The marvelous growth attained by DCs created a realization amongst the UDCs
that they could develop their economies as soon as possible by following them.
After Industrial Revolution a lot of socio, technical and technological changes
occurred in US and Europe which helped in shifting their production functions.
Consequently, the greater increases in their incomes and outputs were observed.
Such rapid increases in income and outputs were considered tantamount to
economic development. Japan whose economic structure and income level was not
different from the present day UDCs. But Japan following 'Catching-up' followed
US, Germany and France, it attained technology from these DCs and got the
development. The experience of Japan have had a great impact on East Asian
countries like Thailand, Malaysia Taiwan, Korea and Singapore etc.
countries are given the name of "Asian Tigers" or "Newly Industrializing
Countries (NICs)". Such countries made remarkable progress and got themselves
out of morasses of poverty in the shortest period Such profound growth attained
by East Asian countries was given the name of "East Asian Miracle". Quite
against so many UDCs the fruits of development in Japan, Taiwan, Korea, Hong
Kong, Malaysia, Singapore and Thailand were widely shared by all the segments of
the society, i.e., the incomes of the poor also increased approximately in the
same proportion to those of the rich. All this means that their growth
experience is furnished with the fair distribution of income. In other words, in
these countries, the growth took place along with redistribution. But, on the
other side it has also been observed that in so many UDCs the growth occurred on
the basis of 'Concentration of Wealth in a few hands'. Accordingly, the economic
growth could not be fruitful for the poor people. More appropriately, as we have
told earlier, that growth (so called) has promoted unequal income distribution
in the countries like Pakistan.
Each govt. and political party in a country is aimed at making the
distribution of income a fairer one. But practically, this objective is hardly
given due place. Rather, the countries have been found crazious in respect of
Economic Growth. In order to remove poverty, the govt. will have to intervene in the matters relating to
production and consumption. But as far as Pakistan is concerned the policies
regarding govt. expenditures, taxation and public facilities were devised in
such a way that they benefited the high income groups while the people with
lower incomes went on getting poor and poor. Such unequal income distribution
greatly jeopardized the process of economic growth when the social and economic
unrest emerged amongst people, particularly amongst poor masses.
Thus keeping in view such state of affairs certain other countries devised
their economic objectives in such a way that economic growth could be attained
without unequal income distribution. In this respect, the countries like
People's Republic of China, India, Cuba, Israel, Sri Lanka, Tanzania and the
former Yugoslavia etc., managed to provide a minimum level of income to the poor
class alongwith attainment of economic growth. This will help in maintaining a
standard of living for the low income classes.
In so many former socialist countries, and even in the existing socialist
countries where the resources are in the possession of state the efforts were
made to bring an equality in the distribution of income. As a result, the
problem of distribution did not get any acute state of affairs. But as far as
those UDCs are concerned where major share of natural and physical resources
were privately owned, the rich people earned a lot on the basis of their capital
skill and resources in the situation when the govt. polices were in their favor.
Consequently, the incomes were concentrated into a few hands in Pakistan, India
and South American countries. Thus, the economic growth worsened the problem of
distribution. In other words, a trade off was found in respect of higher growth
and equal distribution of income. It means that higher growth rates were
attained by making distribution of income unequal. Accordingly, so many
countries tried to reconcile the contradicting objectives of economic growth and
a fairer distribution of income. In this respect, it was India where Perspective
Planning Division of Planning Commission started its work in 1962, and it aimed
at merging economic growth with distribution.
It means that the economic growth
should improve the distribution of income, rather worsening it. This approach
was brought forward with a new approach which was given the name of
'Redistribution with Growth (RWG) by the economists like "Chenery and Ahluwalia".
This situation will occur if it is not allowed to transfer the wealth to the
richest segment of the economy. In other words, such principle be followed that
the economic growth could take place without the concentration of wealth in a
few hands. The poverty could come to an end along with economic growth and
the fruits of economic growth could reach to the poorest sections of the
economy. Realizing this fact that the poverty of the poor could be eliminated
the economic growth was associated with basic needs. The basic needs are
concerned with the provision of health services, educational facilities,
nutritional standards and water supply etc. (As we have discussed earlier).
These indicators of basic needs identify the effectiveness of those policies
which a country adopts to remove poverty. As told above that the Basic Needs
approach stresses upon the distribution of education, health and other social
services. Their supply will increase the productivity as well as remove poverty.