Real Economic Development: Not Just Statistics
People would consider economic development as a rise in the income of a country. The more the income, the greater the development. However, as time progressed, increased Gross Domestic Product meant increased development. To this day, economists worldwide regard GDP as a yardstick to gauge growth.
Economic growth differs from economic development.
A rise in income was economic growth and economic development.
Now, as concepts are redefined, there are clear differences between economic growth and economic development. Some are as follow.
- Development is a very broad concept. It includes living standards and even life expectancy. Growth, on the other hand, is much narrower.
- Economic growth is single dimensional. It comprehends increased incomes as increased progress. Development is multidimensional; it considers income but also includes living standards and education levels (for instance).
- Growth is a short-term process whilst development takes years.
And so on.
Economic Development and Amartya Sen
It wasn’t long before people began to realize that increased GDP did not necessarily mean better lives. Amartya Sen, who is a prodigy in the field of welfare economics, was among the first to point out that other factors mattered. He theorized a capability approach. In this theory, he stated that poverty is a lot more than a deprivation in income sources. He argued for five components when evaluating capability:
- Freedom in choice
- The ability to transform resources into productive activities
- Activities that contributed towards happiness
- Balance between material and non-material factors
- The distribution of opportunities in a society
Furthermore, in this approach, Sen opined that individuals differed in their abilities. Also, people begin to internalize their dire surroundings. Thus, they fail to desire what they believe is unachievable. Evaluating well-being must consider the dichotomy between actual achievements and effective freedom.
For his extensive work, Sen received a Nobel Prize in Economics in 1998.
Development and Statistics
According to statistics, Saudi Arabia controls over 16 percent of global petroleum reserves. It is the largest exporter of petroleum products and has a lead role in the OPEC. Its GDP was $1.775 trillion in 2017 (purchasing power parity). Also, the per capita GDP was around $54,500 by 2017.
All in all, the economy is among the world’s top 20 economies.
Nevertheless, this country is imperfect in many ways. Women have little to no freedom in what they wear or what they do. These women could not travel without a male guardian. They cannot marry, leave a prison or a domestic violence shelter without the guardian’s consent. Despite allowing them to drive (along with other superficial reforms), Saudi Arabian women do not have the freedom to live life as they please.
And Saudi Arabia ranks in the 60’s (out of 156 countries) in the World Happiness Report, 2020.
Which brings us to the question: Is Saudi Arabia truly developed?
Development and Pakistan
With respect to economic growth, it may appear that Pakistan is the 34th largest economy. Per Capita Income has increased by more than four times since 1947. Poverty has almost halved since. Where we could once not feed 30 million mouths, we are now able to feed over 200 million. We’ve risen to the third spot in the globe as rice exporters. We had 100 kWh of power at inception. Now we have over 430 kWh.
Nonetheless, development in Pakistan is stagnant. The country ranks 152nd out of a total of 189 countries in the Human Development Index. Bangladesh and India have both surpassed the country. Infant mortality rates remain high and women and children suffer as a result of the low health status.
Females still participate rarely in the labor force. There is a negligible quota left for women, disheartening the few that wish to work from even trying. The income inequality is growing, paying heed to the famous saying ‘the poor get poorer while the rich get richer.’ The disparities multiply as one compares regions like urbanized Punjab and KPK with rural Sindh and Balochistan. These differences have put paid to chances of development.
To truly study development, we need to evaluate the state’s response to development drivers like consistency in policies, reservoirs and saving. Even human capital and productivity are great parameters, such as in the example of the South Asian Tigers. Dynamism in the private sector, a good governance system and strong institutions all matter. Favoring inclusive over extractive institutions is effective.
And of course, freedom to practice and be productive is vital.
Development is constructive; it is not God-gifted nor based on fate. Infrastructure-wise, there are many barriers in Pakistan to allow proper infrastructural facilities. There have been political influences, instability and bureaucratic systems that slow down development.
Instead of pointing fingers and blaming our failures on others, perhaps it is time we accepted that economic development demands attention from all parties. As citizens, we can ensure we are productive in a positive way. We need to practice tolerance of others’ opinions. As leaders, we can ensure a proper environment where we can coexist peacefully.
Because in the end, though numbers matter, our happiness precedes all.