Zahra Michelle Khan is a recent graduate of Bachelors in Social Sciences, majoring in international relations, from Bahria University, Islamabad. She won the 2nd National Policy Making Competition by YPDC UOL last year in the public policy domain.
The debate between growth and development has been an important one for states, especially considering how dynamic the international system is now. Since the 1950s, the argument in favor of economic growth leading to state prosperity has been the dominant ideology. However, in recent decades, endless growth and growth-induced economic inequalities have led the debate to favor development instead.
However, many still tend to want to find a common ground that can help states balance both growth and development so not only can they fend off the international competition but also over time improve the quality of development as well.
Defining Growth and Development
Ideologically, economic growth has been an important component of state economy since the mid-eighteenth century when the ‘Wealth of Nations’ was published by Adam Smith, but it was only after the 1950s did states actively translate this ideology into rapid realized economic growth. The most publicly sound and policy-proven definition of the term growth can be ‘an increase in the monetary value of goods and services of a country over a given period’.
If evaluated from this aspect then it can be seen that the global political economy is five times the size it was nearly half a century ago. However, this statement generally fails to explain the economic inequalities between states as well as the growing divide between the rich and the poor. States primarily prioritize growth in hopes to catch up with the international competition and accumulate more wealth.
The term “development” has various meanings to different people and can be explained in different contexts. Development involves “an improvement — qualitative, quantitative or both — in the use of available resources”. It does not refer to one particular perspective on social, political, and economic betterment. Instead, it is a hybrid term for a myriad of strategies adopted for socioeconomic and environmental transformation from current states to desired ones.
Development should be seen as progress towards complex goals such as the elimination of poverty, the provision of employment, the reduction of inequality, and the guarantee of human rights. The changed definition had sub-definitions such as redistribution with growth, the basic needs approach, and integrated rural development. Development relates to the growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population’s quality of life.
Choosing Between Growth and Development: Can You Pick One Over the Other?
The decision between choosing growth or development is a difficult one for states. Many external factors come into play when defining what course of action states will pick. For instance, the Scandanavian states prefer development over growth and are leading on the happiness index, human development index, gender equality, sustainable economics, etcetera.
This is because those states neither want to be main contenders in the international system nor do they have any threats from other states that are locked in competition. India, on the other hand, is aiming to be a regional balancer to China and has become one of the fastest-growing economies that most states in the international system are now interested in.
On the contrary, the current growth rate that India is on is internally deepening the economic gap as well as paving the way for more poverty, corruption, environmental degradation, and various violations of human rights. However, the current models for growth that most states of the world are pursuing are no longer feasible for usage in the long run.
Risking the Environment
The economic growth that countries have achieved came at the expense of the environment. Economic growth in the current trend depletes large amounts of natural resources, many of which are non-renewable like fossil fuels. From an ecological standpoint, excessive interference of economic activities into nature may lead to the imbalance, instability, and even irreversible breakdown of ecosystems, undermining their function as life-support systems.
Marx argued that after expanding the natural resources the world has to offer, the current growth system will begin to consume the human resources as well, giving preference to profit over humanity due to inescapable growth. Even though the GDP of most states has only continued to increase, the wage gap and poverty levels seem to follow suit as well.
It was generally assumed that more income for a state meant that the living conditions of the people of the state would be better; however, trickledown economics in the current growth models have only failed. The current growth trend has also not been able to meet the challenges that the rapid population growth brings, especially in the third world.
With the pace at which technological revolution is occurring, most jobs are being lost to machinery with no secure backup of the state to provide for the needs of its people. Keeping in mind the various factors discussed above, I believe that states should focus on both growth and development.
Considering that growth is often a precursor of development, states must realize that when they become economically stable to a sufficient extent, they should settle for focusing on development with a gradual and slow increase in economic growth as compared to growing with the current economic trends and at the pace of other states in the international system.
Focusing on development as well as growth will not only allow the country to become economically more powerful but will also help in the social and political strengthening of the state which is key to a smoothly functioning economy.
The Case of Pakistan
In the case of Pakistan, one must analyze all the factors that come into play when suggesting an economic path. The state is prominent in the international system when it comes to combating terrorism, assisting the US in Afghanistan, and its CPEC project with China. Internally, Pakistan faces various issues like corruption, political instability, lack of quality education, etcetera.
It is clear, that Pakistan is in need of both growth and development, but certain aspects of economic, political, and social levels have to be addressed. The following is my understanding of the steps we can take to ensure Pakistan’s development.
Taking an example of the economy, one of the first changes that have to be made is that the state should not give subsidies to industries that are doing more harm to the economy than good; this includes steel mills, PIA, railways, and many more. Not only does giving subsidies weaken the economy of the state, it wastes resources, makes the industry itself inefficient of becoming strong, and also leads it to cripple in terms of foreign competition.
The industries in Pakistan that are given subsidies target more of a domestic market and can, with proper management, learn to flourish on their own. The money that the state saves from these subsidies can then be used to promote entrepreneurship in the youth and give them incentives so they opt for economic activity in Pakistan.
In terms of population, Pakistan has a fast-growing middle class that needs to be trained in terms of skill and labor so that they may become the productive backbone of the economy of the state, as assumed under capitalism. Job opportunities, keeping sustainability in mind, must be created for them and in ways where even the people in villages can be included without having a major demographic change occur.
Introducing simple and effective microfinancing strategies can help in training and equipping the population with skills that will first help them better their own personal and social situations and in time that economic productivity will translate onto the state level. Following a model like that of Grameen Bank of Bangladesh is in my opinion one of the most effective courses of action that the state can take.
Revamping Political Administration
When looking at political administration, I am of the belief that certain levels of the polity should be introduced to the public so they can familiarize themselves with self-administration rather than depending on the state itself to provide for all of their needs. A system where a small area of a city, preferably by the sector at the very least, should be allowed to choose a small mayor and set of representatives from themselves via a consensus or democratic vote, and these people, in turn, will be in charge of that sector in accordance with the city laws.
For example, each sector can create a certain percentage of money taken from the income from every household in the vicinity, use it for the development of their area which can be even as simple as fixing potholes or creating a footpath or recreational opportunities in the area. Such a system of collection of wealth from a willing area will help accomplish many political, economic, and social feats which will also influence the state’s development.
Wealth collected from the people and spent on them will ameliorate their living conditions and strengthen their belief in not only themselves but in the state that provided them with this opportunity as well. It will help raise more responsible citizens and improve the national character and morale of our state which is also a source of national power.
It will also help create a more grassroots-centric or bottom-up approach to development and serve as a means of connection between the state and the people which can act as a two-way channel. Increased communication between the state and individuals will make it easier for the demands of both sides to be understood and met.
To conclude, I believe that Pakistan is a state that is capable of growing its economy and developing itself to a large extent, and whatever method we may choose to make this happen, one thing will remain the same. Without proper accountability and transparency in the administration of these policies and political and economic functioning, it will be impossible for anyone to make any difference.
The state is accountable for its actions to the people, and the people are also accountable for their actions to the state. If the relationship between the state and the people can be strengthened and turned into one of cooperation instead of conflict, then development wouldn’t be so hard to achieve as it is currently.
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