How useful is economic growth as an indicator of development? What indicators might be more useful
There are various forms of measuring development, this includes infrastructure, poverty, stages of growth (Walt Rostows) and economic growth measured in gross domestic products (GDP) .All four indicators are used to measure development.
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?Ramirez et al (1998) conducted a study on developing countries, studying the link between economic growth and development in developing nations. They found that there was a strong relationship between economic growth and development stating there is a correlation between both relationships.?Their research also concluded that maintaining sustainability of economic growth was only possible through public spending on social services and education. This would imply that through economic growth supported by government public spending is a reliable indicator of development. It would also imply economic growth is generally associated with higher quality of life thus leading greater development.
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However, critics like Hull (2009) state that economic growth does not always translate into benefits particularly for the poor section of the population. Hull (2009) argues that the benefits that come with economic growth will not benefit everyone equally unless it is economic growth that leads to more employment opportunities, training for higher paid jobs and reduction in poverty as a result.
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Hull (2009) is reiterates here that economic growth is not what drives development, but rather it is using economic growth to drive employment figures up and increase access to higher pay which can aid in reducing poverty as rising wages can help managing cost of living effectively.
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Atul Kohli (2004) uses the concept of a ‘neopatrimonial’ state to describe developing countries who boast of a booming economy, but rather than government officials use that economic boom to redistribute wealth, they treat all public goods as their personal property thus resulting in a state that suffers from economic stagnation due lack of economic transformation and poor use of funds. Kohli uses the particular example of Nigeria, a country that possesses one of the biggest economies in Africa but cannot convert that into real economic advantage and advanced development.
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Economic growth illustrates that a nations economy is booming and thriving, but unless that is used to improve employment figures and alleviate poverty to a certain extent then it may mean that economic growth is not a very reliable indicator of development. This is because development is usually associated with states improving one aspect of the economic workforce such as poverty or low wages for example, so if a nation does not use economic growth to reinvest it into the public then it is clearly not a good indicator of development. If states do use economic growth to advance societies current economic climate then it would be a better indicator of development. Thus, depending on how governments use economic growth, it could be a form of measuring development albeit a very subtle form of indicator.
Furthermore, other forms of indicators for development include the advanced level of infrastructure a country possesses. Zhang (2011) states that ‘good’ infrastructure can be measured through how modern or reliable; the roads, bridges, telecommunication networks, modern hospitals, waste disposal systems, schools, hotels, prisons and even military facilities. Zhang argues that for infrastructure to be a success it requires both public (government spending) and private (private donors e.g. businesses). How advanced a nations infrastructure may be is a possible sign of how developed they may be. For example in Africa, a continent that is predominantly undeveloped does not have adequate infrastructure, with poor roads, transport systems and hospitals that lack adequate facilities. This is largely expected from states that are poverty stricken as the government would not have funds to complete such projects and businesses may be reluctant to invest in states that have no economic future.
Using Zhang’s argument that advanced infrastructure can highlight how developed a nation may, simply would not be the case in some instances. For example, Nigeria has a large economy but predominantly poor infrastructure, implying that having a great economy does not mean stable infrastructure and having a poor economy does not mean they cannot have stable infrastructure. ?This illustrates the lack of correlation between infrastructure and development.
However, though in most instances, infrastructure can be an indicator of development. Zhang’s argument is oversimplified in that a good or bad infrastructure tells the full story of a states development stage. Infrastructure can be an indicator of development to some extent and not entirely, particularly shown through the example of Nigeria, where they have a large and booming economy but have poor infrastructure with poor roads and housing across the country. ?Similar to economic growth being an indicator of development, infrastructure only highlights part of a states development.
Moreover, poverty is another indicator of development. ?Hanna (2018) states that reductions in extreme poverty have resulted in substantial economic growth (Hanna, 2018), perhaps highlighting the interconnection between both poverty and economic growth as indicators of development. ?Hanna (2018) states that while future economic growth should reduce poverty levels, it will not entirely solve poverty. This is due to the case that even in rapidly growing economies; poverty still remains at large (Hanna, 2018). ?This point would imply that low poverty rates do not necessarily translate into being a fully developed state. ?You get countries that are considered to be developed in the west such as Britain and the USA but still have alarming levels of poverty nationwide in both respective countries. This would illustrate that despite both states being considered to be developed, the poverty rate does not hinder or seem to impact whether they are developed or not.
Instead, states in the west tend to have huge disparities and inequalities between the poor and rich, despite the huge gap and many falling below the poverty rate, this level of poverty seemingly does not impact whether either USA or the UK are developed or not. Rather, through advanced infrastructure, technology, free healthcare (some nations only), education system and great transportation tend to be more of an indicator of development in the west. This would arguably portray poverty as a poor indicator of measuring development in the west, but equally it seems to be a reliable indicator of development when studying Africa. Depending on the region, poverty as an indicator can be useful in determining the level of development a nation is at, but when used alone can produce varying results depending on the region you study. This reinforces that poverty as an indicator is suitable in some regions such as Africa only, perhaps making it a weak indicator of development as a result. ???
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Ortolano (2015) study of Walt Rostows five stages of growth can also be used as an indicator of development. Rostows five stages are broken up to into; the traditional societies, pre-conditions for takeoff, takeoff, drive to maturity and high mass consumption (Ortolano, 2015). In summary, the first three stages are when states do not go under economic transformation, rely on subsistence farming and trade is done locally with only some international market involvement. Stage four is drive to maturity whereby states use technology along with current resources to boost and drive the economy. There is less reliance on natural resources such as coal and iron; workers learn new valuable skills giving them access to higher paid jobs. This ultimately leads to lower employment levels, a rate which thus leads to more income in the wider population which can only be a positive attribute, since more money in people’s pockets tends to mean more public spending.
Stage five is high mass consumption. This is the stage where high valued goods become normalised to purchase such as expensive Smartphone’s or a play station for example. Society is able to focus more on welfare issues to alleviate poverty, more spending on an adequate healthcare (NHS), military and security (Ortolano,2015). This would imply that societies are in a position to carry out welfare duties once the nation is fully developed. If a state has the funds to provide support in various forms to its citizens then it would illustrate the level of development a state has. For example countries in the west such as USA and the UK, they provide benefits, free healthcare (UK) and large investing in military defense. ?They would only be able to carry this out if they were in a position to do so.
However, critics may point to North Korea as an example of being underdeveloped but investing drastic time and money into nuclear defense. This would illustrate Rostows argument to be oversimplified, as spending in military does not equate to being a developed country, particularly with the example of North Korea.
Moreover, stages four and five of Rostows model can be a reliable indicator of development. It is the most developed nations that tend to provide free healthcare, welfare support and freedom of movement. It also makes sense, that in some states, citizens can afford expensive goods and becomes normalised to do so. This would provide a key indication of how developed a state may be. In poverty stricken or undeveloped nations, food and shelter would be the most important to them but when the citizens of a state can purchase expensive goods on a regular basis, it is a very good indicator of how developed a nation may be. As shown through the example of North Korea, Rostows model is not always applicable to every state but in most instances can be used to measure the development of a state.
Poverty, economic growth, infrastructure and Rostows five stages of growth model can all be indicators of development. ?There seems to be a connection between all four of them. Economic growth can highlight economic prosperity but can still mean there is poverty and underdevelopment. ?There can be developed states such as those in the west but still have poverty rates that make the gap between the rich and poor quite large, with some parts even falling below the poverty line. This is predominantly the case in USA, where there are high inequality levels between the rich and poor. ?
Infrastructure highlights how well a country is built and good systems it has in place, but does not always mean that having good infrastructure translates into a state being fully developed. ?Rostows model highlights how when the citizens of state spend more than their means, suggests a state could be developed. ?Purchasing high valued goods and more importantly when it becomes normalised to do so shows to how developed a nation may be.
Evidently, all four indicators have their weaknesses in measuring development. ?Economic growth surprisingly was meant to be associated with prosperity and less poverty in society but that simply is not always the case. ?From all four indicators of development measured, Rostows model seems to be the most complete, in the sense that it shows society has moved past needing only basic food and shelter to purchasing high developed goods. It also highlights how states have the financial capability to use welfare support to reduce inequality and further advance their economical position.?Thus we can reach the vying conclusion that Rostows model is the most useful indicator as it covers the different stages of where society mat be at. Whilst his model may not be applicable to all states, it is a very good indicator in measuring developments of most countries and certainly a better indicator and covers more than poverty, infrastructure and economic growth. ??
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