID 1990S

 NEW THEORIES OF GROWTH AND TRADE; INFORMATIONAL ASYMMETRIES; ALTERNATIVE MOTIVATIONS; INSTITUTIONS

 HUMAN DEVELOPMENTNEW FOCUS ON POVERTYROLE OF THE STATEAS COMPLEMENTARY TO THE MARKET; ROLE OF NGOS AND COMMUNITIES.

 MID-90S+

 THE THIRD WAY; SOCIAL MARKET

 HUMAN DEVELOPMENTENVIRONMENTGLOBALISATIONHUMAN RIGHTS

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Historical evolution of thought about development:post-colonialism

• Colonial legacy

- low incomes

- low savings/investment

- appalling health; low literacy

- primary production, with little manufacturing

- total dependency

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Development thinking when countries gained independence

• Major emphasis on economic growth (Rostow; Lewis; Hirschman).

• Using ‘surplus’ labour. (Nurkse; Lewis)• On industrialisation and raising investment as

mechanisms. (Mahalanobis; Rosenstein-Rodan)

• In parallel, emphasis on costs of dependence (Prebish/Singer; Frank; Amin; Sunkel).

• General neglect of ‘human’ dimension – thought it would be looked after automatically through growth.

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Growth and industrialisation did follow

Growth in per capita incomes 1960-77 %, pa

Industrial share

%

1960 1977

Investment ratio %

1960 1977

Low-income

1.4 17 25 14 21

Mid-income

3.6 32 36 21 25

Industrial-ised

3.4 40 37 21 22

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But challenge to growth followedWhy • Rising unemployment; high underemployment• Poverty still high and increasing in absolute terms• Dependency remained – finance, technology,

management.• Growth of GNP neglects income distribution, public

goods, employment – all essential for improving quality of life.

The ILO '..it has become increasingly evident, particularly from the experience of the developing countries, that rapid growth at the national level does not automatically reduce poverty or inequality or provide sufficient productive employment' (ILO, 1976, Employment, Growth and Basic Needs: A One-World Problem, p 15)

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Defects of focus on money incomes.

• Income distribution critically important• Neglects public goods (and externalities more

generally).• Assumes utilitarian philosophy. Money income

measures utility. Utility should be maximised.• ‘Physical condition neglect’. Entrenched

deprivation can become acceptable.• Is consequentialist. Neglects agency goals

(how you get there – e.g. child labour).• Assumes people only consider OWN welfare.

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Succession of challenges to growth only agenda from 1970s

• ‘Dethronement’ of GNP (Seers)• Employment objective emphasised: ILO

missions to Colombia, Sri Lanka – led by Seers.• Redistribution with growth (Chenery, Singer and

others).• Basic needs (ILO, WB, Ghai, Streeten, Ranis,

Stewart).• Capabilities (Sen)• Human Development

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Explaining evolution

• Employment objective of ILO early 1970s: But why employment? Employment is a means to achieve various objectives, including incomes, production and recognition

• Hence move to focus on incomes of the poor. Redistribution with growth (RWG).– Is the strategy feasible technically? Politically?– Is it right to focus on money incomes?

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Human well-being goes beyond money incomes

1. Basic needs approach:• Poor need certain basic goods and services (BN).

Income a means. But doesn’t provide public goods. And effectiveness of incomes of households depends on household distribution. Hence BN.

• But how to identify what poor need?• True objective is not consumption of goods and

services (commodity fetishism – Sen), but to lead a decent life (DL).

• Metaproduction function of BN approach, translates BN goods and services into quality of life.

E.g. DL = f(a, b, c d….), or Decent life depends on consumption of food, health

services, shelter….

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2. Sen and capabilities

• Goal of development is to enhance people’s potential to be and do.

• Potential beings and doings are capabilities [but only things ‘people have reason to value’]

• Actual beings and doings are functionings.• Incomes an important means but capabilities go well

beyond incomes.• Freedom to choose critical in this approach– hence

capabilities not functionings.• Big emphasis on personal characteristics in

translation from resources to functionings.• Approach relevant to rich as well as poor countries,

rich as well as poor people – big advantage compared with BN.

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BASIC NEEDS CAPABILITIES

Disposable money income

Social income

Entitlements

Choices

BN goods and services

Capability set Personal characteristics

BN goods and services

Metaproduction function

Characteristics of goods

Decent life characteristics

Functionings

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The international agenda, historically

• BN dominant end 1970s – ILO and Macnamara at WB. (Mahbub ul Haq prominent)

• Displaced by debt crisis, and adjustment.• Increased role of market; liberalisation• Growth and poverty displaced.• Rising poverty in the 1980s – led to reemphasis

on poverty• UNICEF, Adjustment with a Human Face, 1987.• 1990 first Human Development Report.(and

Poverty Report of World Bank)• 2000: MDGs

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First Human Development Report

• Many of the ideas initiated by succession of meetings of North-South Roundtable, some in collaboration with UNDP.

• UNDP, under William Draper, invited M.ul Haq to write report.

• Team led by Mahbub ul Haq. Team included: • Gustav Ranis, Amartya Sen, Frances Stewart,

Keith Griffin, Meghnad Desai, Aziz Khan, Paul Streeten

• Capabilities and BN thinkers and advocates.• Brought two threads together.

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William Draper’s Foreword to first Report

• ‘The Report is of a seminal nature. It makes a contribution to the definition,measurement and policy analysis of human development. It opens the debate….

• I hope the Report and its annual sequels – will make a significant contribution to the development dialogue in the 1990s..’

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What is HD?• ‘Human development is a process of enlarging

people’s choices. The most critical ones are to lead a long and healthy life, to be educated and to enjoy a decent standard of living. Additional choices include political freedom, guaranteed human rights and self-respect’ (HDRO 1990)

• Puts human beings at the centre, not incomes…• ‘people are the real wealth of a nation. The basic

objective of development is to create an enabling environment for people to live long, healthy and creative lives’ (HDRO 1990)

• Kant: ‘so act as to treat humanity, whether in their own person or that of any other, in every case as an end withal, never as a means only’

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Some key aspects of HD1. Humans are ends not means2. Incomes are means not end. 3. In practice major focus is on BN type goods and

services, but also discusses other issues (freedom, democracy, gender, environment, communities, culture) – it is open ended. Considers topics relevant to more developed countries. All issues brought in which may affect human beings’ potential.

4. Freedom to choose given priority – I.e. HD concerns widening human choices.

5. Yet accepts that humans are an important resource too as well as being the objective of development.

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Advantages compared with BN and capability approaches

• Goes beyond ‘basic’. Much better to have an approach that encompasses all nations and income levels.

• Goes beyond physical condition to institutional and political elements.

• Tries to add up and assess country progress. Here better than capability approach.

• To some extent a political agenda, work-in-progress, a rallying cry for all those seeking human and humane alternatives, evaluating our current condition.

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What difference does HD approach make, adopting HDI as measure?

1. Country Ranking

2. Policies

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Correlations between HDI, GNP p. cap. and LE, 2000

Countries HD/GNP HD/LE LE/GNP

All countries

0.923 0.755 0.629

Developed 0.753 0.348 0.005

Developing and transition

0.894 0.694 0.524

Low HD 0.562 0.745 0.384

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To note

• Correlation weaker between LE and GNP than HDI and GNP

• Weak correlation especially for HDI/GNP p. cap. For low HD countries

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Examples of success and failure among developing countries – ex. transition countries, 2005

Best HDI Best HDI rel. to GDP p.cap. Worst HDI Worst HDI rel. to GDP p. cap.

Singapore Cuba +43 Sierra Leone Botswana -70

S.Korea Myanmar +35 Burkina Faso South Africa - 65

Cyprus Occupied Palestinian Territories +33 Philippines

Guinea-Bissau Equatorial Guinea

-54

Barbados Madagascar+27 Niger Namibia - 47

Kuwait Ecuador +21 Mali Swaziland -37

Malta

Dominica +19

Mozambique Angola -33

Ethiopia Vietnam +18 Central African Republic

Guinea -30

Argentina Congo,Timor Leste +16 Chad Algeria -22

UAR Chile, Panama, Tanzania, Tonga, St. Lucia +15

,

Dem. Rep. Congo Papua New Guinea, Saudi Arabia -19

Chile Burundi

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Characteristics of success

• Many paths to HD success including • good growth (Singapore;S.Korea)• good distribution of income: Cyprus, Barbados.• well targeted social expenditures (Chile).

• But in general successes• give priority to girls and women

(education/incomes): • have high social expenditures as share of

national income (Barbados, Malta, Kuwait)

• Good economic performance helps

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Characteristics of failure

• Conflict is a major source of failure (9/10)

• AIDS

• Inegalitarian income distribution

• Low social expenditure

• Poor position of women

• Economic failures.

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Countries with major difference in ranking, on HDI compared with GNP per capita

1. HD better than GNP• Socialist and ex-

socialist; (e.g. Cuba, Vietnam, Ukraine)

• Social democrat, strong emphasis on social sectors (e.g. Chile, Costa Rica)

• Failed economies (Congo, Madagascar)

2. GNP better than HD

• Mineral rich economies (e.g. Algeria; Angola; Saudi Arabia)

• AIDs -affected (Botswana, S.Africa; Burkina Faso)

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Relationship between HD and economic

growth • Close. Two Chains:

– From economy to HD (private and social incomes)

– From HD to economy (skills and productivity of work force.

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CHAIN A

ECONOMIC GROWTH

HUMAN DEVELOPMENT

CHAIN B

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DISTRIBUTION OF INCOME

THE HD-GNP CYCLE

 GNP

C 

H A I N  B

C

H A I 

N   A

HOUSEHOLD EXPEND. ONBN - ALLOCATION WITHIN

HOUSEHOLDS

HOUSEHOLD INCOME AND

POVERTY RATES

GOVERNMENTREVENUE

ANDEXPENDITURE

RATIOS

SOCIAL ALLOCATIONAND PRIORITY

RATIOS

HUMAN DEVELOPMENT

CAPABILITIES OFMANAGERS;WORKERS;FARMERS

ORGANISATION OF PRODUCTION; R AND D; INNOVATION

MANUFACTUREDEXPORTS

SAVINGS AND INVESTMENT

HUMAN DEVELOPMENT IMPROVEMENT FUNCTION

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Virtuous and vicious cycles of development

– Vicious and virtuous cycles of development.– ‘Lopsided development, possible in short run.– Yet to move into virtuous category must give

priority to HD.– No country has succeeded in this strategy– Growth first DOES NOT WORK

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Cycles of development

Economic growth

HD Virtuous cycle

Vicious cycle

HD-Lopsided

EG-Lopsided

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HD: The unfinished agenda

• HD has too much been identified with HDI.

• Beyond the HDI, exploring other measures of progress:

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HDI clearly incomplete measure

• Covers basic aspects of human existence and choices:– Health (life expectancy)– Education– Basic incomes .

• Covers a basic core of material aspects of HD.• Does not cover many other important aspects of

the ‘good life’: e.g.Political freedoms; social aspects of human life; enjoyment of non-basic goods.

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Choosing dimensions of the good life

• Big philosophical question since Aristotle at least. Alkire has list of 39 attempts.

• Many approaches used to define good life: – e.g. Rawls: ‘deliberative rationality’ in defining primary goods:

‘with careful consideration of relevant facts..and consequences’.– Finnis: practical reasoning ‘critical reflection about the planning

of one’s life (Nussbaum).– Doyal and Gough (basic needs):avoidance of serious harm,

where harm prevents people realising their plan of life).– Nussbaum, follows Rawls, ‘overlapping consensus’– Consultation: Voices of the poor; quality of life consultation by

WED research group. • N.B. ‘list’ approach famously avoided by Sen: process is

‘democratic consensus’.

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Rawls (1971) Grisez, Finnis and Boyle (1987)

Doyal and Gough (1993)

Nussbaum (2000)

Narayan (2000)

Defining concepts Primary goods Basic human values Basic Needs (bold) and Intermediate needsa

Central human capabilities

Dimensions of wellbeing

Bodily wellbeing Bodily life –health, vigour and safety

Physical health. LifeBodily healthBodily integrity

Bodily wellbeingAccess to health servicesGood physical environment

Material wellbeing Income and wealth

-Protective housing-Economic security

Material wellbeingFoodAssets

Mental development Knowledge Practical reasonableness

Basic education Senses, imagination,Thought. EmotionsPractical reasonPlay

Work Freedom of occupation

Skilful performance in work and play

Work Work

Security Physical security Civil peace;.Lawfulness Physically safe environmentPersonal physical securitySecurity in old age

Social relations social bases of self-respect

Friendship Significant primary relationships

AffiliationSocial bases for self-respect

Social wellbeing-Family-self-respect and dignity-community relations

Spiritual wellbeing Self-integration Harmony with ultimate source of reality

Empowerment and political freedom

Rights, liberties, opportunitiesPowers and prerogatives of office.Freedom of movement

Autonomy of agencyCivil and political rightsPolitical participation

Control over one’s environment

Freedom of choice and action

Respect for other species

Other species

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Twelve categories covering most of aspects discussed by philosophers

1. The HDI itself -- health, education and a measure of income (i.e. it broadly covers bodily health, mental development and basic aspects of material wellbeing).

2. Mental wellbeing (i.e. psychological state)3. Empowerment (particularly of the deprived). 4. Political freedom5. Social relations 6. Community wellbeing 7. Inequalities.8. Work conditions 9. Leisure conditions 10. Political security - i.e. freedom from political violence or

instability11. Economic security - freedom from economic fluctuations. 12. Environmental conditions.

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Is HDI an adequate measure of broad HD ?

• No according to correlation analysis of indicators across countries.

• Taking a set of indicators to represent different dimensions across countries, found 39 indicators adopted to represent 12 dimensions; of these just 8 were highly correlated with HDI.

• Therefore a full assessment of HD progress goes well beyond HDI.

• Note: precise results depend on chosen categories, and indicators and methodology

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CATEGORY OF HUMAN DEVELOPMENT

INDICATORS not highly correlated with HDI

Mental well-being Male suicide rate; Prisoners

Empowerment GEM;Fem/male secondary educ.Union density

Political freedom Political/civil liberties; Political terror Juridical independence

Social relations Value of friends; Value of familyTolerance of neighbors Divorce rate

Community well-being Alcohol consumption; Natural disastersTolerance of neighbors

Inequalities Income gini; Horizontal inequality Rural/Urban inequality;GDIHealth inequality

Work conditions Unemployment ; Employment conditions Informal sector proportionMinimum wage policy

Leisure conditions Cinema attendance

Economic stability GDP cycle; CPI cyclePortfolio investmentTerms of trade

Political stability Political violence ; Refugee flows

Environment Environmental sustainability

Indicators for HD not represented by the HDI

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Country behaviour

• Assessment of country behaviour on four aspects of HD – core HD, economic, social and community, and political showed VERY FEW did consistently on all aspects

• only eight out of 130 countries with data for all four categories were consistently categorized– two as consistently high; Costa Rica and Trinidad and

Tobago. – five consistently medium: Bolivia, Brazil, Nepal, Saudi

Arabia and Turkey– one consistently low: Sierra Leone, had consistently

low performance

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HD and other contemporary strategies

1. MDGs. 1. Aim to halve many dimensions of poverty by 2015.

MDGS ‘share a common motivation and reflect a vital commitment to promoting human well-being that entails dignity, freedom and equality for all people’ (HDR 2003)

1. Many with direct contribution to HD:2. Reducing child mortality; improving maternal health; combating

major diseases3. Universal primary education; gender equality.:

2. But HD goes beyond MDGs, in time and in concept.3. HD: includes many dimensions not covered by MDGs;

not rigid in objectives; extends to rich as well as poor countries.

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HD and other contemporary development strategies

2. Human Security

- Human security commission of Mrs. Ogata and Amartya Sen.

- Human Security Report (Human Security Centre University of British Columbia)

Many interpretations of Human security: focuses on freedom from risks (political/economic/health).

Sen: ‘downside of Human development’

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HD and other contemporary development strategies

3. Economic growth and a pro-market philosophy1. both growth and the market are instruments for advancing HD,

but neither necessary nor sufficient.2. Need also to be concerned with:

1. distributional consequences of growth and the market.2. with availability of social goods.3. with non-material aspects of providing for human flourishing.

Note: the market may not deliver growth; and growth may not deliver HD. But an HD approach is not anti-market. HD provides a powerful way of assessing the success or failure of the market.

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HD and other contemporary development strategies

4. ‘Happiness’, increasingly argued should substitute for income as measure of progress (Levine and Easterly; Layard)

• Various indicators of HD NOT well correlated with measures of happiness across countries.

• Basic philosophy: HD like capabilities is about expansion of human freedoms, not about mental state.

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HD: an unfinished agenda. Major priorities

• Explore ways in which people can consider, and agree on defining and prioritising alternative dimensions.

• Integrate with environmental framework.• Analyse underlying political conditions and

strategies for promoting HD.• Push forward with revising measures of progress

at macro-level in rich and poor countries. • Evaluate progress at micro-level with HD

perspective.

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Some conclusions

• HD represents an important alternative paradigm to the economic/market paradigm generally adopted by World Bank.

• Interpretation of HD is very wide: it relates to all features of society that promote human flourishing, or prevent it.

• New aspects still being developed 15 years after report started.

• Human development goes well beyond the HDI.