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nature of economic development

Nature of Economic Development

How Development Differs from Growth

at present growth rate by 2020 we should become four times richer
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?
scientific survey
Scientific Survey

According to a survey conducted on 1637 people

2742 said NO to all six questions

(Some people must have raised both hands!)

  • 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.

poverty a lifelong curse
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

measuring poverty
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
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








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

growth vs development
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
Development as Biological Transformation

Growth is reversible

  • Development is cyclic but not reversible
growth vs development1
Growth Vs Development

 Growth

Development 

measuring prosperity
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
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













Radar Map of Maslow Needs


Typical Urban

Typical Rural

Area of the Radar Map Indicates Poverty Level












Public services


Administrative Inputs of Development

goals of economic development
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

urban expansion option
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

how cities develop cancer
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










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

the village pros and cons
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



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
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
Expand Existing City


A useful base exists

Willing entrepreneurs

Public popularity


Space is expensive

Little scope for the poor

High, escalating costs

High pollution

Relocate in Rural Area


Plenty space at low cost

Scope for inclusive growth

Scope for optimum design


Zero base

Risk of local opposition

High start-up costs

Limited size

Urbanisation: Two Options

Urban malaise incurable; rural problems manageable

rurbanisation rural transformation
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
  • 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.


urban amenities + rural ambience

components of rurbanisation
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
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