... growth and development are different processes[;] they are complimentary in the long run but competitive in the short run[;] the distinction is one which ought to be recognized if people really mean to communicate with each other.
Flammang (1979) considers the confusion concerning the difference between economic growth and economic development.
He reviews nine different approaches to distinguishing the two and concludes that economic growth refers to a quantitative increase in something measurable. Economic development, on the other hand, refers to a process of structural change -- something different rather than something more.
Then he begins a description of the cyclical nature of growth and development by discussing Wilkinson's (1973) definition of development.
In [Wilkinson's] view, development is "primarily an attempt to increase the amount of the means of subsistence which the environment can provide." He believes that societies do not do much to change until the pressure of rising population on scarce resources forces them to.
...
Wilkinson argues that development proceeds until a society creates a new "ecological niche" for itself, which brings it into a new harmony with available resources; until population growth again threatens life-styles, development (or structural change) tails off, and societies enjoy a rather stable period of adapting to this niche.
In other words, according to Flammang, "necessity is the mother of development." Society changes because it has to and after a period of successful development, society adapts to its new situation -- "learning to do its new set of jobs better, a process which belongs more under the heading of growth than that of development."
Flammang notes that structural change -- or development -- can be good or bad, successful or unsuccessful and may lead to either growth or decline.
He points out that whether it is considered growth or decline, successful or unsuccessful, depends on whether you won or lost from the change. "It will tend to be called growth by the winners and decline by the losers." [Think about outsourcing and trade.]
He notes that "most of us would probably say that it is growth if overall value productivity appears to have been increased, if the gains of the winners seem to outweigh the losses of the losers." [Think of Kaldor-Hicks compensatin principle.]
He notes that we should be aware that the benefits of development aren't necessarily distributed evenly over people or places.
Also:
In the final analysis, the balance of winners and losers appears to depend upon how well the losers can adapt to what appears to be the superior technology, the superioer method of organization, the broader view of markets, etc.
He notes that structural change can be technical, attitudinal, behavioral, or legal and can occur at many different levels -- international, national, sector, industry, firm, family or individual.
Perhaps it would be clearest if we would think of development along Wilkinson's lines, as a process which begins with fairly simple structural changes within a given ecological niche. As population grows or the known environment per capita shrinks, changes in technique or organization are introduced which make the known environment yield more, such as more frequent cropping of existing land or the introduction of irrigation. Structural change within a known environment may be thought of as intensification at that particular level, or microdevelopment. Eventually, however, this type of structural change encounters diminishing returns, and it becomes necessary to redefine the environment, to change that society's ideas of what are resources and what are not. This is essentially a process of extensification, of extending the environment, such as when Britain's depleted timber reserves made it necessary to begin using its more available supplies of coal. This is development at the macro level, because it amounts to a shift to a new niche for the economy as a whole.
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Intensification requires comparatively small adjustments which are easier to caryy out, whose consequences are unlikely to be catastrophic, and whose nature is better understood. Extensification, on the other hand, amounts to a widening of the system, the inclusion of elements whose feedback effects and ecological by-products are not so well known.
Flammang discusses how society handles the process of structural change. the technical problems of developing new methods or resources are dealt with concurrently with the associated social, political, and cultural problems. He says that society will reject methods and materials that don't work and accept those that do. [I need to think about this some more. It seems that society is quite capable of rejecting new methods that would be successful and accepting less successful methods that are more politically palatable. Again, think about reactions to trade.]
In conclusion, growth and development are complementary and competitive. They tend to be more competitive in the short run -- resources devoted to development can't be applied to growth, and vice versa.
However, it is possible to have growth without development. "Unused land may be brought into production as population increases without much if any structural change."
And development is possible without growth. "One sector often grows at the expense of another." (e.g. industry vs. ag) Ideally, development should set the stage for future growth, but that is not always the case.
Wilkinson, R.G. (1973). Poverty and Progress. New York: Praeger Publishers.
Posted by Chip on May 24, 2004 at 10:35 AM | TrackBack