ECONOMIC GEOGRAPHY
The history of development concerning mankind is as old as human civilization itself. Its horizon
has broadened in consequence of people's search for a better life, by improving their material and
social conditions in different historical epochs. Man's collective efforts, expansion of knowledge and
his capacity to innovate have played a decisive role, in creating epoch making history. For many
millennia, the process of development has been slow. The European renaissance came as an
internal transfinite drive, towards improving conditions, in which new sets of rules became
legitimized. Progress in the field of philosophy, natural and social science along with engineering
and technology made it possible for man to enter into a new horizon of development, through the
industrial revolution.
Under a particular time and space dimension, development possibilities are limited by natural laws.
Although man cannot change those laws, with proper understanding he can attain the capacity to
manipulate his environment through scientific innovation and technological improvement. The
Newtonian paradigm came as a major breakthrough in this regard. The concept of deterministic
and time reversible laws where the world was seen as a vast automation; and man appeared as
being outside nature, as a free agent in a mechanical universe; was the obvious outcome of the
Newtonian endeavor. The search for objectivity was the philosophical foundation that really forced
economists to introduce scientific methods in its application. Classical and neo- classical
economists also pretended to follow the Newtonian philosophy by considering a closed
autonomous system, ruled by endogenous factors of a highly selective nature, self-regulating and
moving to a determinate predictable point of equilibrium.
As we know, human vision does not proceed too far from the social dimension within which man
has to live. The early stage of capitalism had been envisioned by Adam- Smith and Ricardo who
conceived the idea of a laissez faire economy, where a rational individual would be trying to
maximize his profit in an open and free competition. However, their world was dominated by the
problem of scarcity and uncertainty and that being so they pursued their theories in the direction of
production and supply to reach equilibrium. Karl Marx saw the rising trend of capitalism and
identified its unstable and disequilibrium condition that led to advocate the idea of socialism and
communism. With the development of capitalism, the changing structure of age-old society
becomes more adaptive to the response of scientific and technological progress that enormously
increased the capacity to use and exploit resources and to induce a powerful explosion in
production. As a result the nature of the economic problem changed from production and supply to
consumption and demand. Under such circumstances, Keynes identified the chronic tendency of
the laissez-fare market economy to generate involuntary unemployment and he prescribed
governmental intervention for boosting effective demand to avert the tendency.
It is apparent that the contradiction between absolute individualism and absolute collectivism in the
capitalist and socialist structures tended in the direction of a kind of synthesis in both systems,
while they have confronting harsh realities. The systems however are poles apart on such issues
as problem identifications and policy suggestions since they pretend to show their differences in
fundamental values as well as in their aims, objectives, means and ends. Unlike the capitalist
system, socialist policies have tried to correct labor contributions in terms of socially necessary
labor through planning mechanisms and through introducing collective ownership of the means of
production. What needs to be examined further is which system would be more efficient for
attaining specific objectives and whether there is any possibility of synthesizing them on the basis
of the experience of the systems, in particular circumstances.
It is to be kept in mind that the theories we have discussed so far, mainly concern the problem of
the advanced world which could complete the industrial revolution. There is no doubt that through
successful industrial revolution the developed world could provide a decent standard of living for
the majority of its population. As the Scottish poet Hugh Mac Diarmid in his Lament for great
Music" says.
During the 1950s, quite a number of development models surfaced and identified their intellectual
kinship to the paradigm that emerged from the above- mentioned report. Some of these are (1)
Hans Singer ( 1952) The Mechanisms of Economic Development; (2) Nurske ( 1953) Balanced
Growth ; (3) Lewis (1954) Development with Unlimited Supplies of Labour; ( 4) Nelson (1956) low
level Equilibrium Trap ( 5) Rosenstein Radan (1957) Big push (6) Lebenstein (1957) Critical
Minimum Effort; ( 7) Singer ( 1958) Bottleneck breaking and ( 8) Hirschman ( 1958) Unbalanced
growth. Those models were helpful in formulating and applying the conventional strategy in a more
coherent and consistent manner. In addition to this Harrod-Domor model, Leontief model and
Sollow-Sown model contributed a great deal to implement the traditional strategy.
In this conventional strategy objectives and processes were viewed solely in economic terms and
great reliance was placed no economic factors to achieve results. It emphasizes higher economic
growth, to be accomplished at any cost through the accumulation of capital and its investment in
industrialization, modernization and urbanization through a "top- down" process of central planning
and control. Conventional planners recognized increased pre- capita GNP as the main objective
and yardstick of the performance of development. Agriculture and rural development were
neglected till the latter part of the 60's in the hope of a great industrial "leap forward" which would
lead to the creation of sufficient employment opportunities there, leading to a transformation from
rural agriculture to urban industry. It was expected that the question of distributive justice would be
take care automatically, through the "trickle down" process. In principle, the strategy pursued the
policy of inequality owing to the conviction that it is efficient for growth and inevitable in the early
stage of development.
Success Stories
Conventional strategy, with its effort over a period of more than 35 years claimed spectacular
economic growth on a global scale; in the year 1980, gross product per capita reached US$ 1220
and it was expected to increase at an annual rate of about 3%. On this basis, real goods per capita
would double every 23 years or in other words approximately in a single generation, provided of
course, that this rate were sustained. Judged also by many of the normal measures of social
development, conventional strategy can be labeled a success. Life expectancy at birth in
developing nations rose from an average of 42 years in 1950 to 59 years in 1982. Infant mortality
was halved and the primary school enrollment rate increased from 50 to 94%. World Food
Production also achieved some success. Measured globally there has been enough food to feed its
entire population with more than 3,000 calories and 65 grams of protein daily, which is more than is
consumed by the West European average. In the year 1987, 475 million tons of food grain was
estimated as surplus and a considerable portion of that was misused and damaged owing to lack
of storage facilities. The statistics quoted above portrays a prosperous future for all mankind and
seems to rule out the possibility of any kind of scarcity on a global scale.
What was wrong?
In spite of this tremendous success a serious a serious crisis exists in the current world. This is not
due to shortage or scarcity on an international scale, but to maldistribution. Global figures have
very little meaning because they conceal tremendous inequality. The world population already
exceeds 6 billion and more than 80% of them live in the developing nations. Around 50% of the
world populations dwell in 36 countries with average per capita income below US$ 380, which is
less than one third of the average global income quoted earlier. The difference in standard of living
are also very large between different countries as can be seen from a number of social indicators
like life expectancy, infant mortality rate and soon.
Although, developing nations can achieve an impressive rate of economic growth, it has not
necessarily been helpful in eradicating hunger and mass poverty. It is surprising to note that today
after more than 35 years of concerted effort; there is more hunger and poverty than before.
According to the estimate of Ahluwalia the number of people in absolute and relative poverty was
probably 370 and 580 million in the year 1969. The figure rose to 800 million in the year 1973
according to the then President of the World Bank, Robert Mc Namara. Further confirmatory data
concerning the deteriorating rate of poverty came through the International Labour Organization in
1976, at the World Employment Conference. According to them, there were 706 million "destitute"
people and another 500 million were termed seriously poor" in the developing nations.
Conventional strategy not only failed to reduce the extent of poverty, but even enhanced its
intensity. A study was made by Adelman and Morris, which showed that instead of any
improvement, the income of the poorest 40% had declined in real terms and in the case of extreme
dualism even income had declined among the poorest 60%. They concluded that with the
exception of high-income developing nations, poor people of the 3rd world countries would have
been better off, if there had been no development effort at all. Surely development is not worthy of
its name if the benefits accrue only to tie few, while the great majority of the population remain
stuck in abject poverty living on the bare margin of subsistence. In fact, it is a travesty of
development- "a shameful spectacularity in the face of a monumental inhumanity".
None of the assumptions of conventional strategy turned out to be universally applicable. Although,
in the developing nations. GNP growth is a necessary means it may not be considered as an end
in itself. Even for some important ends it is not a very efficient means either- For instance, if Sri
Lanka tried to pursue higher life expectancy "not through direct public actions but primarily through
growth ,..."then it would have taken Sri Lanka ... some where between 58 years and 152 years to
get where it already now happens to be".
Experience shows that there is no automatic tendency for income to become widely spread
through "the trickle down process" and thus ameliorate poverty. For example, countries like Brazil,
Mexico, Argentina, Indonesia and the Philippines, rapid or moderate growth was not helpful in
alleviating poverty. It has already been established that, there is no simple trade off between rate of
growth and equality of income distribution or inevitability of inequality in the early stage of
development. For Example, countries like Taiwan, Yugoslavia, South Korea, Rumania, Hong Kong,
Cuba and Singapore attained higher growth rates with more equitable distribution. It is evident that
even a poorer country or region in fact capable of waging the battle against poverty and attaining
many of the social objectives by providing greater distributive justice. For example, what Kerala,
one of the poorest states in India achieved in terms of longevity, literacy, infant mortality and as on,
with only around 200 US$ per capita income, countries like Brazil with more than 2000 US$ did not
achieve, China and Sri Lanka, with less than a seventh of GNP per head in Brazil or Mexico have
the similar life expectancy figure as the two richer countries and it was possible because they
pursued directly that objective through public policy and social change.
Conventional strategy offered the same prescription for all and those who accepted it, suffered
from many side effects due to the fact that institutions, organizational capacities, administrative
talents, leverage, drive and willingness are not identical in all the developing nations. Many of the
developing countries accepted foreign aid as an unmixed blessing. As a result, they sank deeper
and deeper into debt. Still we can not draw the conclusion that foreign capital must always be
harmful. In fact countries like Australia and Canada received much higher amounts of foreign
capital during their investment boom and they could utilize them properly. Internal institution, quality
of foreign aid and proper planning and control are the key factors to be considered within the social
and political rigidities that restrict a country's capacity to adjust.
The conventional planners tried to reconcile the Western concept of "development' with
preconceived ideas through a "top- down process of central planning and control. They failed to
grasp the problem of development under specific circumstances and could not combine social,
political economical and other variables in the right proportion. It has become clear that
development cannot be a mere transfer of capital and technology without regard to differences in
material and human factors.
The World Bank also conceded the harmful effects of traditional strategy as more and more
confirmatory data came in, that the benefits of growth didn't trickle down" or perhaps the trickle
down' process was so slow that it would be a century or more before the poor people or their
descendants benefited. To overcome this, the World Bank, in cooperation with the Sussex Institute
of Development Studies published a book entitled Redistribution with Growth". The book tried to
introduce reformist measures over traditional strategy and explained that "Wealth distribution might
be politically difficult, growth was essential poverty was inconveniently embarrassing" and under
those conditions it was prescribed that the redistribution of incremental income would be politically
easier.
However, the theory of "Redistribution with Growth" derived from many misconceptions of reality
and led to a purely technocraticafly oriented approach, which to a great extent failed to be
applicable to developing nations. The approach could be criticized on the ground that it tried to
bring 'equality of outcome' oblivious of the causes of inequality in society and a solution through
equality of opportunity.
Since 1974, most of the development thoughts have been focused on a single issue, the central
emphasis of which is meeting the "basic human needs" of the poor masses within the shortest
[
possible period .The basic human approach identified a list of items considered to be essential for
a decent human life such as (1) Food; (2) Clothing; (3) Shelter; (4) Basic range of household
equipments; (5) Health; (6) Education; (7) Safe drinking water and (8) Contraception. Each item
has its own weight, listed In order of priority to have a hierarchically ordered set of basic- needs.
The 'basic- needs' approach precisely aims at increasing the income and ensures the supply of a
stipulated level of BN Basic- needs level of persona! Income (BNI) and ensures the supply of a
stipulated level of goods and services income distribution, production policies and through the
provision of appropriate administrative and institutional mechanisms. Since many of the above
factors are quantifiable, one could easily make plans and pursue policies to achieve them.
Although the basic needs approach has been accepted, at least as a guiding philosophy by most of
the UN organizations and national governments, owing to the following limitations and shortcoming
it has not attained much success.
(1) Although the approach correctly maintained that everybody must attained BNl, it did not specify
in detail how the disadvantaged group would eventually achieve this.
(2) The approach also did not look deeply and identity the causes of the very low income of the
poor people.
(3) It did not specify the nature of organizations and institutions, which would be necessary to its
success.
(4) It considered production planning without going into the details of who is controlling the
production mechanism and under what terms and conditions they would act in the desired way.
(5) Above alt successful implementation of the ' basic- needs' approach requires cultural
enlightenment and the promotion of new social political and moral values in each specific
context.
was a crop failure in the province of Wallo, but no severe decline in food availability for Ethiopia as
a whole. The famine victims of Wallo lacked the economic ability to command food from elsewhere
in Ethiopia and indeed, some food moved out of famine stricken Wallo to the more prosperous
parts of the country.
It is evident that during the 70's when so many people had to starve, there was sufficient food
grain in terms of aggregated average. The extra food that was needed to provide adequate diets
for the malnourished population of the deficit areas was also not very great in relative terms. The
deficit was calculated as around 37 million tons of grain which could be accounted for only 2 to 3
per cent of the world production at that time and more surprisingly was fess than 10 percent of the
quantity of grain fed to the livestock in the rich countries. In the year 1987, around 475 million tons
of food grain was estimated as surplus and 340 to 730 million people were starving at the same
time.
We can see that most of the Third World countries also could keep their food production higher
than population growth. Still many millions of their population was starved due to uneven
distribution of food within the nations. In the year 1978 India produced a record level of rice and
wheat, more grain than it could store. The country exported more than a million tons of wheat and
yet 20 to 40 per cent of her population was still unable to get an adequate diet.
Our study of famine does not confirm that inadequate food supply was solely responsible for such
a catastrophic condition. What explanation can we put forward so far the famine of Ethiopia in
1973-74? The total food grain was only 7 per cent less than the normal years which were hardly
devastating in an economy with primarily rain fed agriculture. The experience of the 1974 famine in
Bangladesh was also disheartening. The total availability of food grain in per capita and absolute
terms was higher in that year. Still the country was ravaged by disastrous famine. Ethiopia, one of
the countries worst affected, by widespread famine in 1986, we can see that the per capita food
production had been higher in the period 1981-86 In comparison to 1974-76 average.
The following policies may be considered as really paradoxical, having a negative effect on food
problem.
1) Export policy in the face of a widespread hunger; As for example some of this countries,
where starvation is widespread like Zambia, Mali and other Sahelian countries and Thailand
from 1974 to 1980 introduced the policy of export by keeping their own people unfed.
2)
More food grain for livestock and less for human beings; in Brazil, the share of food
crops used as livestock fodder reached as high as 44% of the total production. Countries like
Mexico, Central America and the Caribbean, where some cases poorest people consume
less grain than is fed to the animal producing meat, milk and eggs for better of,
3)
Food import and mal distribution: As for example in Egypt food subsidies are twice as high
for the urban middle class as for the rural population. In Bangladesh nearly 90% of subsidized
food is distributed in the urban areas mainly among the middle class population, In Pakistan
and Bangladesh, those who are employed in defense forces received food items almost at a
negligible price.
4).The dap between current and actual production: The gap between current productions could
be roughly 1.8 billion tons. The production possibilities with the present level of technology
have been calculated as 11.4 billion tons of food grain or their equivalent in food energy.
Indeed the production possibilities are much higher in the developing nations and the
production could feed around 40 billion population with sufficient calories.
3. Higher population size and the food problem do not show a one to one correlation. Many
countries with greater population size have solved the problem of food, whereas some sparsely
populated countries have not, even under favorable physical conditions.
4. It is unlikely that devaluation wilt boost production because price elasticity of export for traditional
items (which is the export of most of the developing nations) is highly inelastic. As a result,
devaluation may cause inflation, low real income for the poor and unemployment in the
developing countries.
5. Problem of hunger is a complex phenomenon associated with unequal access to food caused by
either lower real income or higher food prices.
6. Lower income of the poor people may not necessarily be due to lower productivity, ill health or
ignorance associated with illiteracy, it is rather related to:
a) Imperfect market conditions associated with unequal exchange relation.
b) Unequal access to low cost credit and exploitation at a usurious rate of interest.
3. Extent of Poverty
Glimpses of the past about the trend of poverty in the probable future are also cause for
even greater gloom. According to the estimate of Ahluwalia presented in figure 5.1 the
number of people in absolute and relative poverty was probably 370 and 580 million in
the year 1969. The figure rose to 800 million in the year 1973 according to the then
Population in million
2500
2000
1500
1000
500
0
1969
and
1973
1976
1980
1990
2000
2004
Sources: Ahluwalia, 1969, WB, 1973, ILO, 1976, Hopkins, 1980, HDR, 1990, 2000
.
Shanghai, 2004.
President of the World Bank, Robert McNamara. Further confirmatory data regarding the
deteriorating condition of poverty came through the International Labour Organization
(ILO) in 1976 at the World Employment Conference. According to them, there were 706
million destitute people and another 500 million were termed seriously poor in the
developing nations. The figure rose to approximately 1.5 billion in the year 1990 and
further deteriorated and reached 2 billion in the year 2000 as per human development
report (UNDP).
A recently held UN sponsored global poverty alleviation conference in Shanghai (2004)
estimated that 2.2 billion people are living in poverty. The HDR 2004 published by
UNDP estimates 1.1 billion people living on less than one dollar a day and nearly 2.8
billion people without access to adequate sanitation. In 1990, the dividing line between
absolute and relative poverty was below one and two dollars a day. In 1969, such figure
accounted for 0.14 and 0.21 dollar only and in 1993, the poverty line was equivalent to
$1.08 as per HDR 2003. It is obvious that in 2004, one and two dollars cannot be a
measure for absolute and relative poverty and the poverty level income for 2015 need to
be recalculated for setting target under the MDGs. There is no precise poverty alleviation
strategy. Different UN agencies also do not have uniform priorities. Widespread
conviction about poverty alleviation through economic growth in terms of GDP
sometimes suggest trade off between investment in economic growth with health and
education sector may create inequality and further deterioration of poverty.
National policies must provide adequate attention to the interaction between growth,
equality and poverty in the right proportion.
year 2000 about 1.2 billion people were without access to improved water source and about
2.8 billion people without access to sanitation. In a global scale.
Central and
Eastern
SubEurope and
Saharan,
the CIS
29.3
South Asia
, 39.2
Arab
States, 0.7
Sub-Saharan,
22.2
Latin America
and the
Caribbean,
6.4
Central and
Eastern
Europe and
the CIS, 4.0
South Asia ,
37.6
Arab States,
4.1
East Asia and
the Pacific ,
25.6
East Asia
and the
Pacific ,
23.7
Latin America
and the
Caribbean,
6.6
South Asia ,
20.6
Latin America
and the
Caribbean, 5
South Asia ,
39
failure to fully understand the problem of development from its genesis. Introduction of
such a development strategy created dependency and dominance between developed and
developing countries in many ways. Many developing countries accepted foreign
borrowing as an unmixed blessing and sunk deeper and deeper into debt trap. Between
1970 to 1984 the outstanding debt of developing countries expanded almost tenfold, to
US$ 686 billion. (WDR 1985) It has been observed that industrial countries tried
conditional aid and perhaps their own interest often gets priority. Many case quantity of
aid was not sufficient and as a result technology transfer was not taken place. In the early
stage, agriculture and rural development was ignored and as a result developing countries
had to suffer food shortage and became depended on imported food from developed
countries. During 1990s they cost the developing nations 18 to 22 billion annually.
(International Food Policy Research,1999)
Simon Kuznets (Nobel Laureate)
presumption about the inevitability of inequality in the early stage of development
(Paul Streeten, 1982) was not supported by evidence made by Ahluwalia.(1974)
Experience shows that there is no automatic tendency for income to become widely
speared through the trickle down process and thus ameliorate poverty. It is evident that
development strategy not only failed to reduce the extent of poverty, but even enhanced
its intensity. A study was made by Adelman and Merois,(1973) which showed that
instead of any improvement, the income of the poorest 40 percent had declined in real
terms and under the case of extreme dualism even income had declined among the
poorest 60 percent. They concluded that with the exception of high income developing
nations, poor people of the Third World would have been better off if there had been
no development effort at all.