We have entered now the era of Sustainable Development, where the focus is not only on ensuring that people from the most marginalized parts of the world have a good life, but that they also have aa sustainable and bright future.
To help understand how a sustainable and bright future future is different from a merely good life, I thought I should remind our "valucentric" readers about the relationship between economic growth and sustainable economic development.
Defining economic development
The term development means a change over time, typically involving growth or expansion. According to (Norton, et al., 2006), development is a process with many economic and social dimensions. It is a dynamic process including not only changes in the structure and level of economic activity, but also increased opportunities for individual choice and for improved self-esteem. In the first Human Development Report, UNDP defined development as expanding people’s choices.
Economic development therefore refers to a process of economic transformation; involving more efficient resource utilization as well as expansion of productive capacity accompanied by a sustainable and equitable distribution of the gains from such growth.
Several theories of development such as the Mercantilists, the Classicalists, Stage of Growth proponents and Capital Accumulation theorists converge to the belief that: economic development is a transition from traditional society to a modern commercial society with improvements in people’s standards of living.
Economic development is thus a multi-faceted phenomenon involving both growth and productivity gains as well as social and distributional efficiencies.
Contrasting economic development with economic growth
|PHOTO CREDIT: Mabel Munyuki Hungwe (PhD)|
“Economic growth is a necessary but not sufficient condition for economic development.”
The difference between economic growth and development can be illustrated by the recent findings that the early 2000s have been Africa’s decade of unprecedented economic growth. For instance, six of the ten fastest growing economies globally in the early 2000s were in Africa; including Angola, Niger, Ethiopia, Chad, Mozambique, and Rwanda who registered growth of over 7%. However, this unprecedented growth has not delivered the jobs and poverty reduction that Africa has been seeking.
Africa is off target on achieving MDG 1 of eradicating extreme poverty and hunger. This may be seen to resemble “economic growth” without “economic development”.
Economic development focuses on concepts which include, though not limited to:
- productive capacity of resources and productivity of both self-employment and wage-employment
- equity of income and asset distribution
- social protection
To a sustainable and climate smart future post-2015!