(1) Economic Development
with Socio-Economic Indicators Approach:
To measure economic development with this approach a study was launched by
United Nations Research Institute on Social Development (UNRISD) in 1970. This
study was concerned with selection of the most appropriate Indicators of
Development and an analysis of the relationship between these indicators at
different levels of development. Accordingly, a composite "Social Development
Index" was constructed. Originally, 73 indicators were examined.
However, only 16 core indicators (9 social and 7 economic indicators) were
They are as:
(i) The life expectancy, (ii) Percentage of population in localities of
20,000 and over, (iii) The per capita use of animal protein per day, (iv) The
combined enrolment at primary and secondary level, (v) The vocational enrolment
ratio, (vi) Average number of persons per room, (vii) News paper circulation per
1000 population (viii) Percentage of economically active population with
electricity, gas, water etc., (ix) Agriculture production per male agri. worker,
(x) Percentage of adult male labor in agri. (xi) Electricity consumption, KW
per capita, (xii) Steel consumption, Kg per capita, (xiii) Energy consumption, Kg
of coal equivalent per capita, (xiv) Percentage of GDP derived from
manufacturing, (xv) Foreign trade per capita, in I960 US dollar, (xvi) Percentage
of salaried and wage earners to total economically active population.
The above social and economic indicators were selected because there existed
a big correlation between them regarding formation of a development index. And
so the constructed development index is considered to be more suitable than per
capita income approach to measure economic development. On the basis of such
"Development Index", the ranking of certain countries differed from ranking made
on the basis of GNP per capita. It was also found that the "Development Index"
was more highly correlated with GNP per capita for developed countries than for
developing countries. The study concluded that social development occurred at a
more rapid rate than economic development up to a level of $500 per capita (at
In respect of selection of indicators an other study has been conducted by
Irma Adelman and Cynthia Morris who classified 74 UDCs on the basis of following
(i) Size of the traditional agri. sector, (ii) Extent of dualism, (iii) Extent
of urbanization, (iv) Character of basic social organization, (v) Importance of
indigenous middle class, (vi) Extent of social mobility, (vii) Extent of literacy,
(viii) Extent of mass communication, (ix) Degree of cultural and ethnic homogeneity,
(x) Degree of social tension, (xi) Crude fertility rate, (xii) Degree of
modernization of outlook, (xiii) Degree of national integration and sense of
national unity, (xiv) Extent of centralization of political power, (xv) Strength
of democratic institutions, (xvi) Degree of freedom of political opposition and
press, (xvii) Degree of competitiveness of political parties, (xviii) Pre-dominant
basis of the political party system, (xix) strength of labor movement, (xx)
Political strength of the traditional elite, (xxi) Political strength of the military, (xxii) Degree of administrative strength, (xxiii) Extent
of leadership commitment to economic development, (xxiv) Extent of political
stability, (xxv) Per capita GNP in 1961, (xxvi) Rate of growth of real per capita
GNP between 1950-1951 and 1963-64, (xxvii) Abundance of natural resources, (xxviii)
Gross investment rate (xxix) Level of modernization of industry (xxx) Change
in degree of industrialization since 1950, (xxxi) Character of agricultural
organization, (xxxii) Level of modernization of techniques in agriculture, (xxxiii)
Degree of improvement in agri. productivity since 1950, (xxxiv) Level of adequacy
of physical over head capital, (xxxv) Degree of improvement in physical over head
capital since 1951, (xxxvi) Level of effectiveness of the tax system, (xxxvii) Degree
of improvement in tax system since 1950, (xxxviii) Level of effectiveness of
financial institutions, (xxxix) Degree of improvement in human resources, (XL)
Structure of foreign trade.
All above mentioned social and economic factors have been linked with the
level of economic development. The researchers found numerous correlations
between certain key variables and economic development.
(i) The preparation of composite index on the basis of social indicators is
objected on the ground that it suggests that economic development should be
measured in terms of "Structural Change", rather in terms of "Human Welfare".
(ii) This approach also requires that the developing countries must also
develop along the lines of the developed countries, as this measure stresses
upon the use of indicators like animal protein consumption per capita or energy
consumption per capita.
(iii) In this approach the greater stress has been laid upon the "Inputs" like
the number of doctors or hospital beds per 1000 population or enrolment ratios
in schools to measure health and education. But economic development is actually
concerned with the "Outputs", as the case of life expectancy and literacy.
Thus because of such criticism there are certain economists who support in
devising such a 'measure' which could measure economic development in terms of
meeting the 'Basic Needs' of the majority of the people or in terms of "Physical
Quality of Life".
Development with Basic Needs Approach or Physical Quality of Life Approach:
To measure economic development the traditional approaches are concerned
with, (i) increase in GNP, (ii) increase in per capita GNP. But with the passage
of time a dissatisfaction developed against these measures. Rather these
measures, it was emphasized to use the measures of "Employment and Distribution".
But so many economists are of the view that criteria of
Employment' is not a suitable index of economic development. It is so because
that the unemployment which is found in UDCs is different from that unemployment
which exists in DCs. Therefore, it will be least attracting to attack economic
development with increase in employment.
In the same way, to link 'Redistribution of Income' with economic development
may not be accepted as it may happen that poverty is existing in a country
despite equal distribution of income, or unequal income distribution is
co-existing with fall in absolute poverty. In such state of affairs the economic
development would require the abolition of absolute poverty and adversity, which
could be possible only if people get the 'Basic Needs'
of life. Therefore, the economists us the criterion of basic needs to measure
economic development. According to this approach if people are in a position to
avail more amount of food, have better access to educational facilities, and
have greater command over the civic amenities like water supply, water sewerage, health care and shelter etc., all such would represent economic development.
Therefore, according to this approach
whether GNP and per capita GNP increase or not, whether a fairer distribution of
income is made or not, the real matter lies with the 'Provision of Basic
Needs or facilities to the people'. This index identifies the components
of the produced goods and the segments of the society which are benefited by
such goods and services. Therefore, if people fail to get more goods and
services even GNP has gone up, it will not represent economic development.
Therefore, for the sake of economic development we shall have to make such a
measures whereby the availability of basic needs to the masses could be made
Accordingly, to measure economic
development we will have to select those measures which are concerned with the
basic needs, despite certain differences. As in case of country like Pakistan
the supply of doctors is increasing, but a common man fails to get medical
facilities as the doctors are reluctant to go to small cities and villages, and
majority of the doctors and medical services remain confine to big cities. In
such situation, the increase in doctors and medical services will be of least
benefit to the common men. Again, if the infant mortality rates are decreased in
cities while such may not occur in case of rural areas. Moreover, if in so many
countries it is stressed upon to enhance education facilities but the
educational system is not made effective, the defects of educational system are
not removed and the ratio of students to teachers is not improved, in such situation just expansion in educational
facilities can not be accorded as an indicator of economic development. Thus, in spite of
lot of flaws in the indicators of increase in education, health, water supply,
level of calories and shelter, this measure of economic development presents a
realistic picture of economic development than, GNP, GNP per capita and GNP
redistribution methods. These measures represent the determination on the part
of govt. regarding supply of social services. Thus, the basic needs approach
presents a better explanation to remove poverty than the "Redistribution
Thus in the basic needs approach, the following aspects are
(i) How much goods and services are produced?
(ii) What goods and services are being produced?
(iii) How goods and services are being produced?
(iv) What will be the effects of production and distribution on the society?
This shows that in this theory the 'Amount of goods and services' is of
crucial importance and the increase in the quantity of goods and services will
help in removing poverty. The increase in GNP per capita represents the rise in
standard of living. But the criterion of 'Basic Needs' tells us what are the
components of GNP and which segments of the society have utilized such
components. This approach works like social indicators of economic development. We will have
to define some better indicator for each basic need. Basically, the more
important needs are concerned with the provision of foods, basic education,
health services, water supply, water sewerage, residential facilities and infrastructure.
On the basis of stipulated indicators regarding Basic Needs, we can make
comparison between the countries. These indicators or measures will reflect the
relative difference between the rich and the poor countries.
Moreover, with these measures we can
find that which countries are serious regarding provision of basic needs, and
which are non serious. Thus, according to the proponents of the Basic Needs
approach to economic development, following indicators can become helpful to
measure economic development:
(i) Health Standard: Here it is considered; (a) the life expectancy of the
citizens of the country, (b) the infant mortality rates (IMR) in the country.
(ii) Education Level: Here it is considered the 'Literacy Rate' in the
country. Moreover, what is the enrolment ratio at primary level.
(iii) Food Availability: Here it is considered that what is per capita food
availability in the country.
(iv) Water Supply: What is the percentage of the population which is getting
the facility of clean water supply.
(v) Water Drainage: Here it is assessed that what is the percentage of the
population which is getting the facility of water drainage etc.
(vi) Shelter And Residence: Here it is estimated that what is the
ratio of the population who is having suitable shelter and residences.