POST TIME: 8 May, 2019 00:00 00 AM
GDP alone cannot be the development indicator
The last two decades have seen a phenomenal rise of market-driven philosophy of growth over state-driven development models that have dominated the developing countries earlier
Shamim Iqbal

 GDP alone cannot be the development indicator

The pursuit of growth over social justice, which has been the defining credo of classical economists, has brought prosperity to most developing societies. But it has also created huge inequalities. The argument that economic growth is the road to social justice has been relentlessly advocated for a long time, with several wrong consequents for poor societies.

The question that has for long engaged development economists and proponents of social justice is: does accelerated growth translate into inclusive growth? Amartya Sen believes that to think in terms of only income rather the achievements of particular living conditions. Despite considerable economic growth and increasing self-confidence as a major global player, modern Bangladesh is a disaster zone in which millions of lives are wrecked by hunger and by pitiable investment in health and education services, he argues.

The dichotomy between the economic might of Bangladesh vis-a-vis the reality of our crumbling development sectors leading to Bangladesh being ranked amongst the lowest in the Human Development Index is a pointer to what is wrong with our development paradigm. What are the ends of development--growth in GDP, or enhancement of people’s capabilities and widening of their choices and freedom?

For all pervasive prosperity, we need a tide that can lift all the boats. For too long we have been over-obsessed with two concepts--top-down bureaucracy and trickle-down economics. We have believed that aggressive growth can generate wealth at the top, and this will trickle down to the deeper ranks where most of the poor live. But this has not helped put them on the track out of poverty. Many are arguing that we need to find a new measure to assess the health of our economies and--more importantly--the people living in them.

GDP simply totals up everything made within an economy in a year, from widgets to whizzy financial products, at their market value. Dubbed as one of the greatest inventions of the 20th century, GDP has long been a closely watched metric for politicians, administrators, policy doctors and journalists alike. But it is no longer lionized and our love affair with GDP may be coming to an end because, as economic historian Adam Tooze calls, it is “a narrow and somewhat arbitrary slice of reality.”

Joseph E. Stiglitz, a Nobel laureate in economics himself argues: “GDP is not a good measure of well-being. What we measure affects what we do, and if we measure the wrong thing, we will do the wrong thing. If we focus only on material well-being--on, say, the production of goods, rather than on health, education, and the environment--we become distorted in the same way that these measures are distorted; we become more materialistic.”

We should remind ourselves of the memorable poser of Dudley Seers, first president of the prestigious European Association of Development Institutes (EADI) on development: “The questions to ask about a country’s development are: What has been happening to poverty? What has been happening to unemployment? What has been happening to inequality?” The last two decades have seen a phenomenal rise of market-driven philosophy of growth over state-driven development models that dominated the developing countries in the years that followed their birth and independence.

One section embodied the values and principles of the older nonprofits including social movements, mass organisations and community based groups. The other section was located in the market and technology spaces and got rapidly populated by new-age nonprofits, social enterprises and online collectives. There is a fundamental contradiction between them.

The old non-profits’ worldview is premised on integrated social sciences and systemic approach, in which the complexity, interdependence and interrelatedness of diverse factors at work need to be understood and addressed. In the approach of the new-age nonprofits, by contrast, the emphasis is on finding technology based managerial solutions for these issues. One is empathetic and human-driven; the other is purely rational and techno-centric.

Those who look through the techno-managerial lens encourage development groups to zoom straight into the middle of the problem, without the need to engage with the contextual complications. It devalues the deeper socio-cultural nuances. In this process the real world, existing in all its complexity is left behind. It is like creating a bubble in which technical linear solutions are expected to solve complex problems. The whole issue of developments gets artificially locked into a bubble.

These bubbles are then presented as a fertile ground for systems change and innovation. These innovations lead in turn to more investment, which results in the bubble ballooning itself till it punctures. The complexity of the socio-economic and political systems and human behaviour remain unaddressed until the bubble bursts. In the meantime, the process of formation of new bubbles sets in. A large part of development work is ‘change’.

The core of our relationship must be one of fruitful partnership with the people as also with the government at ground level. We must deal with people who are more permanent in the system and are the key interface with their societies. There are several social economists who believe that inclusive growth has to be grounded in inclusive governance. In the absence of inclusive governance, the people at the grassroots, that is, the intended beneficiaries of social programmes are left desperately dependent on a bureaucratic delivery mechanism over which they have no effective control.

The alternative system would be participatory development, where the people themselves are enabled to build their own future through elected representatives responsible to the local community and, therefore, responsive to their needs. Successful development practitioners have always recognized the richness of this local wisdom.

This should be the true matrix of both inclusive and sustainable development. For example, rapid growth which involves faster growth in agriculture, and especially in rain-fed areas where most of the poor live, will be much more inclusive than a GDP growth that is driven entirely by mining or extraction of minerals for exports.  Our focus should not be just on GDP itself, but on achieving a growth process that is as inclusive as possible. Amartya Sen has consistently struck with his stand that “growth rate is a very daft ~ and a deeply alienated way of judging economic progress”.

 The writer is a contributor to

The Independent