What does ‘development’ mean?

From economic development to growth

and happiness

Francine Mestrum, PhD

www.globalsocialjustice.com

Failing efforts in development cooperation have given rise to a now intensive

debate on what ‘development’ should mean or should try to achieve. The next
question then, is what ‘development cooperation’ should try to achieve? The
answers to these questions are not easy, but the vagueness of some of the
answers is not necessarily innocent. ‘Development’ is a highly controversial
ideology.

Three of the main reasons for this are obvious.

The first reason is very clear. One can find it in the books of William Easterly or
the recent success of Dambisa Moyo. Markets are much better instruments than
States and solidarity is an unknown and useless concept. These market-oriented
thinkers have good arguments to be against development cooperation. However,
giving up solidarity in a world with huge inequalities does not seem to me to be
acceptable.

Secondly, some development actors think that the ‘road’ is more important than
the ‘arrival’. ‘There is progress, but there is still a long way to go’. It means that
one doesn’t know exactly where the road is going, that past efforts have been
mainly unsuccessful, but that the few positive results are a reason for hope and
continuous work. It is the answer of those who work in the aid industry and who
cannot imagine, in spite of all the criticism, a world in which their presence
becomes redundant. They prefer to continue and take a ‘leap in the dark’ as the
secretary of one major NGO recently declared.

The third reason can be found with those who, equally, cannot admit their
failures but who constantly search for ‘new paradigms’. ‘We learn from our
mistakes in the past’, they say, ‘from now on things will be better’. They
introduce concepts as ‘participation’ and ‘ownership’ and ‘accountability’ or
‘governance’. They forget the concrete objectives of ‘development’ in the 60s –
to close the gap between ‘underdeveloped’ and ‘industrialized’ nations – and now
aim for poverty reduction. Whereas it is certainly possible to give approximate
measures of individual income poverty, they prefer to talk of
‘multidimensionality’ which is hard to measure, and even of ‘wellbeing’ or
‘happiness’. For them, the perception of poverty is at least as important as the
real hunger people are suffering from.

It is this third phenomenon that I want to analyze in this article. I would like to
explain how the ambitions of development cooperation are constantly
downgraded and how the approach has become purely subjective. To-day, more

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and more people speak of ‘gross national happiness’. The question is: does it
mean anything?

Fifty years of independence

In 2010 it will be fifty years since the decolonization process started. From 1960
onwards, African States became independent and became members of the
United Nations. Thanks to Latin American countries – which had already more
than one century of independence -, they knew that political independence was
rather meaningless if there was no economic progress.

An analysis of the UN-documents from the 50s, 60s and 70s tells us what was
meant by ‘development’ at that time. Industrialization was a major demand since
all rich countries were indeed industrialized. International trade was
controversial, but there was an agreement to say that fair prices had to be paid
for the commodities third world countries were exporting and that the terms of
trade had to be improved. One possibility was to give the new states a fair part in
the services sector (banks, transports, insurance …). The new States also wanted
to have a say on the multinationals that worked in their countries in order to
have some of the profits re-invested. They wanted a transfer of technology. And
in order to fill the financing gap, the now famous objective of 0,7 % of GDP of rich
countries was introduced. The new States wanted to fill the gap between
‘underdeveloped’ and ‘developed’ nations. ‘Development’ was a national process
of economic modernization and collective emancipation.

This generous development discourse did not last for long. It is difficult to say
whether the rich nations have ever really been willing to give in to the demands
of their former colonies. But it is clear that one major mistake was made –
consciously or unconsciously - from the beginning. ‘Development’ was being
considered as a consensus issue, as if everyone agreed that it necessarily had to
happen and that everyone wanted it to happen. But development practice in
North and South clearly pointed in another direction. Moreover, the 0,7 % of GDP
was never realized.

In 1970, the UN-resolution on the second ‘development decade’ was adopted and
it was stated that the gap between rich and poor continued to grow. Today, the
seventies are seen as the ‘decade of social development’, since poverty
suddenly became an issue, as well as social protection, basic needs and the
informal labor market. But beginning of the 70s, the US abandoned the Bretton
Woods agreements whereas the oil exporting countries tripled the price of the
commodity that had become so vital for the West. This was the beginning of an
economic crisis that led, in the 80s, to neoliberalism which thirty years later led
to the current financial and economic crisis.

Development assistance never really got back on the right trail. Between 1975
and 1990 it never was more than 0.30 to 0.35 % of GDP. After the Wall of Berlin
came down, it dropped to 0.20 %. To-day, it is rising again though the current
crisis could put a spoke in the wheels. The most recent UN-report on the
Millennium Development Goals speaks already of a certain decline.

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Neoliberalism

After the external debt crisis began in 1982 in almost all developing countries,
the World Bank and the International Monetary Fund were ready to help. New
loans were given to settle the old ones and in return the indebted countries had
to accept ‘structural adjustments’. The history of these is amply documented and
we know that it has brought a certain macro-economic stability and a lot of
human suffering. According to the UNDP, the social indicators in many countries,
as well as the human development fell back. There was massive unemployment,
women came to the informal labor market, schools and health centers were
closed.

In 1990 the World Bank re-invented ‘poverty reduction’. It had done so before in
the 70s though it never really put it into practice. At that time, poverty was still
related to social protection. The poverty discourse that emerged in the 90s was
very different. Social security was now seen as serving ‘vested interests’,
minimum wages were said to be contrary to the needs of the poor and with the
exception of the social funds that were supposed to help some of the extremely
poor people, the main solution for poverty was said to be the market. Poverty, so
one can read in all major documents, is mainly a consequence of discrimination
and limited access to markets. Nothing in the first poverty programs of the 90s
was different from the structural adjustments. Even after 1999, when the IMF
joined the poverty efforts and poor countries were asked to introduce PRSPs
(poverty reduction strategy papers), the IMF and the WB continued to impose
their conditions, mainly the liberalization of trade and of capital accounts and the
liberalization and privatization of the economy, including public services.

The development agenda of the 60s and 70s had totally disappeared. Priority
was now given to poverty reduction though it should be clear this can only be the
consequence of an economic development process. All neoliberal reforms that
were imposed were said to be – in the long term – in the interest of poor people.
The market would promote growth and growth is for the poor. Today, we know –
once again - this did not happen. It became obvious that once again, the
ambitions of rich countries had been seriously downsized. Closing the gap had
totally disappeared from their discourse. ‘Redistribution’ became unmentionable.
Agriculture was neglected.

A new poverty discourse

In 2000 the World Bank published its second major poverty report. In 1990
poverty was considered to be a question of lack of education and of health care.
In 2000 the definition was broadened. Poverty, the report states, is vulnerability,
lack of empowerment and lack of voice. Poverty, then, was definitely
‘multidimensional’. The poor will rarely speak about income. This is how the
World Bank interprets the poor’s discourse, though other interpretations are
certainly possible.

In fact, it means that another important and dangerous step is being taken. After
downsizing the ambitions in the 1990s, the next step was to forget the

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improvement of material wellbeing. Poverty, in any market economy, is
necessarily a matter of income. The poor need money in order to send their
children to school, in order to see a doctor, in order to have a roof over their
head, in order to buy food. One needs money to buy clothes and to go to the
market. Clearly, trying to eliminate this income deficit may need a
multidimensional approach, it may need to give people vocational training, social
capital, empowerment, etc. But the objective should always remain to help
people to satisfy their basic material needs. In other words, poverty reduction
policies may be or need to be multidimensional, but poverty basically is an
income deficit. The concept of multidimensionality – that is also used in rich
countries – can be a dangerous step to hide the income poverty that one does
not want to see and to solve. Even if poor people find access to the labor market,
it usually is with jobs that are not well paid and leave the poor in their misery.
More than half of the working population in developing countries earns less than
2 $ a day. ‘Workfare’ programs may help people to survive, but they keep living
in poverty.

In other words, ‘multidimensional poverty’ creates an impression of a ‘holistic’

approach that allows to see the poor as human beings. In reality, all human and
psychological aspects of poverty are being considered, without giving the poor a
possibility to really solve their income poverty. Income, according to the World
Bank, is a ‘stochastic phenomenon’, it depends on numerous elements and the
responsibility of the poor themselves has to be taken into account. Income
generation cannot be a public responsibility. The ‘empowered’ poor who can
‘participate’ and who has ‘voice’ can reduce his/her vulnerability thanks to
training or health care. It means that he/she should be able to earn an income.
Unfortunately, we know, here and in the South, that reality is somewhat more
resistant. Multidimensionality hides the real material aspects of income poverty
that no one wants to solve.

The millennium development goals

In the meantime, poverty reduction policies had also been seriously downsized.
The worldwide consensus on the priority for poverty reduction in development
cooperation policies came about at the UN-summit on social development,
Copenhagen, 1995. The action platform consists of three equivalent chapters on
poverty, employment and social integration. These two last chapters have,
unfortunately, been forgotten. The text on poverty shows the lack of clarity – or
willingness? – to eradicate it. The ‘eradication’ of poverty became the
‘eradication of extreme poverty ‘ and later ‘poverty reduction’. All the same, the
document does mention several elements that led to hope that social protection
could be one of the issues to tackle.

However, in 1996, one year later, the OECD published a new agenda for
development cooperation: “Shaping the 21st Century”. It consists of a short series
of ‘international development goals’ that seriously diminish the ambitions of the
different action platforms that had been adopted at the UN conferences of the
1990s. In 2000, when the WWSD+5 conference took place in Geneva in order to
check the implementation of the Copenhagen agenda, the OECD, the WB and the

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UN published a common document in order to promote these ‘international
development goals’. Together with other goals for human rights, they will be
mentioned in the Millennium Declaration that was adopted at the UN-Millennium
summit of September 2000. Later, eight ‘Millennium Development Goals’ will be
distilled from this Declaration.

This whole exercise once more allowed for downsizing the development agenda.
Firstly, a whole serious of objectives in terms of human rights, that were
mentioned in the Millennium Declaration, disappear from the agenda. Secondly,
the action platforms of the different UN-conferences of the 90s are forgotten.
Thirdly, the objectives for poverty reduction as well are lowered. The MDGs do
not mention the number of extremely poor people but only the proportion of the
poor in the developing countries (and no longer in the whole world). The year of
reference becomes 1990 instead of 2000. In this way, the number of extremely
poor people will only minimally be diminished instead of being halved, that is, in
the (unlikely) hypothesis that the MDGs will be met by 2015. However, extreme
poverty, according to the Secretary-general of the UN, is poverty that kills.

What about the statistics?

It should be clear that one cannot be against poverty reduction. However, the
question that has to be answered is if it is possible at all to fight poverty at the
global level and in the absence of comprehensive economic and social
development programs. It is striking to see that in 1990, when the World Bank
put poverty back on the international political agenda, there were no statistics on
world poverty. The World Bank did starts its research, but the results are highly
questionable. This does not mean that the experts of the World Bank do not work
properly, but that there are serious methodological problems and that the efforts
are too biased and limited.

Let me give some examples. In 1985 the World Bank’s estimates about the
number of extremely poor people in the world amounted to 633 million, a drop of
167 million compared to 1980. In the 1990s the methodology was changed, the
purchasing power parities were adapted and the poverty line put higher. With
this new approach the World Bank estimated that there were 1482 million
extremely poor people in 1980, almost double the first number! In 2007 a similar
thing happened. It was stated that the purchasing power parities for China and
India were completely wrong (with 40 and 25 % respectively!). A new poverty line
of 1.25 $ was introduced (instead of 1 $ a day) and this led to a new estimate of
1913,3 million extremely poor people in 1981, three times as much as the
estimated number for 1985. In percentage, this is in fact a good result, because
it shows that extreme poverty has decreased from 50,2 % in 1981 to 25,7 % in
2005! This is precisely what the Millennium Development Goals aim to realize:
halving the proportional extreme poverty in 25 years…

But many of these number are still based on estimates and extrapolations.
According to the UNDP, 67 countries still lack statistics for the MDG indicators. 95
countries do not have trend data. This puts all these numbers in a different light.
And we have to confess - even the World Bank does it now and then -, that we

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know very little about world income poverty. We know, because we see it, that
many people are extremely poor and that many people – mainly women and
children – die from poverty related diseases. Would it help us to have precise
numbers? I do not think so. The knowledge that there are one hundred million
poor people less or more will not influence the policies, because statistics and
policies are not related. Today, ‘poverty reduction’ is the umbrella that allows to
hide the neoliberal reforms and no one really cares to know how many extremely
poor people are trying to survive.

International poverty reduction policies are very difficult to put into place. Even in
Europe, we do not succeed in eradicating poverty. How would it be possible to
reach this objective at the global level? If insufficient resources are transferred to
the poor countries and if poor countries themselves are not allowed to develop
policies to really fight poverty? If economic development is left to the market?
The existing social protection is still being dismantled since it is said to be
inappropriate. The PRSPs, the poverty strategies that poor countries are now
obliged to introduce, are in their third generation but still do not mention how
incomes can be generated for poor people. Today, more and more people begin
to realize that ‘poverty reduction’ was an excellent tool to keep the fire of
development cooperation burning and at the same time to continue with
neoliberal policies. We act as if we were ‘developing’ others. Some call this ‘the
SIBD-syndrome’: something is being done.

Wellbeing and happiness

Now that it becomes clear that poverty reduction policies and the Millennium
Development Goals are failing as well, a new discourse is being prepared. It has
to be analyzed in the context of the growing awareness of an equally important
ecological crisis.

We have to ‘re-think’ development, we cannot strive any longer for the material
welfare of people, we should look for their wellbeing and happiness. We need a
‘post-MDG’ agenda, according to many. It means: the MDG agenda have failed,
we now continue with a new agenda that is even less ambitious and all the more
‘holistic’.

But this new agenda is far from new. In fact, it is clearly linked to the post-
development thinking and this is why it risks to be positively evaluated by some
progressive people. ‘Post-development’ is an intellectual movement that
criticizes the concept of development, interpreting it mainly as discourse and
totally ignoring the material basic needs of people and nations in the South. It
wants to restore local traditions and social relations and attaches much
importance to culture. Universal values are believed to be irrelevant and
emancipation can be realized by stepping back into the past. One of the major
arguments, especially with some indigenous groups in Latin America, is a
rejection of everything that comes from ‘the West’.

The emergence of this new development agenda can, once again, partially be
attributed to the OECD. There is a long research history that is looking for the

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relationship between wellbeing, prosperity and happiness. In 2007 a major
conference was organized in Istanbul on the measurement of ‘the progress of
societies’. ‘Business as usual’ is no longer possible, it was stated, we have to look
at what poor people themselves see as problematic and at the qualitative and
psychological aspects of wellbeing. A positive message will have to be sent out,
based on what people can do and can be. Is it a coincidence that one of the
conference’s conclusions was the statement that income inequality, economic
growth and social security play no role whatsoever in the ‘happiness’ of people?

In Western Europe, these ideas are being promoted by some greens who find
their inspiration in a recent report from the New Economics Foundation. It shows
that more material progress is not synonymous with more happiness. People who
can more than satisfy their basic needs, may tend to agree with this statement,
though it is certainly naïve to think that material goods can never mean more
happiness or that wealthy people cannot be happy. ‘Riches alone make no man
happy’ is certainly correct, though some money can certainly help.

The advocates of this wellbeing approach often refer to Bhutan, where an

enlightened king has introduced a measurement of ‘Gross National Happiness’
and seeks to measure every two years a total of 72 indicators. He hopes to
discover how well his country and its people are doing.

A real problem in this context is indeed the point of indicators. The GDP (Gross
Domestic Product) has been criticized for a very long time, since it measures all
activities that lead to the production of goods in our society. However, not all
goods also contribute to our wellbeing. Traffic accidents or funerals are or
contribute to economic activities that do not make us happy. Moreover, certain
material goods will even cause ecological damage or will lead to more stress.
GDP does not tell us anything on the non-paid labor of mainly women. A new
indicator that can take into account all those elements is certainly welcome and
there are already many examples. Some countries have introduced the ISEW –
indicator for sustainable economic welfare – and use it in parallel with the GDP.

But how should we assess this approach in poor countries? Alternative indicators,
such as the Human Development Index of the UNDP, are certainly welcome.
Taking into account the environment and women’s labor is very important. But
can we not agree to say that poor nations and poor people need in the very first
place more material prosperity? More food, more housing, more jobs, more
income, more public services? Again, it is no coincidence that many poor
countries started to introduce cash transfer programmes, like the ‘Bolsa familia’
in Brazil. A very small amount is paid weekly or monthly to poor families and the
success in poverty reduction is huge, better than all ‘multidimensional’ poverty
approaches taken together.

‘Development’ brings no happiness

There are many reasons to be extremely skeptical of this new approach in

development thinking.

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Firstly because, at any rate, development remains a collective project for a
nation, a region or for peoples. Wellbeing and happiness on the other hand, are
purely individual values. Even if some academics try to present this wellbeing as
a social concept, it is clear that many divergent individual visions of wellbeing
exist. In order to reveal what it really means and in order to try and improve it,
governments need to strongly intervene in people’s individual lives. One can
wonder whether this is feasible and/or desirable? Is the World Bank able to
determine how to offer more ‘wellbeing’ to people? Is this not another way to
impose our vision of ‘wellbeing’ to others?

Secondly, development will always need an important economic dimension and

preferably, this will have to be coupled to a social dimension. They can mutually
reinforce each other by offering security on the one hand and creating
purchasing power on the other hand. ‘Wellbeing’ and ‘happiness’ may be the
results of these policies but they will never by identical. Wellbeing and
‘happiness’ will always involve more than need satisfaction and are difficult to
measure in an objective way. They are more comprehensive than any social-
economic approach and also involve a psychological dimension. Can one ask or
expect a government to be responsible for it?

Thirdly, one has to make a distinction between ‘wellbeing’ and ‘happiness’. A

government that wants to improve the wellbeing of its people can be praised,
even if one has to realize that it will never be able to really deliver. ‘Happiness’
on the other hand is a totally subjective value that completely falls outside the
action field of governments and that has nothing to do with prosperity or with
welfare. Everyone will know poor people that are happy and wealthy people that
feel unhappy. A.K. Sen has repeatedly warned us that many deprivations and
discriminations are interiorized and that many people do not even realize that
another kind of life is possible. It means that there is a risk that a small farmer
who happened to reap a decent harvest will say to be happy, even if he remains
extremely poor. But being ‘happy’ will exclude him from the list of problematic
cases. In this way, one can totally ignore the real misery of people, a tendency
that is already present in the ‘multidimensional’ approach.

Finally, this approach totally hides the income inequality and the lacking (global)
redistribution of wealth. Nothing is left, then, from the old concept of
‘development’. It is not a coincidence that one rarely finds a definition of
economic development nowadays. This is the way to prepare a new content for
‘development’ that will hide what is really happening: a new focus on
philanthropy – every village and every wealthy family its own project -and a new
focus on security – a new priority that is now being prepared. The new holistic
development, then, is purely subjective, while policies prepare a new
colonization. The poor should be worried. And social movements should care.

A recurrent theme

In the French Declaration on Human Rights of 1793 ‘happiness’ was mentioned

as a social objective. Later texts do not mention ‘happiness’ anymore. In the 18th
century the objective was to make poor people ‘happy’ in order to keep them

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where they should always remain, on the lowest treads of the social ladder. It is
mainly to them that the message is repeatedly given that ‘wealth does not bring
happiness’ or that money can have corruptive effects. It is the solution to try and
prevent the poor from seeking more prosperity. Today, a new variant of this old
anthem is emerging in a context in which poor and rich nations find no
agreement on climate change.

It is clear that wellbeing can have a place next to prosperity and can become a
political objective, at least if one accepts that governments can only create the
enabling conditions for this wellbeing. Creating prosperity is one of the main
conditions. Trying to change the unsustainable consumption patterns of those at
the top of the social ladder is also a very positive step in this emerging ecological
crisis. New indicators can help to measure the real progress of societies and to
see in what way the environment is being protected.

However, poor people, here and in poor countries, need more material prosperity.
They need more economic growth. What is currently being prepared in an unholy
alliance of indigenous people, development ‘experts’, greens and neoliberals, is
totally contradictory to this objective. Once again, the objectives of development
cooperation are begin downsized and become more and more subjective. The
poor people of this world should not accept it.