Symbiosis

Institute of Media and Communication, Pune

Economics
-Prof. Ashish Kulkarni

Can a developing nation pursue development without sacrificing economic growth?

Submitted By: Yasmin Hussain 144 MBA TAB1

Developing country is a term generally used to describe a nation with a low level of material well being. The development of a country is measured with statistical indexes such as income per capita (per person) (gross domestic product), life expectancy, the rate of literacy, et cetera. The UN has developed the Human Development Index (HDI), a compound indicator of the above statistics, to gauge the level of human development for countries where data is available. Developing countries are in general countries which have not achieved a significant degree of industrialization relative to their populations, and which have, in most cases a medium to low standard of living. Economic growth is defined as the increasing capacity of the economy to satisfy the wants of its members. Economic growth is enabled by increases in productivity, which lowers the inputs (labor, capital, material, energy, etc.) for a given amount of output. Lowered costs increase demand for goods and services. Economic growth is also the result of new products and services. Developing countries such as China and Brazil point out that they must make industrialization and economic development a priority because they have to support their growing populations. Developing countries must address current problems; they cannot afford to worry about the distant future. They also point out that as First World countries are most to blame for current environmental damage, it is unfair to demand that developing nations limit their own growth to solve these problems. Economic development is vital for meeting the basic needs of the growing populations of developing countries. If we do not allow them to industrialize, these nations will have to bring in measures to limit population growth just to preserve vital resources such as water. Dependency theorists argue that poor countries have sometimes experienced economic growth with little or no economic development initiatives; for instance, in cases where they have functioned mainly as resource-providers to wealthy industrialized countries. Because poor countries have experienced slower growth, they have also contributed far less to climate change than the rich world. Yet they are being hit first and hardest by its affects. Few would question that developing countries should have the opportunity to grow their way out of poverty. THE OTHER VIEW There is an opposing argument, however, that growth causes development because some of the increase in income gets spent on human development such as education and health. According to an economist, economic growth and human development is a two- way relationship. Moreover, the first chain consists of economic growth benefiting human development with GNP. Specifically, GNP increases human development by expenditure from families, government and organizations such as NGOs. With the rise in economic growth, families and individuals will likely

increase expenditures with heightened incomes, which in turn leads to growth in human development. Further, with the increased consumption, health and education grow, also contributing to economic growth. In addition to increasing private incomes, economic growth also generates additional resources that can be used to improve social services (such as healthcare, safe drinking water, etc.). By generating additional resources for social services, unequal income distribution will be mitigated as such social services are distributed equally across each community, thereby benefiting each individual. Thus, increasing living standards for the public. Concisely, the relationship between human development and economic development can be explained in three ways. First, increase in average income leads to improvement in health and nutrition (known as Capability Expansion through Economic Growth). Second, it is believed that social outcomes can only be improved by reducing income poverty (known as Capability Expansion through Poverty Reduction). Lastly, social outcomes can also be improved with essential services such as education, healthcare, and clean drinking water (known as Capability Expansion through Social Services). So, according to me, the answer is YES. A developing nation can develop without sacrificing its economic growth. Developing countries will need to find climate resilient growth strategies (i.e. growth strategies that are achievable despite the impact of climate change). They will also need to identify and manage opportunities (such as new markets or sources of finance) and risks (such as trade barriers or changing patterns of demand) that arise from international mitigation efforts, if they are to maximize their future growth prospects.