AMRATYA SEN GROWTH MODEL

How Development Happens

Development is the accumulation of the freedoms to be and to do1. Men and women do not live by bread alone, but build their capabilities to be and to do through education, healthcare, and access to water, information and justice. They are also social beings, their well-being dependent on a full enjoyment of their rights, just as it is diminished by inequalities and ill-treatment at the hands of others. Development, in the broad sense set out by Amartya Sen, requires two essential aspects: 1. Active citizens 2. Effective states Active Citizens Active citizenship means that combination of rights and obligations that link individuals to society, including paying taxes, obeying laws, and exercising the full range of political, civil, economic, cultural and social rights. Active citizens use these rights to improve the quality of political or civic life, through involvement in the formal economy or formal politics, or through the sort of collective action that historically has allowed poor and excluded groups to make their voices heard. For those who do not enjoy full rights of citizenship, such as migrants or women, the first step is often to organize to assert those rights. In active citizenship people work together to determine the course of their own lives, fighting for rights and justice in their own societies and are critical in holding states, private companies, and others to account. As an integral part of development as freedom, active citizenship also has inherent merits: people living in poverty must have a voice in deciding their own destiny, rather than be treated as passive recipients of welfare or government action.

Effective states Effective states means states that can guarantee security and the rule of law, and can design and implement an effective strategy to ensure inclusive economic growth. Effective states are often known as developmental states, and their long-term stability requires that they have some degree of legitimacy in the eyes of their citizens, although the links to rights and political liberty are more disputed. The focus is on Effective states because history shows that no country has prospered without a state than can actively manage the development process. The extraordinary transformations of countries such as South Korea, Taiwan, Botswana, or Mauritius have been led by states that ensure health and education for all, and which actively promote and manage the process of economic growth. After twenty years of erosion by deregulation, one-size-fits-all structural adjustment programmes, and
1

Sen, A. (1999) Development as Freedom, (Oxford, Oxford University Press).

international trade and aid agreements, many states are weak or absent. But there are no shortcuts; the road to development lies through the state, and neither aid nor NGOs can take its place.

True development emerges from the interaction of effective states and active citizens. Economic growth is not enough if it comes at the expense of other freedoms. The system governments, judiciaries, parliaments, and companies cannot deliver development merely by treating people as objects of government or other action. Rather, people must be recognised as subjects, conscious of and actively demanding their rights, before true development In its full sense can come about. Along with Effective states and Active Citizenship the following parameters are also important Growth with equity: economic growth has been an essential aspect of all successful development stories. However the nature of that growth also matters is it labour intensive (producing jobs and income for the poor)? Does it lead to steady upgrading of the economy into areas of higher skills and income? Does it generate sufficient tax revenues to reduce inequalities and build social cohesion? A dynamic private sector: long term development requires a particular kind of private sector dynamic and possessing a long term commitment to building the economy. Such a private sector requires effective states to regulate and (especially in the early stages) guide its development to upgrade the economy. The difficult balancing act is that economic power brings political influence, and much depends on how large economic players (whether firms, financiers or large landowners) use that influence - active citizens have an important role to play as a check on corporate malpractice (eg tax evasion, corruption or human rights violations) as well as, via trades unions and other collective organizations, ensuring that markets work for poor people. Policy and Institutional Pluralism: any attempt to distil a simple development recipe, whether from theory or history, is bound to fail. There are multiple paths to development, some being more stateled, others more led by the private sector. What matters is for political leaders and domestic players to have both the policy space and ability to find the best path for their place and time, and to have the feedback loops in place so that the inevitable failures are detected, learned from and corrected. History provides valuable guidance to face todays challenges. However, it must not be slavishly followed, since aspects of the successful development model of the past 60 years (such as fossil-fuel intensive growth) have run their course and are no longer applicable. Solutions to todays crises must learn from the past while breaking new ground.

JAGDISH BHAGWATI GROWTH MODEL

Bhagwatis arguments were that if you focus on growth then development will follow. According to Bhagwati, Government should not get into any business of redistribution of resources. It should only play a role of a facilitator and regulator for the prospect of growth. He stated that the growth will have a trickledown effect and the development will follow. His arguments have continuously questioned as a growth driven model may rise inequality in the system, but Bhagwati states that it will be short term effect and the benefits would be long term and sustainable. Bhagwati states that a growth driven model will raise enough money which can later be invested in the development of the society and mitigate the initial effect of creating an inequality. Bhagwati strongly argued that Feeding someone today is fine but as long as we do nothing to attack the primary causes of poverty, that person is going to be hungry again tomorrow. The primary goal should be reducing long-term poverty and equalising economic opportunity. Welfare system should not breed dependence of the poor on that system The inefficiencies of the large welfare programs defeats the purpose of it.

Implications for current development debates Both the private sector and the state are crucial. States create the enabling environments for markets to generate growth with equity whereas the private sector especially SMEs creates the jobs and income that make up one essential aspect of development. Development will remain primarily a national process, but international aid, rules and institutions can help or hinder: states and citizens will remain in the driving seat, but the international system, including aid, retains huge influence, whether for good or ill. Aid donors should ensure their assistance strengthens and does not undermine lasting social contracts between active citizens and effective states. Rich and powerful states and corporations must also pursue far more vigorously a do no harm agenda, both in their activities in developing countries and in international accords on issues such as carbon emissions, trade and investment, corruption and intellectual property rights. New models of growth are needed: Growth has proved a formidable driver of development, but in its current form is threatening to push the planets ecosystem into unknown and potentially devastating territory. Growth must be combined with absolute rather than relative decoupling from increased resource use. That is a feat only rarely achieved in history. A massive global effort to find a new growth model is required, involving historic levels of investment in R&D, and the use of carbon pricing, regulation and other institutional incentives for decoupling.

Resilience to shocks is vital: It seems inevitable that the coming decades will be characterized by shocks sudden, largely unforeseeable events, whether of climate, finance or other areas such as new diseases, that will severely test the resilience of global and national systems. Shocks are often opportunities, and system needs to get better at recognizing and seizing them, but all too often they spell disaster for poor men and women. Preventing shocks and building the resilience of global and national systems when they do occur, is thus an essential task of development.