Overview
Development is the opening chapter of Understanding Economic Development, and its whole purpose is to unsettle a simple idea before replacing it with a better one. It begins from the observation that different persons can have different and even conflicting notions of what development is: what a landless labourer wants from development is not what a large farmer wants, and what is development for one may be destruction for another. Two things follow. People have different developmental goals, and what people desire is regional balance, equal treatment, freedom, security and respect - not income alone. The chapter then turns to national development and to the standard yardstick, average or per capita income, and to the World Bank's classification of countries as rich, middle and low income. It shows why this yardstick is inadequate through a worked comparison of three hypothetical countries with identical average incomes but very different distributions, and through the real comparison of Haryana, Kerala and Bihar, where Haryana has the highest per capita income but Kerala the better infant mortality rate, literacy rate and net attendance ratio. From there it introduces the other criteria - health, education, and the public facilities that money cannot buy individually - and the Human Development Report's composite index built on life expectancy, education and income. The chapter closes on sustainability: groundwater overuse in India and the finite stock of crude oil are used to make the point that development which cannot be maintained for future generations is not development at all.
Learning Objectives
- Explain why different persons can have different and even conflicting notions of development.
- Explain the statement that what may be development for one may be destruction for another.
- State the developmental goals people have besides income.
- Define national development and explain why comparing countries requires a common measure.
- Define average income or per capita income and calculate it for a small group.
- State the World Bank's criterion for classifying countries as rich, middle and low income, and place India in it.
- Explain, using an example, why average income can hide serious inequality.
- Compare Haryana, Kerala and Bihar on per capita income, infant mortality rate, literacy rate and net attendance ratio, and draw the conclusion.
- Explain why public facilities are essential for development and give examples.
- Define infant mortality rate, literacy rate, net attendance ratio and body mass index.
- Explain how the Human Development Report measures development.
- Explain the meaning of sustainability of development, using groundwater and crude oil as examples.
Topics in this chapter
9 topics · tap a topic title to jump straight to it.
Different People, Different Goals
Development is not one thing
Different persons can have different as well as conflicting notions of a country's development. The chapter makes this concrete with a table of categories of persons and their notions of development.
- A landless rural labourer wants more days of work and better wages, local schools able to provide quality education for their children, and no social discrimination.
- A prosperous farmer from Punjab wants assured a high family income through higher support prices for their crops and through hardworking and cheap labourers.
- A farmer who depends only on rain for growing crops wants a good source of irrigation.
- An urban unemployed youth wants better employment opportunities.
- A girl from a rich urban family wants as much freedom as her brother and to be able to decide what she wants to do in life.
The conflict
Look at the first two entries together. Both are legitimate. But the labourer's goal of better wages and the prosperous farmer's goal of cheap labourers cannot both be met. This is what the textbook means when it says notions of development can be conflicting.
Development for one, destruction for another
Industrialists may want more dams for electricity, but this may submerge the land and disrupt the lives of people who are displaced. What may be development for one may not be development for the other. It may even be destructive for the other.
- The rural labourer wants higher wages; the prosperous farmer wants cheap labour - both are development goals and they conflict.
- A dam gives industrialists electricity and destroys the homes and land of those displaced by the reservoir.
- A girl from a rich urban family may want freedom equal to her brother's - a developmental goal that has nothing to do with income.
Income and Other Goals
Why money matters
If you think about it, the answers to what people want are quite simple. People seek things that are most important for them — things that can fulfil their aspirations or desires. In fact, at times, they may fight for these.
Money, or material things that one can buy with it, is one factor on which our life depends. But is a higher income the only thing that people want? The answer is no.
The other goals
Besides seeking more income, one-way or the other, people also seek things like equal treatment, freedom, security, and respect of others. They resent discrimination. All these are important goals. In fact, in some cases, these may be more important than more income or more consumption, because material goods are not all that you need to live.
Two examples the chapter gives
- A person may get a job in a faraway place and hesitate to take it because of the uncertainty and the family's difficulty in moving; but if the family gets to shift along and the children get education there, the same job becomes attractive. So a job that gives a sense of security matters as much as the salary.
- Women may not be able to take up a job in a place where they feel unsafe. So a safe and secure environment may allow more women to take up a variety of jobs or run a business.
Hence, income is one of the most important components of development, but along with income, people also seek equal treatment, good health, peace, literacy, etc.
- A well-paid job in an unsafe or unfamiliar place may be turned down - security is itself a developmental goal.
- Women's participation in work depends on a safe and secure environment, not only on the wage offered.
- People resent discrimination; equal treatment is a goal in its own right.
National Development and the Problem of Comparison
Whose idea prevails?
When we think of a nation or a society as a whole, we come across a problem. Different persons could have different as well as conflicting notions of a country's development. So, how do we compare one with the other? Which idea should be adopted?
Generally the answer is that what may be development for the majority is taken as national development. However, this may cause conflicts, because it does not mean the ideas of others are unimportant.
Income as the common yardstick
For comparing countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. This is based on the understanding that more income means more of all things that human beings need. So, greater income itself is considered to be one important goal.
Total income will not do
The total income of a country is not a useful measure, because countries have different populations. Comparing total income will not tell us what an average person is likely to earn. Hence, we compare the average income, which is the total income of the country divided by its total population. The average income is also called per capita income.
- What is development for the majority is taken as national development, but this can create conflict for those left out.
- Total income is useless for comparison because countries differ in population size.
- Average income = total income of the country divided by its total population; also called per capita income.
- Average income (per capita income) = Total income of the country / Total population
Classifying Countries by Income
The World Bank's method
In World Development Reports, brought out by the World Bank, this criterion is used in classifying countries. Countries with per capita income of US$ 49,300 per annum and above in 2019 are called rich countries and those with per capita income of US$ 2,500 or less are called low-income countries.
India comes in the category of low middle income countries because its per capita income in 2019 was just US$ 6,700 per annum. The rich countries, excluding countries of the Middle East and certain other small countries, are generally called developed countries.
These cut-offs are revised by the World Bank from time to time, so it is the method rather than the exact figure that should be remembered: countries are ranked and grouped by per capita income measured in a common currency.
Why the figures are converted to dollars
While calculating national income, the value of final goods and services produced in a country is taken. To compare countries, incomes are converted into a single currency — US dollars — so that they can be placed on one scale.
- World Development Report 2021: rich countries are those with per capita income of US$49,300 and above in 2019.
- Low-income countries: US$2,500 or less per annum.
- India, at about US$6,700 per annum in 2019, is a low-middle-income country.
Why Average Income is Not Enough
The hidden inequality
Average income is useful for comparison, but it does not tell us how this income is distributed among people. Consider three countries, each with only five residents, and each with exactly the same average income.
In Country A, all five citizens earn much the same. In Country B, four citizens are very poor and one is extremely rich. The averages are identical. But you would obviously prefer to live in Country A: it has a more equitable distribution, and people are neither very rich nor extremely poor.
The general point
While average income is useful for comparison, it hides disparities. So, in addition to average income, other criteria are needed to compare countries. Income by itself is not a completely adequate indicator of material goods and services that citizens are able to use.
What money cannot buy
For example, normally your money cannot buy you a pollution-free environment or ensure that you get unadulterated medicines, unless you can afford to shift to a community that already has all these things. Money may also not be able to protect you from infectious diseases, unless the whole of your community takes preventive steps.
- Two countries with identical average incomes can differ completely in how that income is shared.
- You would prefer the country where incomes are equitably distributed, even though the averages are the same.
- Money cannot buy a pollution-free environment, unadulterated medicine, or safety from infectious disease - these depend on the whole community.
- Average income of a country of 5 people = (sum of the 5 incomes) / 5 - identical averages can conceal completely different distributions
Comparing Haryana, Kerala and Bihar
The comparison that overturns the ranking
The chapter tests the income yardstick against real Indian states. On per capita income, Haryana ranks highest among the three, Kerala second and Bihar lowest.
But on the health and education indicators the ordering changes.
- Infant Mortality Rate: Kerala's is the lowest of the three by a wide margin; Haryana's is higher despite its higher income; Bihar's is the highest.
- Literacy Rate: Kerala is highest, Bihar lowest.
- Net Attendance Ratio for Class I-VIII: Kerala is highest, Bihar lowest.
The conclusion
Although Haryana has the highest per capita income, it lags behind Kerala in these other indicators. So money in your pocket cannot buy all the goods and services that you may need to live well. Income by itself is not a completely adequate indicator.
The definitions you must know
- Infant Mortality Rate (IMR) indicates the number of children that die before the age of one year as a proportion of 1000 live children born in that particular year.
- Literacy Rate measures the proportion of literate population in the 7-and-above age group.
- Net Attendance Ratio is the total number of children of age group 6-10 attending school as a percentage of total number of children in the same age group.
- Haryana leads on per capita income but Kerala leads on infant mortality, literacy and school attendance.
- IMR is measured per 1000 live births in that year.
- Literacy rate is measured for the population aged 7 and above.
Public Facilities
Why some things must be provided collectively
The above discussion has shown that money cannot buy all the goods and services that one needs to live well. So, income by itself is not a completely adequate indicator of material goods and services that citizens are able to use.
The ration shop example
Kerala has a low infant mortality rate because it has adequate provision of basic health and educational facilities. Similarly, in some states, the public distribution system (PDS) functions well. Health and nutritional status of people of such states is certainly likely to be better.
The general principle
Many facilities like schools, colleges, hospitals, roads, clean drinking water and sanitation are needed by everyone, and cannot be provided by any one individual for himself. They have to be provided collectively, normally by the government.
This is the reason the chapter insists that development cannot be reduced to income. Two families with identical incomes will live very differently if one lives where the school works and the water is clean and the other does not.
- Kerala's low infant mortality is attributed to adequate provision of basic health and educational facilities.
- A well-functioning public distribution system improves the health and nutrition of a whole state.
- Schools, hospitals, roads, clean water and sanitation must be provided collectively - no individual can arrange them alone.
The Human Development Report
A composite measure
The Human Development Report published by UNDP compares countries based on the educational levels of the people, their health status and per capita income.
The three components
- Life expectancy at birth denotes the average expected length of life of a person at the time of birth.
- Mean years of schooling for people aged 25 years and above, and expected years of schooling for children.
- Gross National Income (GNI) per capita, at purchasing power parity in US dollars.
How to read a rank
The HDI rank in the world places countries in order out of the total number of countries covered. A country's rank on HDI can be quite different from its rank on per capita income alone — which is precisely the point of constructing the index.
Notice how this connects back. The HDI is the international version of the Haryana-Kerala comparison: it refuses to rank countries by income alone, and adds exactly the two dimensions — health and education — that the Indian comparison showed income was missing.
- HDI is published by the UNDP in the Human Development Report.
- Its three components are life expectancy at birth, years of schooling, and GNI per capita at purchasing power parity.
- A country can rank far higher on HDI than on per capita income, or far lower - which is the value of the index.
- \[HDI combines three dimensions: a long and healthy life (life expectancy at birth)\]\[knowledge (mean and expected years of schooling)\]\[and a decent standard of living (GNI per capita\]\[PPP US$)\]
Sustainability of Development
The question of the future
Scientists have been warning that the present type and levels of development are not sustainable. The question is whether development can be maintained for future generations.
Groundwater
Groundwater is an example of a renewable resource. These resources are replenished by nature, as in the case of groundwater. However, if we use more than what is being replenished by rain, then we would be overusing this resource.
There is an alarming fall in the water table in most parts of India. Around one-third of the country is overusing their groundwater reserves. In the next 25 years, more than 60 per cent of the country will be doing so if the present way of using this resource continues. Overusing of groundwater is very serious in agriculturally prosperous regions of Punjab and Western Uttar Pradesh, hard rock plateau areas of central and south India, some coastal areas and rapidly growing urban settlements.
Crude oil
Crude oil is a non-renewable resource: it will get exhausted after years of use. We have a fixed stock on earth which can never be replenished. The consequences of the depletion of this resource are far-reaching, since much of the world's transport and industry depends on it and the known reserves are concentrated in a small number of countries.
The conclusion
The issue of sustainability is important for development because development must be in keeping with the future. Consequences of environmental degradation do not respect national or state boundaries; this issue is no longer region or nation specific. Our future is linked together.
- Groundwater is renewable but is being overused - roughly a third of India already, and possibly over 60% within 25 years.
- Overuse is worst in Punjab and Western Uttar Pradesh, the hard rock plateaus of central and south India, some coastal areas and fast-growing cities.
- Crude oil is non-renewable: a fixed stock that can never be replenished.
Key Concepts
- Development
- A process that involves different people having different and sometimes conflicting goals, and that concerns income together with equal treatment, freedom, security and respect.
- National development
- What is considered development for the country as a whole, generally taken as what is development for the majority.
- Average income
- The total income of a country divided by its total population; also called per capita income.
- Per capita income
- Another name for average income, used by the World Bank to classify countries as rich, middle or low income.
- Developed countries
- The rich countries, excluding those of the Middle East and certain small countries, as classified in the World Development Report.
- Infant Mortality Rate (IMR)
- The number of children that die before the age of one year per 1000 live births in a given year.
- Literacy Rate
- The proportion of the literate population in the 7-and-above age group.
- Net Attendance Ratio
- The number of children of a given age group attending school as a percentage of the total number of children in that age group.
- Body Mass Index (BMI)
- Weight in kilograms divided by the square of height in metres, used to judge whether adults are undernourished.
- Public facilities
- Facilities such as schools, hospitals, roads, clean drinking water and sanitation that are needed by everyone and must be provided collectively, normally by the government.
- Public Distribution System (PDS)
- The government system of supplying essential food items through ration shops, which improves health and nutrition where it works well.
- Human Development Report
- The report published by UNDP comparing countries on educational levels, health status and per capita income.
- Human Development Index (HDI)
- A composite index based on life expectancy at birth, years of schooling, and gross national income per capita at purchasing power parity.
- Life expectancy at birth
- The average expected length of life of a person at the time of birth.
- Gross National Income per capita
- A country's national income per person, measured at purchasing power parity in US dollars, used as the income component of HDI.
- Sustainability of development
- The requirement that development be maintainable for future generations, without exhausting resources or degrading the environment.
- Renewable resource
- A resource replenished by nature, such as groundwater - but which can still be overused if consumption exceeds replenishment.
- Non-renewable resource
- A resource with a fixed stock on earth that can never be replenished, such as crude oil.
- Water table
- The level of groundwater below the surface, now falling alarmingly in most parts of India.
End-of-Chapter Trial Paper & Test Questions
Topic-wise questions to test your understanding of every concept in this chapter.
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Why do different persons have different notions of development? Give an example. / विभिन्न व्यक्तियों के विकास के बारे में अलग-अलग विचार क्यों होते हैं? एक उदाहरण दीजिए।
Show answer
Development goals differ because people have different life situations and needs; for example, a landless labourer wants more days of work and higher wages, while a rich farmer wants higher support prices and cheaper labour, so the same change may be development for one and not for another. / विकास के लक्ष्य भिन्न होते हैं क्योंकि लोगों की जीवन-परिस्थितियाँ और आवश्यकताएँ अलग होती हैं; उदाहरणार्थ, भूमिहीन मजदूर अधिक काम के दिन और ऊँची मजदूरी चाहता है, जबकि धनी किसान ऊँचे समर्थन मूल्य और सस्ता श्रम चाहता है, इसलिए एक ही परिवर्तन किसी के लिए विकास हो सकता है और किसी के लिए नहीं।
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Besides income, what other goals do people have for development? / आय के अलावा लोगों के विकास के अन्य कौन-से लक्ष्य होते हैं?
Show answer
Apart from higher income, people seek equal treatment, freedom, security, respect, good working conditions and a pollution-free environment; thus quality of life depends on both material and non-material goals. / अधिक आय के अतिरिक्त लोग समान व्यवहार, स्वतंत्रता, सुरक्षा, सम्मान, अच्छी कार्य-स्थितियाँ और प्रदूषण-मुक्त वातावरण चाहते हैं; इस प्रकार जीवन की गुणवत्ता भौतिक और गैर-भौतिक दोनों लक्ष्यों पर निर्भर करती है।
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What is per capita income, and why is it used to compare the development of countries? / प्रति व्यक्ति आय क्या है, और देशों के विकास की तुलना के लिए इसका उपयोग क्यों किया जाता है?
Show answer
Per capita income is the average income of a country, calculated as total national income divided by total population; it is used because it gives the average income per person, allowing fairer comparison between countries of different population sizes. / प्रति व्यक्ति आय किसी देश की औसत आय है, जिसे कुल राष्ट्रीय आय को कुल जनसंख्या से भाग देकर निकाला जाता है; इसका उपयोग इसलिए किया जाता है क्योंकि यह प्रति व्यक्ति औसत आय देती है, जिससे भिन्न जनसंख्या वाले देशों की तुलना अधिक न्यायसंगत हो जाती है।
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Country A has total income ₹40,00,000 with 8 people, and Country B has total income ₹40,00,000 with 4 people. Which is more developed by average income? / देश A की कुल आय ₹40,00,000 है और 8 लोग हैं, देश B की कुल आय ₹40,00,000 है और 4 लोग हैं। औसत आय के आधार पर कौन अधिक विकसित है?
Show answer
Per capita income of A = 40,00,000 / 8 = ₹5,00,000; of B = 40,00,000 / 4 = ₹10,00,000; so Country B is more developed by average income even though both have the same total income. / A की प्रति व्यक्ति आय = 40,00,000 / 8 = ₹5,00,000; B की = 40,00,000 / 4 = ₹10,00,000; अतः समान कुल आय होने पर भी औसत आय के आधार पर देश B अधिक विकसित है।
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Why is average (per capita) income not an adequate measure of development? / औसत (प्रति व्यक्ति) आय विकास का पर्याप्त माप क्यों नहीं है?
Show answer
Average income hides the distribution of income, so it does not show whether wealth is shared equally or concentrated in a few hands; two countries with the same average can have very different levels of equality and well-being. / औसत आय आय के वितरण को छिपा देती है, इसलिए यह नहीं दर्शाती कि धन समान रूप से बँटा है या कुछ ही हाथों में केंद्रित है; समान औसत वाले दो देशों में समानता और कल्याण के स्तर बहुत भिन्न हो सकते हैं।
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Name the indicators used in the Human Development Index (HDI) and the body that publishes it. / मानव विकास सूचकांक (HDI) में प्रयुक्त संकेतकों और इसे प्रकाशित करने वाली संस्था के नाम बताइए।
Show answer
HDI combines per capita income, health (life expectancy) and education levels of people; it is published by the United Nations Development Programme (UNDP) in its Human Development Report. / HDI लोगों की प्रति व्यक्ति आय, स्वास्थ्य (जीवन प्रत्याशा) और शिक्षा के स्तर को मिलाकर बनता है; इसे संयुक्त राष्ट्र विकास कार्यक्रम (UNDP) अपनी मानव विकास रिपोर्ट में प्रकाशित करता है।
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What is sustainable development, and why is it important? / सतत (टिकाऊ) विकास क्या है, और यह क्यों महत्वपूर्ण है?
Show answer
Sustainable development means using resources in a way that meets present needs without harming the ability of future generations to meet their own needs; it is important because resources like groundwater and minerals are limited and overuse can damage the environment. / सतत विकास का अर्थ है संसाधनों का इस प्रकार उपयोग करना जो वर्तमान आवश्यकताओं को पूरा करे बिना भावी पीढ़ियों की अपनी ज़रूरतें पूरी करने की क्षमता को नुकसान पहुँचाए; यह महत्वपूर्ण है क्योंकि भूजल और खनिज जैसे संसाधन सीमित हैं और अति-उपयोग पर्यावरण को क्षति पहुँचा सकता है।
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Distinguish between renewable and non-renewable resources with one example each. / नवीकरणीय और गैर-नवीकरणीय संसाधनों में एक-एक उदाहरण सहित अंतर कीजिए।
Show answer
Renewable resources can be replenished by natural processes within a reasonable time, such as groundwater or solar energy, while non-renewable resources are limited in stock and get exhausted with use, such as crude oil or coal. / नवीकरणीय संसाधन उचित समय में प्राकृतिक प्रक्रियाओं द्वारा पुनः भरे जा सकते हैं, जैसे भूजल या सौर ऊर्जा, जबकि गैर-नवीकरणीय संसाधनों का भंडार सीमित होता है और उपयोग से समाप्त हो जाता है, जैसे कच्चा तेल या कोयला।
Related Laws & Principles
Explore allFoundational laws & principles behind this chapter. Each one opens a full page — what it says, why it matters, five practice questions and the mistakes to avoid.