development growth

When growth is not enough

Last week I wrote about some of the drivers of development described in the UN’s latest Human Development Report (HDR). There was another section that caught my eye, making a point that I often make on the blog: economic growth is not necessarily a sign of real development. It is too blunt an instrument, too abstract a goal to show how much genuine progress is being made.

“The link between growth and human development is not automatic. It needs to be forged through pro-poor policies by concurrently investing in health and education, expanding decent jobs, preventing the depletion and overexploitation of natural resources, ensuring gender balance and equitable income distribution and avoiding unnecessary displacement of communities.”

For those of you diving to the comments section to defend the idea of economic growth, let me save you the trouble – growth in poor countries is absolutely vital. When people don’t have enough, they need higher and more stable incomes. Developing countries need economic growth to provide infrastructure, education and healthcare, pay off debts and invest for the future. Postgrowth economics does not dispute the need for growth in poor countries.

What matters is who gets the growth, and how it is created. If it comes by stripping a country of resources, it will be a short term boost that will then drop off with little progress made. If all the growth goes to the political elite, it won’t make any difference to those that need it most. Growth needs to be translated into the things that people need before it becomes useful.

It is entirely possible for countries to report enviable GDP growth rates for years at a time, and for the number of people living in poverty to stay the same or even increase. That’s been true in Britain, where we had the more people living below the poverty line at the end of the 80s boom years as we did at the beginning. Poverty is measured with a relative definition in Britain, but it can happen with absolute poverty too. Egypt’s 7% a year growth rate under Mubarak masked the fact that the number of people living on less than $2 a day had gone from 20% to 44% by the time the Tahir Square protests began. These incidences are by no means unique. “The links between economic growth and human development have snapped several times” says the UNDP.

How do you make sure the benefits of growth are shared, and that economic growth is translated into true development? That’s what last week’s post about developmental states, global markets and social programmes was about.

4 comments

  1. Amen to that. If there is going to be growth, it is essential to be clear about what kind of growth it will be. A cancer is a growth.

    Growth does not of itself lead to an increase in real wages, since these are determined by other factors. The usual effect of growth is to drive up rental values, thereby increasing the gap between rich and poor. Infrastructure also drives up rental values. Unless these matters are dealt with in the right way, and they rarely are, growth leaves a society worse of than it was to begin with.

  2. Henry says ‘unless these matters are dealt with in tne right way’,and that ‘they rarely are’. These three words seem so true, so vital, and so appalling, that they pull at my heart and I had to say so.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.