Growth Versus Distribution:

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.

These 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.