What do we mean by development

Traditional economic measurements: Development may mean different things! Traditional economic measurements: to generate and sustain an annual increase in gross national income (GNI) 5%-7% or more. growth rate of income per capita: to expand its output at a rate > population growth rate real measures vs. nominal

to measure the economic well-being of population: how much of real goods and services is available to the average citizen for consumption and investment. alteration of the structure of production and employment: agriculture’s share of both declines while manufacturing and service industries increases. yet, problems of poverty, discrimination, unemployment, and income distribution were of secondary important.

the new economic view of development during 1950s and 1960s many developing economies did reach their economic growth target yet, for many people, nothing changed!

redistribution from growth and improving living standards therefore, development must be conceived as a multidimensional process that involves among other factors: - changes in social structure - popular attitudes - institutions - in addition to classical economic measurements

Sen’s “capabilities” Approach income and wealth are not ends in themselves but instruments for other purposes Amartya Sen: “... development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy.” what a person is, or can be, and does, or can do. different than utility approach.

it is beyond the availability of a commodity and its use: functionings: - what a person does with the commodities of given characteristics that they come to posses or control.

thus looking at real income levels or levels of consumption of specific commodities cannot sufficiently measure the well-being one may have a lot of commodities, but are not what consumer desire one may have income, but some essential commodities for well-being may be unavailable.

capabilities according to Sen: “the freedom that a person has in terms of the choice of functionings, given his personal features and his command over commodities. this explains why development economists concentrate on health and education. growth without development. for Sen, human “well-being” means being well” being healthy, well nourished, highly literate, having freedom of choice in what one can become and can do.