Development Paradigms~II

What exactly is development and what kind of development do we want for Viksit Bharat? True development must be multidimensional, encompassing not just purchasing power but health, education, opportunity, job, dignity, security, inclusion, and a whole lot of other things. Income of course is important as higher income levels are strongly correlated with better health outcomes, higher educational attainment, and greater state capacity

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The artificial classifications of the World Bank and IMF at best serve their limited institutional purposes ~ to determine for eligibility of poorer developing countries for concessional loans, favourable trade terms etc., and for phasing these countries in or out of aid windows.

They may provide a framework for organising global macroeconomic data but suffer from many serious flaws. They ignore inequality ~ the USA has a high per capita income of $84000, but is a highly unequal country where the richest 1 per cent of households own almost 30 per cent of the nation's total wealth, while the bottom 50 per cent hold only about 3 per cent. The top 10% own more than two-thirds of total wealth, and this share has increased steadily over the decades. In contrast, Japan, also an advanced economy, has low inequality. In our dream of Viksit Bharat, do we want an unequal society where a million billionaires account for 80 per cent of the nation's GDP?

The classifications also ignore social outcomes ~ South Africa and Vietnam have similar income levels but vastly different inequality and employment structures. They ignore human development and economic structures, and cannot distinguish between a diversified modern manufacturing economy with a high skill base like China, an upper middle-income country, from Saudi Arabia, a high-income rentier state that is dependent on a single commodity, oil, and has very narrow domestic skill base.