Index

How the Other Three-Quarters Live

Economics and Development Studies
The Nature of Development Economics
Why Study Development Economics Some !ritical
Questions
The "mportant #ole of $alues in Development Economics
Economies as Social Systems% The Need to &o 'eyond Simple
Economics
What Do We (ean )y Development
Traditional Economic (easures
The New Economic $iew of Development
Sen*s +!apa)ilities, -pproach
Three !ore $alues of Development
Sustenance% The -)ility to (eet 'asic Needs
Self-Esteem% To 'e a .erson
/reedom from Servitude% To 'e -)le to !hoose
The Three O)0ectives of Development
!onclusions

KEY CONCEPTS & COMMENTARY
Attitudes1 23
Glossary% - state of mind or feelin4 of an individual1 4roup1
or society re4ardin4 issues such as material 4ain1 hard wor51
savin4 for the future1 sharin4 wealth1 etc6 See also values6
Commentary%
Capabilities, 78
Glossary% The freedoms that a person has to )e or to
do1 4iven their personal features and their command over
commodities6 See the discussion of -martya Sen*sapproach
to definin4 development in !hapter 26
Commentary%
Development Economics, 9
Glossary% The study of how economies are transformed
from sta4nation to 4rowth and from low-income to hi4h-
income status6 See development6
Development The process of improvin4 the :uality of
all human lives6 Three e:ually important aspects of
development are ;2< raisin4 people*s livin4 levels -
their incomes and consumption levels of food1 medical
services1 education etc61 throu4h relevant economic
4rowth processes= ;7< creatin4 conditions conducive to
the 4rowth of people*s self-esteem throu4h the
esta)lishment of social1 political1 and economic
systems and institutions that promote human di4nity
and respect= and ;>< increasin4 people*s freedom )y
enlar4in4 the ran4e of their choice varia)les1 as )y
increasin4 varieties of consumer 4oods and services6
Commentary%
Developin Nations1 ?
Glossary% The present countries of -sia1 -frica1 the (iddle
East1 Latin -merica and East Europe and the /ormer Soviet
@nion1 mainly characteriAed )y low levels of livin41 hi4h
rates of population 4rowth1 low income per capita1 and
4eneral economic and technolo4ical dependence on
developed economies6
Commentary%
!"eedom1 72
Glossary% - situation in which a society has at its disposal a
variety of alternatives from which to satisfy its wants6 See
also development6
Commentary%
!unctionins1 2B
Glossary% What people do or can do with the commodities
of 4iven characteristics that they come to possess or control
;see !hapter 2<6
Commentary%
#lobali$ation1 22
Glossary% The increasin4 inte4ration of national economies
into eCpandin4 international mar5ets6
Commentary%
#"oss National P"oduct %#NP&1 2D
Glossary% The total domestic and forei4n output claimed )y
residents of a country6 "t comprises 4ross domestic product
;&D.< plus factor incomes accruin4 to residents from
a)road1 less the income earned in the domestic economy
accruin4 to persons a)road6 See also national income6
Commentary%
'ncome Pe" Capita1 2D
Glossary% Total 4ross national product of a country divided
)y total population6 .er capita income is often used as an
economic indicator of level of livin4 and development6 "t
can1 however1 )e a )iased indeC )ecause it ta5es no account
of income distri)ution and the ownership of the assets that
are employed to 4enerate part of that income6
Commentary%
'nstitutions1 23
Glossary% Norms1 rules of conduct1 and 4enerally accepted
ways of doin4 thin4s6 Social institutions are well-defined1
formal or4aniAations of society that 4overn the way that
society operates - for eCample1 the class system1 private
versus communal ownership1 or the educational
system6 .olitical institutions are the systems that 4overn the
operations of the 4overnment of a particular society - formal
power structures1 political parties1 and mechanisms for
o)tainin4 power6
Commentary% "n "nstitutional Economics1 an institution is a
routiniAed pattern of collective human )ehaviour6 Such
patterns develop )ecause of their decision-ma5in4
efficiency1 i6e61 you donEt have to thin5 a)out it 0ust follow
the path6 -t one eCtreme such patterns may )e formaliAed
as physical or4aniAations li5e schools1 hospitals1 armies1
etc6 -t the other eCtreme1 they are informal customs and
traditions that are simply EnormalE6 One contemporary
economist1 Ec5hardt Schlicht1 has eCamined the economic
efficiency of custom and tradition6 .lease see%
Schlicht1 E61 On Custom in the Economy,
Introduction, OCford !larendon .ress1 299B1 2-B6
Schlicht1 E61 On Custom in the Economy, Chapter 14: The
Division of Laour 1 OCford !larendon .ress1 299B1 737-7?D6
Schlicht1 E61 -estheticism in the Theory of !ustom1 !ournal
des Economistes et des Etudes "umaines1 $olume F81
numGro 21 (ars 78881 pp >>-D26

(ess Developed Count"ies %(DCs&1 9
Glossary% See developin# countries
Commentary%
Mo"e Developed Count"ies %MDCs&1 9
Glossary% See developed world
Developed )o"ld The now economically
advanced capitalist countries of Western
Europe1 North -merica1 -ustralia1 New Healand1
and Iapan6 These were the first countries to
eCperience sustained lon4-term economic 4rowth6
Commentary%
Non*economic +a"iables1 23
Glossary% Elements of interest to economists in their wor5
)ut not 4iven a monetary value or eCpressed numerically
)ecause of their intan4i)le nature6 Sometimes non-
economic varia)les such as educational1 health1 cultural1
political1 and institutional factors are more important than
the :uantifia)le economic varia)les in promotin4
development6
Commentary% -r4ua)ly some of what the authors treat as
non-economic are in fact economic1 e$#$, property ri4hts6
E%tract% The !ompetitiveness of Nations in a &lo)al
Jnowled4e-'ased Economy
286B3 The nature of .hysiocratic pu)lic
intervention was also radically different from
(arCian Kownership of the means of production*
and Jeynesian mana4ement of a44re4ate
demand6 -cceptin4 that private property and self-
interest were the drivers of economic 4rowth and
development1 the .hysiocratsreached )eneath the
surface of the laisse& faire, laisse&
passer mar5etplace6 They reached down to the
le4al foundations of capitalism ;!ommons 2973<
to manipulate the nature of property ri4hts
themselves6 /or the .hysiocrats1 +the pu)lic
interest is manifest in the continuin4 modification
or reconstitution of the )undle of ri4hts that
comprise private property at any 4iven time
;Samuels 29?71 2?2<6
286BD "n effect1 the .hysiocrats wanted to Kload
the dice* to raise the Kcommandin4 hei4hts* of the
national economy6 They wanted to use the
conscious manipulation of capitalist self-interest L
accumulation of mar5eta)le property L to foster
and promote the economic 4rowth and
development of the nation$ The .hysiocrats thus
viewed property ri4hts as instruments of economic
policy6 They also saw them as providin4 the
foundation of the economy itself definin4 what is
)ou4ht and sold1 how and where6 -ccordin4ly1
the .hysiocrats%
implicitly reco4niAe that the )asic economic
institutions ;the or4aniAation of economy< are
le4al in character= that law is an instrument
for the attainment of economic o)0ectives and
that economy is an o)0ect of le4al control
;Samuels 29?71 2?7<6
Pe" Capita #NP1 2D
Glossary% See income per capita
Commentary%
Political Econom,1 9
Glossary% The attempt to mer4e economic analysis with
practical politics - to view economic activity in its political
conteCt6 (uch of classical economics was political
economy1 and today political economy is increasin4ly )ein4
reco4niAed as necessary for any realistic eCamination of
development pro)lems6
Commentary% On the positive side of the e:uation1
reco4nition of the critical role of 4overnment in the
developmental process is necessary6 Thus while the
Kdeveloped* economy is supposedly self-re4ulatin41 the
State actually plays an inevita)le role in the control of the
money supply as well as mana4in4 education1
unemployment1 trainin4 and a host of other policies that
effectively1 even if unnoticed1 re4ulate the mar5etplace6 On
the ne4ative side1 -dam Smith was concerned with
economic profit )ein4 converted into political power and
political power )ein4 converted into economic profit6 "t was
to )rea5 this connection that -dam Smith ar4ued a4ainst
State monopolies6
Sel-*Esteem1 72
Glossary% The feelin4 of worthiness that a society en0oys
when its social1 political1 and economic systems and
institutions promote human respect1 di4nity1 inte4rity1 self-
determination1 etc6 See development6
Commentary% !an a society en0oy feelin4s of worthiness or
only the individual "t is here that the author slips from the
Standard (odel in economics in which the individual is the
unit of analysis and slides into a traditionally more (arCian
view of the collective or 4roup as the unit6 This catches the
dupleC nature of humanity as what 'ronows5i in The 'scent
of (an called Ea social solitaireE6
Social 'ndicato"s1 2D
Glossary% Non-economic measures of development1 such as
life eCpectancy at )irth1 infant mortality rate1 literacy rate1
and physicians per 2881888 population6
Commentary% Social indicators are not 0ust used in
developmental economics6 /or eCample in welfare
economics there have overtime )een several attempts to
compensate for the pro)lems inherent in the concept and
computation of &D. and &N. in so-called developed
economies1 e$#61 the pro)lem of displacement6 "n sociolo4y1
the rou4h e:uivalent of &D. is Time @se where the time
spent )y an individual1 community or nation at different tas5
durin4 the day ;and ni4ht<6
Social S,stem1 23
Glossary% The or4aniAational and institutional structure of a
society1 includin4 its value premises1 attitudes1 power
structure1 and traditions6 (a0or social systems include
political processes1 reli4ions1 and ethnic divisions6
Commentary%
Subsistence Econom,1 D
Glossary% -n economy in which production is mainly for
personal consumption and the standard of livin4 yields no
more than the )asic necessities of life - food1 shelter1 and
clothin46 See also su)sistence farmin46
Commentary%
Sustenance1 72
Glossary% The )asic 4oods and services1 such as food1
clothin41 and shelter1 that are necessary to sustain an avera4e
human )ein4 at the )are minimum level of livin46
Commentary% The :uestion arises as to whether
Ksustenance* is an a)solute1 e6461 calories of food per day1 or
relative1 i6e61 what is a luCury to people in an under-
developed country is a necessity for sustenance in a
developed country1 e6461 access to a telephone1 television or
even the internet6
T"aditional Economics1 B
Glossary% The economics of capitalist mar5et economies
characteriAed )y consumer soverei4nty1 profit maCimiAation1
private enterprise1 and perfect competition6 The ma0or focus
is on the efficient allocation of scarce resources ;see
economic efficiency< throu4h the price system and the
forces of supply and demand6 See alsomicroeconomics,
macroeconomics, laisse&)faire, invisile hand1 and mar*et
economy6
Commentary%
+alue P"emises1 2>
Glossary% See values
Commentary%
+alues1 231 72
Glossary% .rinciples1 standards1 or :ualities considered
worthwhile or desira)le6 - value 0ud4ment reflects personal
or class )eliefs6 See also normative economics6
Commentary% The authors do not discuss e:uity which
to4ether with efficiency and effectiveness is one of the >
KEs* of economics6 'ehind the motivation for international
development is a sense of Kine:uity*6 E:uity is a concept
that emer4ed out of the -n4lo--merican !ommon
law6 When En4land was ta5en )y William the !on:ueror in
28?? there was a patchwor5 of le4al systems reflectin4 the
different peoples settled in various parts of the country L
-n4les1 !elts1 Danes1 Iutes1 SaCons1 etc6 The same crime
or offense often had dramatically different penalties6 Over
time the Jin4 esta)lished Kcourts of e:uity* to miti4ate such
differences as well as to provide a venue for appeal )y the
poor and wea5 to the !rown a4ainst the stron4 and
powerful1 e$#61 the no)les66 The rationale was that even
thou4h the law may have )een properly applied1 its outcome
was unfair1 une:ual or not e:uita)le6 Out of this le4al
concept that of economic e:uity developed especially with
respect to taCation6 "n economics there are two primary
dimensions to e:uity6 HoriAontal e:uity re:uires Kli5e
treatment of li5e*6 $ertical e:uity re:uires Kunli5e treatment
of unli5e*6