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Home Economic Development Growth of GNP Versus Basic Needs Approach

 

Growth of GNP Versus Basic Needs Approach:

 

The growth of income (GNP) method identifies that path which leads to increase the real incomes of the poor people. As a result, they will become more productive, the value of their assets will increase, hence they will be able to have a basket of basic needs. This shows that because of increase in income people will eventually be able to have a greater command over goods and services, and their poverty could be eliminated. Therefore, whether it is of increase in GNP or of increase in basic needs both measures aim at elimination of poverty It is the GNP method which directly aims at abolition of poverty, while the basic needs approach indirectly aims at abolition of poverty. The increase in basic needs like education, foods, health care, shelter, clean and piped water, and water drainage facilities will become helpful in increasing productivity. Their health standards will improve, their life expectancy will increase and they will be able to work more diligently. Consequently, the outputs both the total as well as per head will increase. The proponents of basic needs approach give the following superiority over GNP approach:

 

(i) The basic needs approach is better than income approach because most of basic needs are concerned with the supply of social services on the part of government. But for such all; govt. is in need of funds and such funds can be raised through imposing direct taxes or taxing the luxurious goods. In this way, on the one side, the unnecessary consumption will be controlled, and unequal income distribution could also be checked. Moreover, the efficiency of the middle and lower middle class will increase when they will be provided! greater social services. In this way, the fruits of economic development could be availed of by a majority of population.

 

(ii) It is not guaranteed that increase in incomes due to economic growth could be spent over better education, better residential facilities and better health care services etc. It happens that so many persons do not follow optimal behavior in respect of making expenditures on food and health care, particularly, those people whose class changes. As the case of Pakistani and Indian labor who earn a lot while migrating to Middle East, but they fail to spend more of their incomes on better fooding and lodging etc. Again, the farmers in these countries whose incomes increase when they grow 'Cash Crops', but they fail to spell their increased incomes on education, health water supply and water sewerage etc. Perhaps the income elasticity for these goods is lower. In such situation, basic needs approach will present a better picture of economic development than GNP approach.

 

(iii) In so many cases the means and ways which lead to increase the incomes may air affect the level of foodings. As due to economic growth the women have to work out of their houses and there will be reduced 'Breast Feeding'. Consequently, the health standards of offspring's will be affected, though the incomes of the mothers have gone up. The economic development may lead to increase the production of cash crops at the cost of decrease in the production of food staples etc. In such situation, the economic development will lead to reduce the production and consumption of sugar, wheat and maize etc. Those lands which used to produce maize now will be utilized for dairy farms. In this way, the production of cheaper foods will come down. The hydro-electricity projects will lead to increase the income of the country, but the canal system in the country will promote water logging and salinity in the country. They will reduce the fertility of lands. To remove these problems the expenditures will have to be made. As a result, the cost of hydro-electricity projects may exceed their benefits.

 

(iv) It is not necessary that because of increase in incomes all the members of the family could equally benefit. Sometimes, the major share is taken away by the women and the children who have not contributed to earning, as the case of Pakistani and Indian men. In such situation, the division of income and food will not occur on the basis of work.

 

(v) The Income approach does not tell us that what will be the nature of produced goods. If along with increase in GNP those goods are produced or imported which are consumed by the rich class, then only a limited segment of the society will be benefited by increase in GNP. On the contrary, the basic needs approach selects the appropriate final goods and guides in respect of appropriate technique of production to produce such goods. In such situation, the employment opportunities will increase; income will be distributed equally; and optimum and a balanced demand for goods will come into being in the society.

 

(vi) In each society there are so many destitute orphans, old aged and ailing persons who do not contribute to national output of the economy, and they depend upon transfer payments. If even along with increase in GNP their poverty does not come down, then it will be better to use basic needs approach, rather GNP approach to measure economic development.

 

(vii) The increase in income or GNP only becomes possible due to increase in outputs of the society, whereas it ignores the production and consumption of immaterial goods. As GNP approach thinks that the immaterial goods and services like recreation, mental peace and participation in social and political affairs do not add any thing to national output. On the other hand, the basic needs approach includes even those immaterial factors which lead to increase human efficiency.

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