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Nature of economic development l.jpg

Nature of Economic Development

How Development Differs from Growth

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At present growth rate by 2020 we should become four times richer l.jpg

At present growth rate, by 2020We should become four times richer

  • Will our residences be four times better?

  • Will there be four times fewer slums?

  • Will there be four times less congestion?

  • Will personal safety be four times better?

  • Will the environment be four times better?

  • Will quality of life be four times better?


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Scientific Survey

According to a survey conducted on 1637 people

2742 said NO to all six questions

(Some people must have raised both hands!)


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ISSUES

  • Rural-urban disparity is spreading Naxalism

    and retarding business development.

  • Differential rural-urban growth rate is making

    matters worse.

  • Unemployment among educated youth is both

    the cause and the result of rural-urban disparity

  • Current rural development schemes do not

    generate educated employment in rural areas.


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Poverty- A Lifelong Curse

“impoverished conditions early in life

could have dramatic affects on the

brain's development and function.

Children who grow up in environments

with family stress, negative social and

environmental characteristics, and little

cognitive stimulation may not fully

develop brain areas critical for learning,

memory, and language abilities”

– American Association for the Advancement of

Science. Feb 15, 2008


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Measuring Poverty

That is why Indian standard measure for poverty

Is based on the quantum of food consumed;

the idea “Below Poverty Line”

dominates development debate

However, “man does not live by food alone”!

Poverty is more than hunger

Every kind of under-development is Poverty


Nature of development l.jpg

Nature of Development?

Q. What is Development?

  • Fulfilment of human needs

  • What are human needs?

    • Possibly Maslow Needs

      Maslow postulated his needs for individuals

      We assume they apply also to society at large


  • Maslow needs l.jpg

    Need

    Physical

    Security

    Status

    Autonomy

    Ecology*

    Self-actualisation

    Description

    Daily consumption

    Life-long assets

    Fancy goods, Perquisites

    Freedom to choose

    Freedom from harm*

    Doing what comes naturally

    Maslow Needs

    * Not in the original list of Maslow


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    Growth Vs Development

    • Growth refers to quantity

      • Development pertains to quality

    • Growth is uni-dimensional

      • Development is multi-dimensional

    • Growth is physical change

      • Development is biological transformation


    Development as biological transformation l.jpg

    Development as Biological Transformation

    Growth is reversible

    • Development is cyclic but not reversible


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    Growth Vs Development

     Growth

    Development 


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    Measuring Prosperity

    • Prosperity is often measured by GDP

    • GDP = Price of “good”s + “bad”s + “anti-bad”s

      e.g.: Price of food + tobacco + cancer treatment

    • Prosperity = Priceof “good”s minus Price of “bad”s

    • GDPmisleads the true level of prosperity

      Q. What happens to GDP if you marry your cook?


    Measuring development l.jpg

    Measuring Development

    Q. How do we measure development?

    • As a complex vector of its components

    • How can we represent those components?

      A. A Radar Map may be used


    Radar map of maslow needs l.jpg

    Wealth

    Wealth

    Connectivity

    Connectivity

    Income

    Income

    Choice

    Choice

    Quality

    Quality

    Leisure

    Leisure

    Radar Map of Maslow Needs

    Ideal

    Typical Urban

    Typical Rural

    Area of the Radar Map Indicates Poverty Level


    Slide15 l.jpg

    Transport

    Internet

    Market

    Desired

    Actual

    Energy

    Healthcare

    Recreation

    Education

    Water

    Public services

    Housing

    Administrative Inputs of Development


    Hierarchy of consumer demand l.jpg

    Hierarchy of Consumer demand


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    Goals of Economic Development

    Every family with a dwelling provided with

    • Protected water supply, reliable electricity

    • Within walking distance of public transport

    • Connecting to a choice of

    • Schools, hospitals, markets

    • Set in a clean, spacious habitat

    • Endowed with a variety of recreation spaces

      (Play grounds, gardens, theatres)

      Plus income safety net for the helpless


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    Urban Expansion Option

    • Can cities offer affordable housing for all?

    • Can they offer clean environment?

    • Can they relieve congestion?

    • Can they avoid long hours of commuting?

    • Can they increase quality time for family?

      Answer: Resounding “No!” to all questions

      That is why we need an alternative


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    How Cities Develop Cancer

    • Congestion

    • Long hours of commuting to work

    • Little open space

    • High real estate prices

    • Large rich-poor disparity

    • Insecurity, needs gated communities

    • Little quality time for family

    • Multi-dimensional pollution

      • Physical, psychological, social stress


    Cities block prosperity l.jpg

    Increased

    Demand

    Price

    Normal

    Demand

    P

    Supply

    Quantity

    Q

    Cities Block Prosperity

    • Citizens of Mumbai earn high wages

      • Yet they live in dehumanised slums

      • A classic instance of Supply Side poverty

    Cities have little land

    Limited space, high prices

    Diminishing quality too


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    The Village: Pros and Cons

    • Pro:

      • Large spaces at low prices

      • Superior social ambience

      • Better ecology

      • Expandable

    • Con:

      • Market size too small to offer choice

      • Few or no basic services

      • Few jobs, particularly for the educated

      • Agriculture saturated, income very low


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    DEPENDENCY

    SUBSIDY

    Rural development is based on subsidies

    Subsidies lead to dependency; dependence seeks more subsidies

    Same way a dog chases its own tail


    Why both cities and villages fail l.jpg

    Rural Limitations

    Tiny, unviable market size

    Few and poor services

    Unattractive to the rich

    Subsidy dependent

    Poor connectivity

    Sluggish growth

    No jobs for the educated

    Urban Failings

    Congested markets

    Astronomical land prices

    Perpetual poverty

    Exploitation driven

    Wasteful commuting

    Unregulated growth

    Shrinking Value of Money

    Why Both Cities and Villages Fail

    Both Increase Rich-Poor Disparity


    Urbanisation two options l.jpg

    Expand Existing City

    Advantages

    A useful base exists

    Willing entrepreneurs

    Public popularity

    Disadvantages

    Space is expensive

    Little scope for the poor

    High, escalating costs

    High pollution

    Relocate in Rural Area

    Advantages

    Plenty space at low cost

    Scope for inclusive growth

    Scope for optimum design

    Disadvantages

    Zero base

    Risk of local opposition

    High start-up costs

    Limited size

    Urbanisation: Two Options

    Urban malaise incurable; rural problems manageable


    Rurbanisation rural transformation l.jpg

    Normal Development

    Low wage jobs

    For the poor, unskilled only

    Farm-based economy

    State Subsidised

    Low technology

    Government controlled

    Rurban Transformation

    High wage employment

    For all, including the educated

    Amenities-based economy

    Profit oriented

    High technology

    Public Private Partnership

    Rurbanisation = Rural Transformation


    Rurbanisation l.jpg

    Rurbanisation

    • Cities are expensive;

      • villages are inexpensive.

    • Cities attract capital - financial and human

      • villages virtually repel both.

    • Cities offer choice of services

      • Villages provide practically no services

    • City growth is cancerous

      • Villages have ample scope to expand.

    Solution = RURBANISATION =

    urban amenities + rural ambience


    Components of rurbanisation l.jpg

    Components of Rurbanisation

    • Rural ambience

      • Open space

      • Clean environment

      • Little or no commuting time

      • Family quality time

      • Low prices

    • Plus Urban amenities

      • Connectivity

      • Choice of social, economic services

      • High incomes, jobs for the educated


    Why rurbanisation l.jpg

    Why Rurbanisation?

    Indian Slum with

    Palatial buildings

    In the background

    0.3% of the country’s area will suffice to provide as much as

    200 sq m space for each slum family in the country.

    Affordable space available only in rural areas

    Rurbanisation only option for Inclusive Development


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