MODULE I

Unit 1

CONCEPT OF DEVELOPMENT-

SOCIAL CHANGE, PROGRESS AND SOCIAL DEVELOPMENT

Structure

I.1.1 Introduction

I.1.2 Objectives

I.1.3 Concept of development

I.1.4 Social change

I.1.4.a Factors of social change

I.1.5 Progress

I.1.5.a. Characteristics of progress

I.1.6 Social development

I.1.6.a. Approaches to Social Development

I.1.6.b. The goals of social development

I.1.7 Concept of economic development

I.1.7.a. Stages of economic development

I.1.8 Conclusion

I.1.9 Model questions

I.1.10 Bibliography and further readings

I.1.11 Space for note

I.1.1 Introduction

Globalization has often acquired a narrow connotation, associated primarily with the
liberalization of international trade and investment. This narrow interpretation is even narrower
and focuses on the particular institutional frame work within which that expansion is taking place
today, involving WTO and related bodies. Development means making a better life for everyone.
In the present context of a highly uneven world, a better life for most people means, essentially,
meeting basic needs; sufficient food to maintain good health; a safe healthy place to live;
affordable services available to everyone and being treated with dignity and respect.

I.1.2 Objectives

This unit will help the student to understand the concept of development and economic
development and the different aspects of social development. It also offers a formal definition of
social development and a description of its key characteristics. It include

 Meanings of social change and progress

 Social and economic development

I.1.3 Concept of development

The term ‘development’ has carried very different meanings over the years. Development is a
process that creates growth, progress, positive change or the addition of physical, economic,
environmental, social and demographic component. The purpose of development is in the level
and quality of life of population and expansion of income and employment opportunities without
damaging the resources of the environment. Development is visible and useful, not necessarily
immediately, and includes an aspect of quality change and the creation of conditions for a
continuation of that change.

Through the years, professionals and various researchers developed a number of definitions
and emphases for the term “development.” Amartya Sen, for example, developed the “capability
approach,” which defined “development as a tool enabling people to reach the highest level of
their ability, through granting freedom of action, i.e., freedom of economic, social and family
actions, etc. This approach became a basis for the measurement of development by the HDI
(Human Development Index), which was developed by the UN Development Program (UNDP)
in 1990.

In most recent sociological writing, the term development has been used in quite different
ways; first to differentiate two broad types of societies the prosperous industrial society and on
the other side all those societies which are predominantly rural, agricultural and poor. Secondly,
the term development is also used to describe the process of industrialization or modernization.

There are three possible meanings related to development

1. Development from within: This view says that any object – a plant, an animal, and a
society- has within it the tendency to change its form. When we talk about societies in
this way, we assume that the possibilities and the direction of change emerge within that
society.

2. Development as interaction: This view says that development of anything results from
the interaction of an object and its environment. Thus an animal or a society changes
because of a combination of the qualities and potentials within the object and the
opportunities and resources available in the environment.

3. Development as interpretation: This view says that we cannot really draw a sharp
distinction between an object and its environment. For example, an animal is made of
materials from outside itself; its actions in feeding and housing itself alter that environment.
When applied to society, this view raises the question of where are the boundaries of any
society.

In short we can see that development is a broad concept and though interrelated, it differs
from social change. Change is a value –neutral concept whereas development is a value-laden
concept. This notion of development is, in other words, the process of desired change. All cases
do not indicate development. Only, planned and desired changes can be described as
development.

1.1.4 Social change

Social change is the change in society. Society is a web of social relationships. Hence the
social change is the change in the social relationships. Social relationships include social
processes, social patterns and social interactions. These include the mutual activities and
relations of the various parts of the society. According to Jones, “social change is a term used to
describe variations or modifications of any aspects of the social processes, social patterns, social
interactions or social organizations’. Thus social change is a change in the social organisation.
Social change can be observed in every society.

Definition of social change

1. K. Davis: - “By social change is meant only such alternations as secure in social
organization- that is, the structure and functions of society.”
2. Merrill and Eldredge:- “ Social change means that large numbers of persons are engaging
in activities that differ from those which they or their immediate (forefathers) engaged in
some time before. Society is composed of a vast and complex network of patterned
human relationships in which all men participate.

1.1.4. a. Factors of social change

Human society is constituted of human beings. Thus whatever apparent alteration in the
mutual behaviour between individuals takes place is a sign of social change. This fact of social
change can be verified by glancing at the history of any society. Man is a dynamic being. Hence
society can never remain static. It undergoes constant variation.

Some writers regard diffusion to be the main factor of social change while some other writers
consider invention in a similar capacity. Actually, both diffusion and invention have a hand in
the change which besets social relationship. Main causes of social changes are the following

1. Cultural factors

The main cause of social change is the cultural factor. Changes in the culture are
accompanied by social changes. Max Weber has proved this by a comparative study of religious
and economic institutions. Actually, no one can deny that changes and variations in culture
inevitably influence social relationship. Culture gives speed and direction to social change and
determines the limits beyond which social changes cannot occur. Actually the field of social
change is limited in comparison to the field of cultural change.

2. Technological Factors

The technological factor has immense influence in social change. The increase in new
machines and methods due to new discoveries has had a very great influence upon social
relationship. The form of society is undergoing changes as a result of the development and
invention of electricity, steam and petrol driven machines for production, the means of transport
and communication and various mechanical appliances in everyday life. Even the institution of
family and marriage also effect these developments. The explicit effects of technological
advance are labour organizations, division of labour, high speed of life, increase in production
etc. In the modern age technological factors are among the predominant causes of social change.

3. Biological factors

Biological factors too have some indirect influence upon social change. Biological factors
play a part in social change. The biological principles of natural selection and struggle for
survival are constantly producing alternations in society.

4. Population factors

Even changes in the quality and size of the population have an effect upon the social
organization as well as customs and traditions, institutions, associations etc. increase and
decrease of population, a change in the ratio of men and women, young and old have an effect
upon social relationships. Decrease or increase in the population has an immediate effect upon
economic institutions and associations. The ratio of men to women in a society affects marriage,
family and the condition of women in society. In the same way the birth and death rates also
influence social change.

5. Environmental factors

Huntington claims that an alternation in the climate is the sole cause of the evolution and
devolution of civilizations and cultures. Even if these claims of the geographists are to be
discarded, it cannot be denied that floods, earthquake, excessive rain, drought, change of season
etc, have significant effect upon social relationships and these are modified by such natural
occurrences.

6. Psychological factors

Most sociologists regard psychological factors as important elements in social change. The
cause of social changes is the psychology of man himself. Man is by nature a lover of change. He
is always trying to discover new things in every sphere of his life and is always anxious for novel
experiences. As a result of this tendency, the mores, traditions, customs etc. of every human
society are perpetually undergoing change. The form of social relationships is constantly
changing in the process of interaction between these two tendencies. New customs and methods
which replace the old traditional customs are being formed.

7. Other Factors

In addition to above mentioned factors another factors of social change is the appearance of
new opinions and thoughts. For example, changes in the attitudes towards dowry, caste system,
female education, etc, have resulted in widespread social variations and modifications. In fact a
majority of the social revolution take place as a result of the evolution of new ways of thinking.
Similarly, war is also a cause of social change because it influence the population, the economic
situation and ratio of males to females, etc.

Result of social change

The form of ach aspect of social life is being continually transformed due to the effect of
the above mentioned factors which cause social change. New institutions and associations are
being formed and destroyed in the social, economic, political, cultural, verily in all spheres. The
form of family, marriage, state, religion, culture, educational system and economic and social
structures, is continually changing and transforming as a result of which, a change occurs in the
life of the individual and subsequently in his relation with others. For example, the results of
social change can be well understood and realized by studying the history of the objectives,
structures, forms, importance and functions etc. of the family from the early past to the present
dat. Similarly, all changes and differences that can be seen between the tribal society and the
present day society can be attributed to social change.

1.1.5. Progress

The literal meaning of the word progress is moving forwards some objective or simply
‘moving forward’. But moving forward and backward, progress or regress, are relative terms.
Progress is a narrower concept. It is change, but it is changes in a desired or approved direction
not any direction. The word progress cannot be appended to change in every direction. For
example, if the condition of agriculture in a particular country worsens and a famine results, it is
undeniably change, but it will not be called progress. Progress means moving forward in the
direction and achievement of some aim.

1.1.5. a. Characteristics of progress

The concept of progress will be clarified by the knowledge of its characteristics. The
following are its main general characteristics

1. There is change in progress. Progress is change or motion in some direction. Hence,

change is its first essential characteristic.
2. In progress, the desired aim is achieved. But mere change cannot be called progress. It
can be called progress only when it full fill the desired aim.
3. Progress is communal. Progress, in its ethical and certain other meanings, is also
personal but in sociology this meaning of progress is not accepted since sociology is the
science of society and in it the individual is taken into consideration only as a part of
society. Thus progress, according to sociological view point is communal or in other
words, in progress the entire group moves ahead in some desired direction.
4. Both loss and gain are possible in progress. It is not that there is only gain and no loss
in progress, although ultimately, of course, there is more gain than loss. In case the loss is
greater than gain, the social change involved cannot be called progress. In social progress
the community has to suffer hardships and make sacrifices.
5. Progress is voluntary. Progress does not come about involuntarily. Desire and volition
are needed for progress. It is an uphill task. Efforts have to be made and when these
efforts are successful it is called progress.
6. Concept of progress is variable. The concept of progress does not remain constant in all
times and at all places. That which is today considered the symbol of progress may
tomorrow be considered and treated as a sign of regress.

1.1.6. Social development

Even though the term social development has been in regular use for more than half a
century, it is still poorly defined. It is often associated with community – based projects in the
developing countries such as microenterprises, women’s groups, cooperatives, maternal and
child welfare programme, the provision of safe drinking water and the construction of schools
and clinics. It also refers to government policies and programmes concerned with the social
aspect of development, such as reducing poverty, increasing literacy, combating malnutrition and
improving access to health and education. Scholars working in different academic fields have
also used the term in different ways

Social development may be viewed as an approach for promoting people’s welfare or

social well- being. Social development may be contrasted with other approaches such as social
philanthropy, social work and social administration. The notion of social welfare is central to the
concept of social development. The term social development connotes as a move towards a
better social life. The ultimate purpose of development is to provide opportunities to people in
all sections for a better life, better facilities for education, health, nutrition, housing, social
welfare and environment.

The concept of social development was first used by Hobhouse. He proposed four
criteria of development, namely increase in scale, efficiency, mutuality and freedom. Social
development includes improvement in the quality of life of people, equitable distribution of
resources, equal participation of people in decision making, freedom to participate in every event
in their life world. Social development has two interrelated dimensions. First one is Facility of
people to work continuously for their welfare and second is the development of all institutions so
as human needs can meet at all levels through the process of improving relationship between
people and social institutions. Social development obviously reveals the ideas like reducing
inequalities and problems, creating opportunities and empowering people, achieving human
welfare and well-being, improving relationship between people and their institutions and finally
ensuring economic development.

The main features of social development are:

 High degree of urbanization

 Industrial mode of production
 High literacy rate and vocational training
 High newspaper circulation
  Political Democracy ( existence of a multi-party system and selection of representative
through secret ballet election)
 Secularization, institutionalization, of rationality as a dominant behavioral norm
 High degree of social mobility
 Increasing occupational differentiation
 Independence of Judiciary
 Proliferation of voluntary associations including trade unions
 A strong sense of national unity (as opposed to ethnic and denominational functionalism)
 Nuclear family pattern

The improvement in social quality means an increase in the strength of family stability,
interpersonal bonds and social solidarity. An improvement in the cultural quality of life signifies
the upsurge of the moral dimensions. A concern for others is the essence of social morality.
Thus sociological approach to development looks upon the development process as alternations
that affect the whole socio-cultural matrix of society. In the modern sense, development refers to
planned, stimulated movement of the entire system in the direction of the overall development.

1.1.6. a. Approaches to Social Development

Approaches to Social Development on the basis of two criteria:

i. Centralization versus decentralization of development schemes and resources

ii. Unit of development i.e. the focus of development individual, group, village etc.

The first criterion gives rise to two approaches namely, development from the top and
development from the bottom. The second criterion gives rise to the three approaches –sectoral
development, area development and target group development. Let us now review briefly the
five approaches.

1. Development from the top

The approach of development from the top envisages the planning and execution of
development scheme by the central or apex bodies of administration. In other words, the central
organizations decide direction of plan formulate projects and impose them on the people. For
example, the ministers and high officials sitting in the capital made the development plans for
rural people without fully realizing their problems.

2. Development from the bottom

The exponents of the second approach development from the bottom, on the contrary,
believe the fairness of intentions and abilities of the people who need development. They give an
opportunity to articulate their problems as well as the ways they would like to solve them. They
are trained and maid capable, and are prepared for self-help. Utilization of resources for
development schemes decide by the concerned people themselves or by their representatives at
the local level. Thus, there is a greater decentralization of plans and higher participation of the
people.

3. Sectoral development

Sectoral development approach refers to formulation and execution of schemes for a

particular sector of economy like agriculture or industry. For instance, extension services were
made available for educating farmers, adopt new agricultural technology and loans for the well-
being of farmers.

4. Area development

All regions are not equally developed. Some are more affluent that of others. The
under development of regions is due to the problems of floods and drought. When schemes are
devised for the infrastructural development of an area or region, we call it area development
approach. The Command Area Development Scheme, introduced in India in 1974 for the
development of irrigation resources in certain regions illustrates this approach.

5. Target group development

Target group development approach has its focus on a particular category of people,
such as small farmers, women and farm labourers. Schemes, such as Small Farmers
Development Agency (SFDA) and reservation of seats in schools and colleges and in
employment for scheduled castes show the target group approach.

6. Community development Approach

 There is another approach to development, which has its focus on the overall
development of the people residing in a locality, village or town. This is known as a community
development approach. This approach stress on the development of education, health facilities,
economic and social activities, and other infrastructural facilities. Community development
scheme was initiated in 1952 for overall development of the villages. The philosophy of this
programme was to educate, encourage and enable the people to develop themselves with their
own efforts and resources. It was realized that a greater participation of the rural people in the
preparation of development schemes was essential.

Social Development: Important Points

The process of social change in social development is progressive in nature. In social

development, the progressive notion of social change can be viewed conceptually as involving
three ideal typical stages; first, a pre-existing social condition social development seeks to
change; second, the process of change itself; and finally, the end state in which goals are
realized. In practical terms, social development is concerned with the projects, programmes,
policies and plans that promote progressive change. The social development process forms a part
of a larger multifaceted process comprised of economic, social, political, and cultural
environmental, gender and other dimensions which are integrated and harmonized. This is
particularly pertinent to social development practice where economic, social and other
interventions are linked and social investments are utilized to promote social well- being.

The process of social development is interventionist in that it requires human agency in

the form of projects, programmes, policies and plans that achieve social development goals. The
proponents of social development reject the idea that social improvement occur naturally as a
result of the workings of the economic market or because of natural or inbuilt historical forces.
They believe that deliberate efforts are needed to enhance people’s wellbeing. Human beings are
not swept along haphazardly by events, but are able to influence their own future in the context
of wider social, economic and political changes and accordingly the role of agents who promote
change through social development practice is emphasized. It includes individuals, households,
grassroots associations, non-governmental organizations, faith- based organizations,
communities, commercial providers and government ministries. Social development
interventions are also implemented on different levels, including the household, community,
regional and national levels. Often social development practice has a special focus in that many
projects and programmes seek to enhance social well-being within special socio-spatial settings,
such as rural communities, inner-city areas and geographic regions. Social development’s
practice strategies are informed by normative theories that reflect wider values, beliefs and
ideologies.

The social development process is productivity in that practice interventions functions as

investments that contribute positively to economic development, because they are based on
social investments, they generate rates of return to the individuals, households and communities
that benefit from these investments as well as to the wider society.

Social development is universalistic in scope, being concerned with the population as a

whole rather than with impoverished, vulnerable and needy groups of people. It also seeks to
promote people’s participation in development. It has also been extensively concerned with
women and gender issues. Finally, social development is committed to the goal of promoting
people’s social well-being. The notion of social well-being requires that social needs be met,
problems are managed and opportunities maximized for families, communities and societies.
Social development advocates believe that a commitment to achieve social- well- being for all
can best be realized through a dynamic multifaceted development process that utilizes social
investments and harnesses the power of economic growth for social ends.

1.1.6. b. The goals of social development

Despite their importance, social development goals have not been adequately debated.
Although a variety of goals are mentioned in the literature, they are seldom defined in concrete
terms of formulated as a coherent conception of the desirable end state that social development
seeks to achieve. This reflects the tendency among social development scholars to rhetorically
use value-laden terms rather than grapple with the complexity of defining goals such as “social
change’, ‘equality’, ‘progress’ and ‘social justice’, which are often bandied about in the
academic literature on the assumption that their meaning is self-evident..

Abstract, ideational goals can be contrasted with material goals that are usually more
precisely defined since they refer to tangible states such as a reduction in poverty or
improvements in literacy or declines in maternal mortality. They can also be readily
operationalized and as scholars engaged in social indicators research have shown, there is much
agreement on the definition of material goals of this kind. In addition, aggregate indicators have
also been constructed to measure general improvements in social well- being. On the other hand,
non-material or ideational goals’ are much more difficult to operationalize and those who
rhetorically use these abstract concepts seldom attempt to translate them into specific,
measurable goals. Although they are difficult to operationalize, research undertaken into
inequality and social capital reveal that it can be done. Certainly, the formulation of more
concrete and measurable ideational goals would aid implementation.

The concept of social well-being is defined as a state or conditions that characterises

individuals, families, communities and even whole societies that have effectively managed social
problems, met social needs and created opportunities for people to maximise their potential. This
approach incorporates ideational as well as material elements and also encompasses many of the
elements highlighted in other conceptualizations of social development’s goals. While the goals
such as alleviating poverty, the notion of opportunity incorporates ideational notions of equality,
freedom, rights, peace and social justice. Defined in this way, opportunity is not only concerned
with education, but with facilitating the realisation of people’s aspirations.

I.1.7. Concept of economic development

Economy as a sub-system of society can be viewed in dual perspective. One, in its

static and the other, is its dynamic perspectives. Economic development comes within the latter.
It is more crucial and inevitable as the perpetuation and existence of economic sub- system and
human society depend upon that. Mankind in all the stages of their living on this earth have
aspired and made efforts to uplift their economic condition. Therefore, economic development is
not a new phenomenon rather is as old as human civilization. But, the great era of economic
development began in the world in modern period, more particularly after the advent of
industrial revolution and now every nation of the world is earnestly engaged in arresting more
and more progress in its economy.

Definition of economic development

The term economic development refers to the long run sustained process of improvement
in economy accompanied by rise in per capita income, national income, production, progress in
technology as well as change and improvement in the overall condition of social life. It does not
involve improvement in income or material well being alone rather includes improvement in rise
in standard of living, health, and life expectancy, population growth, spread of education, social
mobility, industrial urbanization as well as growth of new institutions and values. A definition
given in recent United Nations publication clearly emphasizes that development concerns not
only economic growth but also social, cultural, institutional as well as economic changes.

Meaning of economic development

Economic development is of almost significance to all economies. Economic

development is necessary for under- developed countries because they can solve the problems
of general poverty, unemployment, backwardness and low standard of living through it. On the
other hand, economic development is equally significant to developed economies as it helps
them to main their existing growth rate. In the words of Meier and Baldwin, A study of poverty
of nations has even more urgency than a study of the wealth of nations” .Economic development
studies the cause and cures of general poverty. Economic development refers to the process by
which per capita income and economic welfare of a country increase over time. It may be noted
that the term “economic development” and “Economic Growth” are used interchangeably.
According to them, economic development means growth with change.

1.1.7.a. Stages of economic development

Rostow has identified three stages of economic development

1. Preparatory stage - it covers a long period during which the preconditions for take-off
the characteristics features of this stage are

a. Rate of productive investment increase

b. One or more substantial manufacturing sector of development arises.
c. Social and political institutions which assist development are brought into existence.
d. The rate of population growth becomes lower.
e. Modern science and technology are applied.
2. The Take off period
Economy transforms itself in such a way that economic growth subsequently takes place more or
less automatically. Rate of investment becomes increases.

3. Period of self-sustained growth

Here the country carries on economic development without foreign capital. All ingredients of
economic development at this stage are available in the country itself.

1.1.8. Conclusion

The term Development is however no more precise than the term evolution in its
application to social phenomenon. Social development is equitable, socially inclusive and
therefore sustainable. It promotes local, national and global institutions that are responsive,
accountable and inclusive and it empowers poor and vulnerable people to participate effectively
in development processes. Social development begins with the perspectives of poor and
marginalized people and works towards positive and sustainable changes to make societies more
equitable, inclusive and just.

1.1.9. Model questions

1) What is development?
2) Define economic development?
3) Explain the concept of social change and progress?
4) What are the elements of economic development?
5) Illustrate the stages of economic development?
6) Define social development?
7) Explain different approaches to social development?
8) Discuss the nature of social development?
9) What are the main goals of social development?

1.1.10 Bibliography and further readings

1. Tony Barnett “Sociology and development”

2. R.S Tripathi and S. B Sing “Social and economic development in India”

3. Irma Adelman “Theories of economic growth and development” 1961

4. T. R Jain Babirkaur “Development economics”

5. Paul streeten “Social and Economic development” Cetre for Indian Development

Studies, New century publications, new Delhi 2010

6. James Midgley “Social Development, Theory and Practices” 2013,

I.1.11 Space for note

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 MODULE I
Unit 2
HUMAN DEVELOPMENT
AND
SUSTAINABLEDEVELOPMENT

Structure
I.2.1. Introduction

I.2.2. Objectives

I.2.3. Human development

I.2.3.a. Concept of human development

I.2.3.b. Defining and measuring human development

I.2.4. Sustainable development

I.2.4.a Features of sustainable development

I.2.4.b Need of sustainable development

I.2.4.c Condition for sustainable development

I.2.4.d Indictors of sustainable development

I.2.4.e. Strategies for sustainable development

I.2.5. Participatory development

I.2.5.a. Approaches to participatory development

I.2.5.b. Level of participatory development

I.2.6. Factors affecting economic growth

I.2.7. Conclusion

I.2.8. Model questions

I.2.9. Bibliography/ further readings

I.2.10. Space for note

1.2.1. Introduction

Human development is the process of enlarging people’s choices. These choices can be
infinite and can change over time. Gender is one of the fundamental ways in which the social life
of human beings is organized. Indeed, one of the first questions people ask when they hear of a
birth is whether the child is a boy or girl. From infancy onwards, parents often think that boys
and girls are very different.

1.2.2. Objectives

 This unit provides an inference about the human development

 This unit aim to explain the need for sustainable development in our nation and importance
of participatory development
 Try to understand economic growth and how it differs from development

1.2.3. Human development

Development problems in less developing nations/regions must be seen in a much

broader perspective in comparison to traditional economics of a developed one. Problems of such
economies have to be analysed within the context of the overall social system of the area
concerned. Social system implies the interdependent relationship between economic and non-
economic factors. Among non-economic factors we have attitude towards life, work, legal and
administrative structures, patterns of kinship and religion, cultural traditions, system of land
tenure, the authority and integrity of government agencies and the degree of people’s
participation in development decisions and activities and the flexibility or rigidity of economic
and social classes.

A humanistic approach of development model based on wage goods paradigm may be

possible alternative. The main focus of attention of these models should be based on the
paradigm of human development, in its various dimensions. Various aspects of human well-
being such as food, nutrition, shelter, education, health and other various amenities which
constitute a good quality life, should occupy the centre stage of all development efforts.

The concept of human development has two sides. One is the formation of human
capacity such as improved health, knowledge and skills. The other is how people make use of
these acquired capabilities for productive purpose, for leisure and for being active in cultural,
social and political affairs. If the scale of human development do not finally balanced the two
sides, human frustration can result.

According to the concept of human development income is one of the option that people
would like to have though certainly an important one. The purpose of human development is to
enlarge all human choice, not just income. Human development brings together the production
and distribution of commodities and the expansion and use of human capabilities. In analysis all
issues of society whether economic growth, trade, employment, political freedom or cultural
values. This concept of human development applies equally to developing and industrialized
countries.

1.2.3.a Concept of human development

There are four major elements in the concept of human development

A. Productivity

People must be enabling to increase their productivity and to participate fully in the
process of income generation and remunerative employment. Economic growth is therefore a
subset of human development models.

B. Equity
 People must have equal access to equal opportunities. All barriers to economic and
political opportunities must be eliminated. So that people can participate in and benefit from
these opportunities.

C. Sustainability

Access to opportunities must be ensured not only for the present generations but for future
generation as well. All forms of capital, physical, human, environmental should be replenished.

D. Empowerment

Development must be by people and not only for them. People must participate fully in the
decisions and the process that shape their life.

Importance and significance of the study of Human Development

The essence of all these issues such as education, health and various other factors which
determine the conditions of living of the common man are captured in the newly emerged
concept of Human development. The acceptance of this new idea has significantly broadened the
narrow conventional development paradigm. The basic reason for the Human Development
Report by UNDP, since 1990, is an attempt to reduce the unacceptable levels of economic
inequalities, poverty commonly experienced in the fewer developing countries and even certain
neglected regions of a large and developed country. Adequate attention need to be paid to these
aspects related to development experience in the less developing nations, because, what is
needed to raise the miserable living levels of the poor masses is instead radical institutional
reforms. These would serve the double purpose of greater equality and economic growth. Study
of human development therefore emphasises the need to achieve social justice and enhance
human happiness for which we need to create institutions that transmute the longing for a better
world into a set of policies, which begin by raising the welfare of the deprived sections.

Economic growth must be combined by equitable distribution of benefits. Equitable

opportunities must be available both to the present and to the future generations. And all people,
women and men, must be empowered to participate in these developmental processes that are
they should participate equally in the design and in the implementation of key decisions that
shape their lives. Thus human development is impossible without gender equality. Sustainable
human development implies engendering the development paradigm. The human development
index was constructed to reflect the most important dimensions of the human development.

Human development contains three indicators

1) Life expectancy: representing a long and healthy life

2) Educational attainment: representing knowledge
3) Gross domestic product: representing a decent standard of living

The human development index, a measure of human development shows how far a country
has to travel to provide these essential choices to its entire people. It is not a measure of well
being nor is it a measure of happiness. Instead it is a measure of empowerment. Over the years
the human development index has undergone refinement both in methodology and in data. The
gender related development index and the gender empowerment measure introduced in human
development report in 1995 are composite measures reflecting gender inequalities in human
development. The gender empowerment measures inequality in economic and political
opportunities. The Human Development Report, 1997 introduced the concept of human poverty
and formulated a composite measures of Human Poverty Index. (HPI)

The 8th plan recognized human development as the core of all development efforts through
the provision of adequate social welfare, health, educational and other basic services. However,
the importance of mobilization of human resources themselves has not received proper attention
in the context of economic development.

1.2.3.b. Defining and measuring human development

People are the real wealth of a nation. The basic objective of development is to create an
enabling environment for people to enjoy long, healthy and creative lives. This may be appearing
to be a simple truth. But it is often forgotten in the immediate concern with the accumulation of
commodities and financial wealth. Technical considerations of the means to achieve human
development – and the use statistical aggregates to measure national income and its growth- have
at times obscured the fact that the primary objective of development is to benefit people. There
are two reasons for this. First, national income figures, useful though they are for many purposes,
do not reveal the composition of income or the real beneficiaries. Second, people often value
achievements that do not show up at all, or not immediately, in higher measured income or
growth figures.; better nutrition and health services, greater access to knowledge, more secure
livelihoods, better working conditions, security against crime and physical violence, satisfying
leisure hours and a sense of participating in the economic, cultural and political activities of their
communities. Of course, people also want higher incomes as one of their option. But income is
not the sum total of human life.

Recent development experience has once again underlined the need for paying close
attention to the link between economic growth and human development- for a variety of reasons.

 Many fast growing developing countries are discovering that their high GNP growth rates
have failed to reduce the socio- economic deprivation of substantial sections of their
population.
 Even industrial nations are realizing that high income is no protection against the rapid
spread of such problems as drugs, alcoholism, AIDS, homelessness, violence and the
breakdown of family relations.
 At the same time, some low –income countries have demonstrated that it is possible to
achieve high levels of human development if they skillfully use the available means to
expand basic human capabilities.
 Human development efforts in many developing countries have been severely squeezed
by the economic crisis of the 1980s and the ensuring adjustment programme.

Recent development experience is thus a powerful remainder that the expansion of output and
wealth is only a means.

A. Defining human development

Human development is a process of enlarging people’s choices. The most crucial ones are
lead to a long and healthy life, to be educated and to enjoy a decent standard of living. It is
sometimes suggested that income is a good proxy for all other human choices since access to
income permits exercise of every other option. This is only partly true for a variety of reasons;
  Income is a means, not an end. It may be used for essential medicines or narcotic drugs.
Well-being of a society depends on the uses to which income is put, not on the level of
income itself.
 Country experience demonstrates several cases of high levels of human development at
modest income levels and poor levels of human development at fairly high income levels.
 Present income of a country may offer little guidance to its future growth prospects. If it
has already invested in its people, its potential income may be much higher than what its
current income levels shows, and vice versa.
 Multiplying human problems in many industrial, rich nations show that high income
levels, by themselves, are no guarantee for human progress.

The term human development here denotes both the process of widening people’s choices
and the levels of their achieved well-being. It also helps to distinguish clearly between two sides
of human development. One is the formation of human capabilities, such as improved health or
knowledge. The other is the use that people make of their acquired capabilities, for work and
leisure.

Human welfare approaches look at human beings more as the beneficiaries of the
development process than as participants in it. They emphasize distributive policies rather than
production structures. The basic needs approach usually concentrates on the bundle of goods and
services that deprived population group’s needs; food, shelter, health care, clothing and water. It
focuses on the provision of these goods and services rather than on the issue of human choices.

Human development, by contrast, brings together the production and distribution of

commodities and the expansion and use of human capabilities. Human development is more
over, concerned not only with basic needs satisfaction but also with human development as a
participatory and dynamic process. It applies equally to less developed and highly developed
countries.

B. Measuring human development

In any system for measuring and monitoring human development, the ideal would be to
include many variables, to obtain as comprehensive a picture as possible. But the current lack of
relevant comparable statistics precludes that, nor sis such comprehensiveness entirely desirable.
Too many indicators could produce a perplexing picture- perhaps distracting policymakers from
main overall trends.

Indicators of human development

The human development report suggest that the measurement of human development should
for the time being focus on the three essential elements of human life- longevity, knowledge and
decent living standards.

For the first component- longevity-life expectancy at birth is the indicator. The importance
of life expectancy lies in the common belief that along life is valuable in itself and in the fact that
various indirect benefits (such as adequate nutrition and good health) are closely associated with
higher life expectancy. This association makes life expectancy an important indicator of human
development, especially in view of the present lack of comprehensive information about people’s
health and nutritional status.

For the second key components- knowledge- literacy figures are only a crude reflection of
access to education, particularly to the good quality education so necessary for productive life in
modern society. But literacy is a person’s first step in learning and knowledge –building, so
literacy figures are essential in any measurement of human development. In a more varied set of
indicators, importance would also have to be attached to the outputs of higher levels of
education. But for basic human development, literacy deserves the clearest emphasis.

The third key components of human development- command over resources needed for a
decent living- is perhaps the most difficult to measure simply. It requires data on access to land,
credit, income and other resources. But given the scarce data on many of these variables, we
must for the time being make the best use of an income indicator. The most readily available
income indicator – per capita income- has wide national coverage. But the presence of no
tradable goods and services and the distortions from exchange rate anomalies, tariffs and taxes
make per capita income data in nominal prices not very useful for international comparisons,
such data can, be improved by using purchasing power adjusted real GDP per capita figures,
which provide better approximations of the relative power to buy commodities and to gain
command over resources for a decent living standard.
 All three measures of human development suffer from a common failing; they are
averages that conceal wide disparities in the overall population. Different social groups have
different life expectancies. There often are wide disparities in male and female literacy. An
income is distributed unevenly. The inequality possible in respect of life expectancy and literacy
is much more limited; a person can be literate only once, and human life is finite. Reliable and
comparable estimates of inequality of income are hard to come by however.

I.2.4. SUSTAINABLE DEVELOPMENT

Introduction

Almost all economies of the world are actively engaged in their economic progress.
Economic advancement is a must for underdeveloped countries like India because in it lays the
solution of the problem like, poverty, unemployment, backwardness and low standard of living.
Sustainable development is a modern variant of the concept of development. It refers to that
process of economic development which aims at maintaining the quality of life of both present
and future generations.

Sustainable development emphasizes development without environmental degradation.

Environmental degradation includes

 Environmental pollution and

 Exploitation of natural resources

The concept of sustainable development stresses that the process of development should be
such that it causes minimum possible environmental pollution as well as minimum possible ex-
exploitation of natural resources. Over the last few years the economists have put forward a new
concept of economic development. It is known as Sustainable development. The concept of
sustainable development was propounded for the first time in 1987 by the World Commission on
Environment and Development in Broundtland Report entitled as Our Common Future.
Sustainable development is that process of economic development which aims at maintaining the
quality of life of both present and future generations without harming natural resources and
environment. Main rationale behind the use of this concept is that the process of economic
growth in almost all developed countries and economic development in underdeveloped
countries has been at the cost of natural resources and environment. By natural resources is
meant free gifts of nature like earth, water, minerals, forests, etc. made available to man.
Environment means all those situations which influence the lives and developments of the men.
Environment includes non- living things like soil and the climate and living things like animals,
creatures, plants and trees, etc. economic development may cause excessive exploitation of
natural resources. Diverse crops may be grown on land causing fall in its productivity. Excessive
mining of iron, coal, gold, silver and extraction of crude oil may lead to gradual depletion of
their stocks. Smoke and other injurious emissions from factories and means of transport often
lead to pollution of environment. Economic development, therefore may compound the problem
of pollution. Accordingly, quality of life of present and future generations may be adversely
affected. In such a situation, present development may be at the cost of future development,
prosperity of present generations may be at the cost of prosperity of the future generations. Here
comes the significance of the concept of sustainable development. It is that the processes of
development which can be sustained over a long period of time without causing any fall in the
quality of life of future generation. Such a development process has been termed as sustainable
development. Sustainable development is therefore a process that maximizes for present and
future generations log- term net gains resulting from economic development.

In essence, sustainable development is a process of change, in which exploitation of resources,

the direction of investments, the orientation of technological development and institutional
change are all in harmony and enhance both current and future potential to meet human needs
and aspirations. This meaning of sustainable development itself provides due to design the
process of development, choice of technology, the kind of property rights system, institutional
structure to manage the resources and the expected social order.

Definition

In words of Robbert Repetto, sustainable development is a development strategy that manages

all natural resources and human resources as well as financial and physical assets for increasing
long term wealth and well- being.

Nobel Laureate Robert Solow defines, “sustainability as making sure the next generation is as
well as off the current generation and ensuring that this continues for all time.
 According to World Development Report 2003, sustainable development is that process of
development which meets the needs of the present generation without compromising the ability
of the future generation to meet their own needs.

In short sustainable development is that process which fulfils the needs of present generation
without causing any harm to meet their own needs

This sustainable development addresses both inter-generational and intra- generational

equity. It enables all generations, present and future to make the best use of their potential
capabilities. The concept depends on the belief that the next generation deserves the opportunity
to enjoy the same well-being that we now enjoy. Sustainability is a matter of sharing
development opportunities and not the poverty and human deprivation. According to Mahbub ul
Haq, sustainability does not mean sustaining present levels of poverty and human deprivation. If
the present is miserable and unacceptable to the majority of the world’s people, it must be
changed before it is sustained. In other worlds, we must be sustained are worthwhile life
opportunities, not human deprivation. The ability to meet the needs of the people depends on
three types of capital

1. Natural capital: natural resources, clean air, clean water etc.

2. Physical capital: machines, tools, capital equipments etc.
3. Human capital: educational and technical advancement.

Thus sustainable development means that we pass on to the future generation at least as
much capital (natural + physical + human) as we have, so that they have no less a chance than us
to be happy. The strongest argument for protecting the environment is the need to guarantee the
foundation of sustainable development. Apart from natural capital, sustainable development
should also protect the human capital and physical capital so that the future generations do get at
least as much as the present generation has inherited from the past. All this involves such a
management of resources that while we satisfy the present needs, we enhance the quality of these
resources. Thus, in the final analysis, sustainable development is pro-people, pro-jobs and pro-
nature.

1.2.4. a. Features of sustainable development

Main features of sustainable development are under:

1. Efficient use of Natural Resources

Sustainable development does not mean that natural resources should not be used at all. It simply
means that natural resources and environment should be used in such an efficient manner as to
achieve long-term net gains of increase in income and employment, abolition of poverty,
improvement in standard of living, etc.

2. No Reduction in the Quality of Life of the Future Generation

Sustainable development aims at making use of natural resources and environment for raising the
existing standard of living in such a way as not to bring down the quality of life of futu7re
generations.

3. No Increase in Pollution

Sustainable development discards those activities which, in order to maintain existing high
standard of living, prove detrimental to natural resources and environment. According to this
concept, one should desist from undertaking such activities as may increase pollution and
decrease quality of life of future generation.

4. Does not Delimit the concept of Development

Sustainable development does not delimit concept of economic development. Its objective is that
natural resources and environment be used in such a maintain not only the present but also the
future rate of economic development.

5. Distributional equity

The concept of sustainable development lays emphasis on distributional equity namely inter-
generational and intra-generational equity that is within the same generation.

6. Preservation of Three Types of Capital

Sustainable development emphasis the preservation of human capital (education and
technological advance), physical capital (machines, tools etc.) and natural capital (natural
resources, clean air, clean water)

1.2.4. b. Importance or need of sustainable development

Any serious attempt at reducing poverty requires sustained economic growth in order to increase
productivity and income in developing countries. But there is more to development than just
economic growth. World Development Report 2003 suggests that ensuring sustainable
development requires attention not just too economic growth but also to environmental and
social issues. Unless the transformation of society and management of environment are
addressed integrally along with economic growth, growth itself will be jeopardized over the
longer term.

The importance and need for sustainable development is mainly due to the following reasons.

1. Poverty declining but still a challenge

There has been a significant drop in poverty since 1990 there has been decline in the number of
poor people lot in China and India. But countries like Africa, East Asia and South Asia
accounted for two thirds of the world’s very poor people. Sustainable development strategy is
needed to eliminate poverty in these countries.

2. Inequality Widening

The average income in the richest 20 countries in 37 times that in the poorest 20. The ratio has
doubled in the last 40 years mainly because of growth in poorest countries. Similarly inequality
is found within many other countries. Reduction in equality requires sustainable development.

3. Conflict – Devastating

In the 1990’s forty six countries were involved in conflict primarily civil. This includes more
than half of the poorest countries. These conflicts have high costs destroying post development
gains and living a legacy of damaged assets and mistrust that impeded future growth.

4. Air Pollution
Cities in the developing countries have unhealthy level of air pollution. At the global level the
biosphere capacity to absorb carbon dioxide without altering temperature has been reduced. It is
because of heavy reliance on fossil fuels for energy. Greenhouse gas emissions will also continue
to grow unless serious efforts are made for sustainable development. In the last fifty years excess
nitrogen –mainly from fertilizers and human sewage-has begun to overpower the global nitrogen
cycle. It has adversely affected soil fertility and water in lakes and rivers.

5. Fresh water increasingly scarce

Fresh water consumption rising quickly but its availability in some parts of the world has been
scarce. Thus, better conservation and allocation of water is very important. It requires sustainable
development.

6. Soil being degraded

Nearly 20 lakh hectares of land have been degraded since 1950, some areas face sharp losses in
productivity. This necessitates sustainable development as only then soil conservation would be
possible.

7. Forests being destroyed

Deforestation is proceeding at a significant rate. One-fifth of tropical forest has been cleared
since 1960. According to FAO deforestation has caused loss of 20 crores hectares between 1980
and 1995. Deforestation in developing countries have several causes, including conversion of
forest to large scale ranching and plantation and the expansion of subsistence farming.
Deforestation leads to the necessity of sustainable development.

8. Biodiversity disappearing

Through a series of local extinctions, the range of many plants and animals has been reduced to
that found in the beginning of the century. One-third of world biodiversity is threatened with
complete loss in the event of natural calamity of further human encroachment.

9. Fisheries declining
The fisheries and its productivity are on the decline. About 54 percent of the world coral reefs
and 34 percent of all fish spices are at risk from human activities. Seventy percent of the world’s
commercial fisheries are fully exploited or overexploited and experiencing declining yields.

Thus in addition to above, the following points highlight the importance of sustainable
development

I. It will raises the standard of living of the existing generation

II. It will check that no harm is cause to the living standard of the future generation
III. It will also protect the people against pollution, thus improving their quality of life and
health
IV. It will also help in conserving environment for the present and future generation

But to make sustainable development a reality, efforts should be made in the following
directions;

There should be restraint on wasteful luxurious consumption pattern

Efforts should be made to invent environment and employment friendly appropriate

technology and fast growing population should be effectively checked especially in
developing countries.

1.2.4. c. Conditions of sustainable development

Main conditions of sustainable development are as under

1. Increase in Per Capita income and Quality of Life.

First condition of sustainable development is that there should be increase in the rate of long-
term real per capita income of the economy. There should be enhancement in economic
welfare and quality of life of the people.

2. Conservation of Natural Capital Stock

Another important condition of sustainable development and quality of life is that as a result
of economic development there should not occur any degradation of natural capital stock. By
natural capital stock is meant total stock of assets of all kinds of environmental and natural
 resources. On account of economic development, depletion of natural resources like
reduction in the area under forests should not take place. There should be conservation of soil
and water.

3. Reduction in Industrial Pollution

Technology used in industrial production should be environment friendly. Development of

small industries is given priority.

4. Reduction in Agricultural pollution

In agriculture, traditional seeds should be conserved. Use of fertilizers and pesticides is

replaced by green manure and bio-control technique.

5. Comprehensive Rural development

All round development of villages should be undertaken. All amenities of life should be
made available in rural areas. It will reduce tendency towards urbanization and minimize
water, air and sound pollution.

1.2.4. d. Indicators of sustainable development

After discussing the conditions of sustainable development, we can go a step further by

asking that what are the indicators of sustainability? But now it is clear that sustainability
refers to both ecological and economic attributes. Therefore, the corresponding sustainability
indicators will also have to account for both of them. A large number of product and service
and people related indicators could be developed.

Sustainable development links present development with future development. But here
main question arises is that how can we say whether sustainability is achieved or not? Many
dynamics mathematical and statistical models linking with environmental economics and
economic social changes have developed for measuring sustainability. But these models are
very complex, confused and full of difficulties, from operational practical point of view.
Simplicity, practicality, reality and easiness are required for sustainability of the development
process.
 Considering the various views of learned economist and experts, we can narrate the main
indicators of sustainability as under:

1. Total production growth rate is one of the significant indicator or sustainability. This
represents the success or failure story of working machinery of the economy as whole. G.D.P
is the basic and very important criteria of development. The growth rate of G.D.P depends on
the growth rate of total production of commodities and services. The total production growth
rate depends upon, capital formation, the marginal efficiency of capital, infrastructural
facilities, resources use planning etc. higher economic growth rate is essential for economic
and social welfare of present and future generations. Higher growth rate in total production
reduces the unemployment and poverty, which is directly connected with the reduction in the
environment damage caused by poverty.
2. Population should be controlled in the context of environment. Overpopulation overexploits
the natural resources which make it difficult to achieve sustainability. It is true that labor is
very important factor of production. It is also true that, human being is ultimately responsible
for present pollution problems. In this context population control is required. Optimum size
of population is essential for optimum use of resources for the welfare of present and future
generations. Present overpopulation is harmful to future generation. Overpopulation is one
the major causes of environmental degradation in India. Because, poverty, overpopulation
and environmental degradation are interrelated with each other. Hence, in the context of
sustainable development excessive population control is an important indicator.
3. Water supply and its uses are directly related to the sustainability. Water is key factor in
production and consumption process. Water is required for domestic, agricultural, industrial
and much other use. Unfortunately, after 68 years of independence our people are not getting
safe and fresh drinking water. Crores of rural and urban people cover long distance daily for
obtaining drinking water. The use of water is excessive and faster than its renewable
capacity. Wells are dug thousands meter deep for obtaining water. Overuse of water in
inefficient manner has already created water crisis for present generation, then what would be
the fate of future generations?
4. The availability of fresh water and pure air for present as well as future generations is one of
the significant indicators for the sustainability. Because pure air is life supporting for human
beings and other creatures. Due to rapid industrial and urban development, the level of air
 pollution is continuously increasing day by day. Automobiles and industries emit pollutants
in the air. Many gases mix in the air. These include carbon dioxide, carbon monoxide,
sulphur oxide, sulphur dioxide, etc. this air pollution resulted in the greenhouse effects and
acid rains causing many health problems. This would also eliminate the sustainability of the
development process.
5. Human resources development is also very significant achieving sustainable economic
development. Because here, human being is treated as a capital / human capital. Human
capital is very essential in transforming the process of economic development. Human
quality or human up gradation is required in the development process. Human resource
development can be identified as an indicator of sustainable development. Efficient, capable
and skilled human resources serve as foundation not only for the present but also future
generation. Education and training, nutritional standard research and development, health
and development , standard of living, etc are very essential as the same constitute main
indicators of Human Resources Development index.
6. Energy is the key factor in the whole development process. There are a specific impact of the
changes in the trends of demand and supply of energy on sustainable development. In this
context energy intensity is very important in total output. It can be measured by Energy/ GNP
Ratio. Lower Energy/GNP Ratio reflects higher sustainability. There are two sources of
energy, exhaustible sources and renewable sources. Renewable sources are very important in
energy generation. Higher the ratio of renewable energy greater is sustainable development.
There should be lower use of renewable energy than the rate if its regeneration for
sustainability. But if the rate of use of renewable resources is higher than the rate of
regeneration of energy by renewable resources, then shorter will be the sustainability. The
crux of the matter is that as far as possible use of renewable resources for energy generation
should be kept to the minimum limits in the present so that the same is used with ease to
development programmes in future.

Only a few of the ecological attributes are quantifiable. Ecological status of aesthetic beauty
is not easy to put on any scale or indicators, though some of the environment related factors
could be viewed in terms of selected physical indicators. For example, air pollution can be
viewed in terms of emission of carbon dioxide, sulphur dioxide or nitrogen. Biological Oxygen
Demand (BOD) Chemical Oxygen Demand (COD) in water, indicators of soil degradation ( e.g
soil texture, colour, depth, salinity, drainage and percolation), deforestation rates, mineral
depletion, etc. are a few other ecological and environmental measures.

1.2.4. e. Strategies for Sustainable development

The concept of sustainable development does not suggest delimiting the process of growth and
development. Sustainable development should not be interpreted to mean that a check on the
pace of growth would imply a check on the exploitation of resources and also a check on
environmental pollution. Sustainable development only suggests a judicious or optimum
utilization of resources and in a manner such that the pace of economic growth is sustained with
inters- generational equity.

Possible strategies for achieving sustainable development are

1. Input Efficient Technology: we are to devise such production technologies which are input
efficient. It means more is produced per unit of input. This will reduce the exploitation of
resources to meet the emerging needs.
2. Use of Environment-friendly Sources of Energy: LPG and CNG are cleaner fuels and
environment- friendly. The use of these fuels must be encouraged in place of petrol and
diesel which emit huge amount of carbon- dioxide adding to the incidence of green house
gases.

People in rural areas should be discouraged from using wood as a fuel. It causes deforestation
and therefore, unwarranted depletion of resources. Instead, gobar gas plants may be developed as
a source of domestic fuel.

3. Integrated Rural Development: Integrated Rural Development must be the main concern of
state planning. This will generate employment opportunities in rural areas, restricting
migration to urban areas. If rural – urban migration is checked, transportation needs will
automatically be reduced.
4. Convert Sunlight into Solar Energy into Electricity: Energy is the most critical input of
production. While use of fossil fuels implies a direct depletion of non- renewable sources of
energy, the use of coal is grossly unfriendly to environment as it emits lots o carbon- dioxide.
In countries like India, sunlight is a rich natural gift and a rich source of energy which is both
 environments friendly as well as non-exhaustible. We have made only a modest beginning in
harnessing sunlight as a source of solar energy. Scientist need to focus more on it as it can
offer a real breakthrough to countries like India where energy is a big bottle neck in the
process of economic growth. Solar energy is an effective answer not only to the problem of
economic growth, but also to the problem of sustainable development.
5. Shift to Organic Farming: Excessive use of chemical fertilizers, insecticides and pesticides
has raised the crop yield. But at the cost of soil fertility, which means a loss of production
capacity for the future generations. It is high time that we change over to organic farming
which promotes soil- health rather than the plant- health.
6. Recycle the Wastes. Rather than allowing the wastes to spread here and there and adding to
environmental pollution, we must recycle them. Household waste can be recycled into
compost and used as manure for organic farming.
7. Stringent Laws on the Disposal of Chemical Effluents: In India is a land where laws are
enacted, but seldom enforced. Chemical effluents from the industrial units have invariably
been flowing into the streams and rivers, polluting water and taking a toll on aquatic life.
Stringent laws and their strict enforcement is the need of the hour if we wish to save our
environment.
8. Awareness to conserve Natural Assets for Inter-generational Equity: the Indians are highly
conscious of inter- generational equity at the micro level. At the family level, we shall do our
best to preserve our assets as a rich bequeath for the future generations. But this awareness is
very bleak at the macro level, national level. We are wary of conserving our natural wealth
for future generations. For example like the ‘Chipko’ movement in the north and ‘Appiko’
movement in the south where people clung to the trees, forcing the woodcutters to retreat.
9. Public Means of Transport: Public means of transport are to be rapis, comfortable and
economical. Example metro in Delhi, though its services are yet to percolate to all parts of
the city.

1.2.5. Participatory development

Participation has been pushed to the centre of the development agenda in the face of
enormous challenges confronting the globe. Since the 1990s, we have witnessed a search for
development strategies that go beyond beneficiary participation to inclusive, deepened
participation, together with an increasing emphasis on good governance. This does not suggest
that participatory development in itself is a new phenomenon. It is as old as human society and is
common to all political systems, both democratic and nondemocratic, with the former providing
a more conductive environment for its practice. Even colonial governments used participatory
development in the form of community development as a means to reduce costs through
involvement of people in their own development.

People’s participation continued to be the norm in the postcolonial era. In the 1960’s
newly independent governments in developing countries relied on participatory development to
mobilize the populace for national development as part of the reconstruction of the colonial past.
In 1970s and 1980s, participatory development was also emphasized for several reasons, namely
, the dismal performance of a state –led development strategy; disappointing outcomes of
foreign aid; the adoption of the neoliberal / conservative ideological approach to development
that necessitated a minimal role for the state; the increased reliance on civil society, primarily
communities and non- governmental organizations (NGOs) as agents of development; and the
trend towards a people centred development strategy.

All the global players, ranging from state, aid donors, NGOs or civil society
organizations to local communities, subscribe to the promotion of participatory development as
they grapple with the challenges of social and economic development. Bilateral and multilateral
donors have made participatory development and good governance preconditions for aid, and
their basis of development strategy and cooperation with developing countries. However, in spite
of the much –touted positive elements associated with it, questions have been raised about the
efficacy, benefits and contributions to development of participation.

1.2.5.a. Approaches to Participatory development

Several development approaches or paradigms have provided definition of participatory

development that has evolved over time from a conservative to a radical to a more substantive
conception of the term.

Conservative Approaches: Community and Humanist

 The community development approach to participation was conservative. It was employed by
colonial and postcolonial governments as part of modernization. They viewed it as mere
consultation of people to legitimise development decisions taken by governments on behalf of
the people. Other conservative approaches include the humanist approach adopted by some
development sociologists, which defines participation as actions and interactions among people
and the meaning accorded to them by those involved with the aim of avoiding the
dehumanization and alienation of people. The instrumental view of participation sees it as a tool
for improving the livelihood of beneficiaries. Participatory development is a new socio-economic
force or social institution that is non conventional and aimed at achieving sustained development
at the village level by identifying links between resources, people and government.

Radical/people – Centered Approach

The radical approach to participatory development envisages participation as transformation,

empowerment and self-actualization aiming to restructure class and power relations in society.
The most recent radical approach is people –centred development (PCD), which includes
participation as defined by Roodt (2001) and dates from the June 1989 Manila Declaration on
People’s Participation and Sustainable Development put forward by thirty one NGO leaders and
carried forward by the World Bank. People centred participation conceptualizes participation as
development engaged in by the majority of the population, especially those excluded from, or
marginalized within, the process of development, including women and youth. Participation of
such groups is considered critical to the successful implementation of projects.

Since the late 1990s, the World Bank has made (PCD) the cornerstone of its development
philosophy in the fight against poverty which, it emphasizes, should be people –owned to ensure
realization of the first goal of the Millennium development Goals(MDGs) worldwide, that of
reducing by half the number of people living in poverty by 2015.

Definitional issues

The World Bank defines participatory development as a process through which disadvantaged
people influences policy formulation, design alternatives and investment choices and manage
and monitor development interventions in their communities. The term disadvantaged people
here refer to women, indigenous groups and the very poor. However, other stakeholders,
including governments, project managers, donors and CSOs are not necessarily excluded.
Nevertheless, communities and no other stakeholders are expected to be the drivers of
development process.

To the World Bank, participatory development is both means and an end. It is an avenue for
participatory contribution to development policies, so that people are not only targets or
recipients of development initiatives but also initiators as well as guarantors of realistic policies
that meet the needs of communities and ensure ownership by people of the development process.
It is an end in the sense that participation builds skills, enhances people’s capacity for action and
enriches and fulfils their lives.

In a 1994, the World Bank defines participatory development as a “process through which
stakeholders influence and share control over development initiatives and the decisions and
resources which affect them”. Viewed in this way, participatory development is people-oriented
development that focuses on certain goals, including raising the quality of participation by local
societies, allowing for self-reliant and sustainable growth without foreign assistance, fostering
environmental conservation and providing equal opportunities for participation in development
to reduce income inequalities, regional disparities and gender imbalances, thereby achieving
social justice.

Bhatnagar and Williams (1992) concur that participation entails people being responsible for
their own development and is geared towards improving economic and social conditions,
successfully implementing development, reducing costs and guaranteeing sustainable
development. These authors conceptualize that participation as people taking part in decision
making, implementation and evaluation of development policy.

Cornwall (2000) and Roodt (2001) present a more radical conception of participatory
development than the World Bank, one that is transformative and empowering. To Cornwall,
participatory development has three important dimensions. These are

1. Representative in terms of people having an equal voice and choice in shaping their
development
2. Instrumental with respect to input by the community rather than governments or donors
for the sake of lessening costs and
 3. Transformative in terms of empowering the powerless through developing their human,
organizational and management capacity to solve problems

His definition highlights issues of democratic representation, power and agency. Therefore,
it goes beyond a beneficiary and project focus to include issues of citizenship and voice as a
means of deepening and broadening the scope of participation.

Roodt’s conception of participation is more radical than both the World Bank’s and
Cornwall’s. His definition includes elements of transformation, consciousness-raising, self-
actualization and empowerment. Thus Roodt sees participation as active involvement by people
in civic associations and activities, community developmental organizations, political parties and
local governments to influence and have a say in decisions that impact on their lives. Roodt is
essentially concerned with local level decision making in both formal and non-formal structures,
including organized pressure groups as part of CSOs. This explains the importance attached to
the qualitative enhancement of participation of local societies, including rural groups or
communities and local administrative and developmental units. In this respects, participatory
development is participatory decision making with direct involvement of the population in public
policy making and the implementation of policies that affect them.

Participatory development is seen as community driven. This is because it gets people

involved in the decision making and the implementation of projects. Therefore, it is seen as
instrumental in poverty alleviation and empowerment of the poor. In this light, it is also viewed
as an effective tool in building democracy and accountability and for achieving inclusive and
sustainable socio- economic change.

Participatory development is based on the assumption that communities have better

knowledge of their local conditions and problems and of the form of social capital available
locally. For these reasons, communities are supposed to be better resourced than central
governments and external bodied to determine priorities, identify beneficiaries, develop and
implement projects and enforce rules and verify actions.

Common to all definitions is that participatory development is both a tool and goal of
development. In this, people participate as agents and beneficiaries of development process.
1.2.5. b. Level of participatory development

People’s participation is at different levels- national, regional and local- in different context,
such as town, and rural and with different scope of intensity. It can be either direct or indirect,
with the preference being for the former as it gives people a voice in their own affairs. For
example, participatory rural appraisal (PRA) is seen as one of the most important mechanisms
through which communities can be actively involved in development processes. The PRA allows
people, especially the poor and women, to take part in planning. It empowers communities for
self- development and empowers governments, donors and NGOs to initiate and facilitate the
participatory process.

The human rights viewpoint supports participation of the poorest of the poor and vulnerable
people as part of their right to determine their destiny pave the way for pro-poor development
strategies and as a means for their empowerment. According to Sharma participation as a means
of obtaining information about local conditions, needs and attitudes, without which development
programmes and projects could fail.

Participatory local development emphasizes that planners, practitioners and researchers must
give up their assumed fundamental power to define problems and to solve them for the people.
The focus on grassroots participation is based on the perception that, for a project to be
sustainable, it must address issues identified by the people themselves and with a management
structure which they understand, identify with and control. Participation assumes that people
have a fundamental right and duty to engage fully in decisions that affect them at all levels and at
all times.

Growth and development are of central significance to all economies of the world. The
economics of growth and development has emerged as a specialized study component of
economic literature. Economic development is a central issue not only for underdeveloped or
developing economies but also for developed economies striving to sustain their existing rate of
growth. Thus, in modern times every economy, rich or poor, developed or underdeveloped, is
confronted with problems or issues related to growth and development. Economists consider
economic wellbeing as the key element of economic development, but at the same time they
consider some social parameters of change.
1.2.6. Factors Affecting Economic Growth
Prof. RagnarNurkse in this connection, "Economic development has much to do with
human endowments, social attitudes, political conditions and historical accidents. Capital is a
necessary but not a sufficient condition of progress". The supply of natural resources, the growth
of scientific and technological knowledge-all these too have a strong bearing on the process of
economic growth.
A. Economic Factors
1. Natural Resources
The principal factor affecting the development of an economy is the natural resources. Among
the natural resources, include the land area, the quality of the soil, forest wealth, good river
system, minerals and oil resources, good and bracing climate, etc. Without sufficient natural
resources a country cannot progress. Natural resources are very important.
2. Technological Progress
Usage of improved techniques in production can help in increasing per capita income.
Technological progress definitely leads to new and better methods of production or
improvement.
3. Human Resources
Quality of population is very important in determining the rate of economic progress. The most
important requirement of industrial growth is people.
4. Social Overheads
The most important determinant of economic growth is the provision of social overheads like
schools, hospitals and other facilities. These facilities help the working population healthy,
efficient and useful to the society.
Requirement of Economic growth

Rate of capital formation should be such that it should exceed the rate of growth of
population by a significant margin. Capital formation is the key to economic development
because capital can substitute for labour. Capital formation results in more production which in
turn creates a surplus to be ploughed back into the production system. Poverty stands in the way
of capital formation, unless people have excess of income over expenditure they cannot save.
Lack of savings prevents capital formation thereby preventing expansion of national income. The
rapid growth of population is also a determinant of economic growth.
Factors that hinder Economic Development

1. Shortage of capital and technological skill is a bottleneck to the growth of an

underdevelopment country.

2. Reluctance on the part of the people to work and improve their material wellbeing.

3. Population explosion may also stand in the way of economic development. Population
explosion leads to unemployment which in turns results in an increased pressure on existing
natural resources

4. When an underdeveloped country launch upon a programme of economic development, it

may find that its own resources are inadequate to meet the heavy expense. This situation compel
underdeveloped nations to borrow money and technological skill from advanced countries.

Difference between economic development and economic growth

For a long time, the terms economic development, economic growth and economic
progress have been used as synonyms. Schumpeter, in his book “The theory of economic
development” (1911) clarified the distinction between economic development and economic
growth. Main differences between economic development and economic growth given below:

1. Single and multiple dimensions: Economic growth is single dimensional. It is concerned

with increase in national and per capita income. On the other hand, economic development is
multi- dimensional. It is concerned both with income and structural changes. In fact, economic
development is a broad term. In case of economic development , along with increase in national
income, there is a change in the economic, social and political structure of the country. In the
words of D. Bright Singh, Economic Development is a multi- dimensional phenomena; it
involves not only increase in money incomes, but also improvement in habits, education, public
health, greater leisure and in fact all the social and economic circumstances that make for a fuller
and happier life”. On the contrary, in case of economic growth, there is increase in national
income alone. There is no structural change in economy.

2. Qualitative change:In the words of Prof. J. K Mehta, the development and growth are not
synonymous. Term growth is quantitative whereas term development is qualitative. These
qualitative changes manifest themselves in the form of efficient functioning of the factors of
production and improved technique of production. Economic development is concerned not only
with increase in production but also its equitable distribution. Economic development is a
process that ensures growth with justice, whereas economic growth relates only to higher growth
rate of national and per capita income. Economic development entails improvements in the
quality of life, in the qualities of goods available or in the ways production is organized.

3. Spontaneous and discontinuous Changes: in the words of Schumpeter, “development is

discontinuous and spontaneous changes in the stationary state which forever alters and displaces
the equilibrium state previously existing, while growth is a gradual and steady change in the long
run

4. Economic development implies Economic growth: according to some economists the term
economic development is used to describe the determinants of economic growth, such as,
changes in techniques of production, social attitudes, and institutions. It is because of these
changes that national income increases and is called economic growth. Thus development is the
determinant of growth.

Difference between economic development and economic growth

Economic growth Economic development

Single dimensional that is increase in output Multi-dimensional, that is more output and
alone. changes in technical and institutional
arrangements.

Quantitative changes – changes in national Qualitative change- change in composition

and per capita income. and distribution of national and per capita
income and changes in functional capacities.

Continuous change. Discontinuity in change

Spontaneous in character Regulated and controlled in character

Determinant of economic growth may be Economic development is the determinant of

economic development. economic growth.

Economic Growth is possible without Growth to some extent is essential for

development development

Solution of the problem of developed Solution of the problem of under – developed

countries countries.

1.2.7. Conclusion

Briefly sustainable development is a process to be practiced as a daily life activity. It is

not simply a specially designed programme or process of production. It is more about our
awareness of the implications of what we are doing as producers and consumers. It is more about
our concerns for future generations and our social responsibilities. It involves less of cost and
more of consciousness.

Participation by masses is very critical to the development process, to democratization and

most important, to giving voice to and empowering the poor, marginalized and vulnerable groups
in society. It is also an imperative to harnessing people’s commitment to and ownership of as
well as the successful implementation of, development projects. However, authentic
participatory development is rare and difficult to achieve because of the inherent shortcomings of
communities, governments, donors and NGOs. On one hand, communities might lack the will,
capacity and resources. On the other hand, centralized authority of government structures and
donors and NGOs modes of operations and expertise, might be too over- bearing and inflexible
to permit the opening up of avenues for people’s say in decision making, planning or
implementation.
1.2.8. Model questions

1. Define sustainable development?

2. Features of sustainable development?
3. What are the necessities for sustainable development?
4. What are the conditions of sustainable development?
5. Describe the indicators of sustainable development?
6. Explain the strategies for sustainable development?
7. Define participatory development?
8. Explain different approaches to participatory development?
9. Discuss different levels of participatory development?
10. Distinguish between growth and development?

I.2.9. Bibliography /further readings

1. T. R Jain Babir kaur “Development economics”

2. Paul streeten “Social and Economic development” Cetre for Indian Development studies ,
New century publications , new Delhi 2010
3. James Midgley “Social Development, Theory and Practices” 2013,
4. UNDP “Sustainable Development” New York, Oxford University Press

I.2.10 Space for note

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 MODULE II

Unit 1

THEORIES OF DEVELOPMENT
Dependency theory: Immanuel Wallenstein
Structure
II.1.1. Introduction

II.1.2. Objectives

II.1.3. Historical perspective

II.1.4. Immanuel Wallenstein – The Theory of World System

II.1.5. Wallenstein’s Capitalist world Economy

II.1.6. Conclusion

II.1.7. Model questions

II.1.8. Bibliography/further readings

II.1.9 Space for note

II.1.1. Introduction

Dependency theory is a model of economic and social development that explains global
inequality in terms of the historical exploitation of poor nations by rich one. This analysis puts
the primary responsibility for global poverty on rich nations. It holds that some countries became
rich only by looting the resources of poor countries and in the process, making poor nations
dependent on them. This destructive process, which began centuries ago, persists today.

II.1.2. Objectives

 This unit help the student to understand dependency theory of Immanuel Wallenstein

II.1.3. Historical perspective

Everyone agrees that before the Industrial revolution there was little affluence in the world.
Dependency theory asserts, however, that people living in poor countries were actually better off
economically in the past than their descendants are now. Andre Gunder Frank (1975), a noted
proponent of this theory, argues that the colonial process that helped develop rich nation also
underdeveloped poor societies.

Dependency theory is based on the idea that the economic positions of rich and poor nations of
the world are linked together by global economy. Poor nations are not simply lagging behind rich
ones on the “path of progress” rather the prosperity of the most developed countries came largely
at the expense of the least developed ones. In short, then, global commerce made some nations
rich only by making other nations poor. Both are products of the global commerce beginning five
centuries ago.

II.1.4. IMMANUEL WALLERSTEIN – THE THEORY OF WORLD SYSTEM

Immanuel Wallenstein, began in the 1960s as an Africanist and Marxist and has taught for
many years at the State University of New York at Binghamton. He believed in a single path to
development. He proposed an analytic frame work that is worldwide, with the nation- state as but
“one kind of organizational structure among others within this single social system”

World system theory is most closely associated with sociologist Immanuel Wallenstein, who
believed that a country’s mode of incorporation into the capitalist work economy is the key
feature in determining how economic development take place in that nation. An introducing
Immanuel Wallenstein’s World system, we should note that he has never abandoned the Marxist
view of exploitation and oppression. He does not, however speak of a final revolution and his
analysis of oppression does not focus on classes within nation- states, but primary on the world
capitalist system.

Immanuel Wallenstein has stated more than once that he is doing “World System analysis” not
writing world system theory. However, his efforts at explanation from this perspective justify
treating it as a theory. In place of modernization theory, Immanuel Wallenstein proposes a model
that he calls world system analysis. This model down plays communities and nation- states and
views social change in global terms.

Immanuel Wallenstein considers a social system as largely self- contained, with the
dynamics of development stemming mainly from internal sources. He sees only two genuine
types of social system in the world: small self-contained tribes and world system.

World system consist of sets of inter connected societies and they contain many diverse
cultures and a highly refined division of labour. Immanuel Wallenstein believes that only two
types of world system have ever existed, world empires and world economies. World empires are
composed of several territories grouped under a single military and political command.
Example Roman Empire World economics are also integrated systems containing a variety of
lands and territories, but they lack a central political authority. A good example is the tributary
system of imperial China.

Historically most world economics have been unstable. They have either collapsed or been
for transformed into world empires. However Immanuel Wallenstein points out that one world
economy modern capitalism has survival for 500 years without becoming World Empire.

According to World system theory the capitalist world economy is a global system divided
into a hierarchy of three major types of nations i.e. core states, semi peripheral areas and
peripheral areas. This is the second major distinction in his analysis. This hierarchical division in
which upward and or downward mobility is conditioned by the resources and obstacles that
characteristics the international system.

The core states are dominant capitalist centre characterized by high levels of industrialization
and urbanization. The core states control the peripheral areas to a large extent. The core states
consist of the advantaged areas of the world economy, which have strong integrated state
machinery and national culture. Thus they gain an advantage over the less developed nations.

The semi peripheral areas act as a buffer in a number of complex ways. At the same time, the
core states are constantly struggling among themselves. Semi peripheral nations are more
developed than peripheral nations but less developed than core nations.

Peripheral nations that are dependent on core nations for capital have little or no
industrialization and have uneven patterns of urbanization. Peripheral area have weak state
machinery, weaker economic activities and less cultural consistency.

Immanuel Wallenstein sees the history of the capitalist economy as consisting of three major
stages.

The first was the renaissance, which he defines as the period between 1450 and 1640. In this
period population grew, prices rose and labour became more specialized.

The second stage described by Immanuel Wallenstein extended from the late 1600s through
the early 1700s. In this period the English consolidated their commercial and industrial
dominance of the world economy. The third stage spans the last two and a half centuries from
1750 to the present. Industrial capitalism flourished in several countries. With the aid of
technological advances, more and more areas were brought under the control of the capitalist
economy. This process included the colonization of much of the Western World.

Criticism

Immanuel Wallenstein acknowledges that World system theory is an “incomplete unfinished

critique for long term” for long term, large scale social change that influence global inequality.

II.1.5. Wallenstein’s Capitalist world Economy

Immanuel Wallenstein explains global stratification using a model of the “capitalist world
economy”. Wallenstein’s term world economy suggests that the prosperity or poverty of any
country is the product of a global economic system. He traces the roots of the global economy to
the onset of colonization 500 years ago, when Europeans began gathering wealth from the rest of
the world. Because the world economy is based in the high income countries, it is capitalist in
character.

Wallenstein calls the rich nations the core of the world economy. Colonialism enriched this
core by funnelling raw materials from around the world to Western Europe, where they fuelled
the Industrial Revolution. Today, multinational corporations operate profitably worldwide,
channelling wealth to North America, Western Europe, Australia and Japan.

Low income countries, on the other hand, represent the periphery of the world economy.
Drawn into the world economy by colonial exploitation, poor nations continue to support rich
ones by providing inexpensive labour and a vast market for industrial products. The remaining
countries are considered the semi-periphery of the world economy. They include middle- income
countries like Mexico and South Africa that have closer ties to global economic core.

According to Wallenstein, the world economy benefits rich societies and harms the rest of the
world. The world economy thus makes poor nations dependent on rich ones. This dependency
involves three factors.

1. Narrow export –oriented economies

Poor nations produce only a few crops for export to rich countries. Examples include coffee and
fruit from Latin American nations, oil from Nigeria, hard woods from the Philippines and palm
oil from Malaysia. Today’s multinational corporations purchase raw materials cheaply in poor
societies and transport them to core nations where factories process them for profitable sale.
Thus poor nations develop few industries of their own.

2. Lack of industrial capacity

Without industrial base poor societies face a double bind. They count on rich nations to buy their
inexpensive raw materials. And they try to buy from them whatever expensive manufactured
goods they can afford. In a classic example of this dependency, British colonialists encouraged
the people of India to raise cotton but prevented them from weaving their own cloth. Instead, the
British shipped Indian cotton to their own textile mills in Birmingham and Manchester
manufactured the cloth and shipped finished goods back to India for profitable sale. Poor
countries sell cheap raw materials to rich nations and then try to buy expensive fertilizers,
pesticides and tractors in return. Rich countries profit from this exchange much more than poor
nations.

3. Foreign debt

Unequal trade patterns have plunged poor countries into debt to the core nations. Collectively,
the poor nations of the world owe rich countries some ₴2.3 trillion, including hundreds of
billions of dollars owed to the United States. Including hundreds of billions of dollars owed to
the US. Such staggering debt paralyzes a country with high unemployment and rampant
inflation.

II.1.6. Conclusion

 Immanuel Wallenstein’s primary assertion is that a world system must be analyzed as a

whole. According to Immanuel Wallenstein semi peripheral nations exploit peripheral
nations just as the core nations exploit both the semi peripheral and the peripheral nations.
 Global party was disrupted by colonization which made some countries rich while making
others poor, barring radical change in the world capitalist system, rich nations will grow
richer and poor nations will become poorer. Rich countries have concentrated global
resources, conferring advantages on themselves while generating massive foreign debt in low
income countries, rich nations impede the economic development of poor nations.

II.1.7. Model questions

1. Describe dependency theory of Immanuel Wallenstein?

II.1.8. Bibliography /further readings

1. Paul streeten “Social and Economic development” Cetre for Indian Development studies ,
New century publications , new Delhi 2010
2. James Midgley “Social Development, Theory and Practices” 2013,
3. Dereze Jean and Amartya Sen “India: Economic development and Social opportunity”
New Delhi ,Oxford University Press

II.1.9 Space for note

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MODULE II
Unit 2
ALTERNATIVE VIEWS – E.F Schumacher, M.K. Gandhi
Structure
II.2.1. Introduction
II.2.2. Objectives
II.2.3. Alternative views of E.F Schumacher
II.2.4. Intermediate and Appropriate technology
II.2.5. Alternative view of M. K. Gandhi
II.2.5.a. Gandhian economics
II.2.5.b. Gandhi’s economic ideas
II.2.5.c Implementation in India
II.2.5.d. Modern interpretation
II.2.5.c. Salient features of Gandhian Economics
II.2.6. Conclusion
II.2.7. Model questions
II.2.8. Bibliography/further reading
II.2.9 Space for note
II.2.1. Introduction

Technological development is necessary for the economic and social development of the
society. This technology leads to capital industrialization Schumacher point out that modern
world is shaped by technology. The Gandhian perspective visualized economic change. Welfare
economics is closely related to social choice, distribution of goods and services, benefits and
poverty.

II.2.2. Objectives

 The objective of this unit is an attempt to analyze the alternative development theory of
Schumacher and Gandhian development model.

II.2.3. Alternative views of E.F Schumacher

E.F Schumacher (1911-1917) was a Rhodes Scholar in economics and a philosopher. He

was the president of the Soil Association and the founder of Intermediate technology
Development Group in 1955. Schumacher act as an economic consultant. The alternative
development approach has been advocated in his famous work ‘Small is Beautiful’. The
alternative development approach is different from other approaches in that it offers an
alternative to industrialization that would involve a significant de- industrialization of the mass-
production economies of today and the introduction of self- reliant, small – scale technological
system in the Third World. While then he developed the principals of what he called “Buddhist
Economist” based on belief that good work was essential for proper human development and that
production from local resources for local needs is the most national way of economic life. That
led him to become a pioneer of what is now called appropriate technology, earth and near
friendly technology matched to the scale of community life.

According to Schumacher the modern world has been shaped by technology. Every
system of nature leads to be self-balancing, self-adjusting and self-learning. Modern technology
has not helped to alleviate poverty and unemployment. Modern technology has deprived man of
the kind of work that he enjoy, most creative, useful works with hands and brain and give him
plenty of works of fragmental kind, most of which he does not enjoy at all. The system of mass
production based on sophisticated, highly capital investment and human labour saving
technology is ecologically damaging. Self-defeating and stratifies the human process.
Intermediate technology is vastly superior to primitive technology but at the same time much
simpler and cheaper than super technology of the rich. It can also be called self – help
technology or domestic or people’s technology. Intermediate technology will be labour intensive
and to lead to use in small scale establishment. The intermediate technology will use
equipment’s which is fairly simple and therefore understandable. Simple equipment is far less
dependent on raw materials of great purity of exact specification and these equipments are much
more adaptable to market fluctuations than highly sophisticated equipment.

Although the transmission of technology lead capitalist industrialization had some role
to play in many so – called less- developed countries, modern capitalist development had
generally taken the form of small Dynamic Island surrounded by a massive stagnant seas of
poverty, despair and unemployment. A classical ‘dual economy ‘ had emerged, with a
technologically advanced modern sector accessible only to a small and privileged minority and a
swollen traditional sector which provided a means of survival but little else for the great mass of
population. Schumacher argued that a labour- displacing development strategy centred on the
importation of technology and investment resources and the promotion of capitalist intensive. He
was also prescient in his view that this modern technology –driven development strategy was on
a collision course with nature.

Schumacher advocated a people focused development strategy based on immediate needs,

capabilities and circumstances and appropriate technology choices. He argued for autonomous
and sustainable development which built up locally the capacity for education, organization,
discipline and ingenuity in an evolutionary manner, rather than being created or borrowed from
afar through a process of technological ‘leapfrogging’.

Technological development should be given a new direction. That direction shall lead it back to
the real needs of man that is the actual size of man. Man is small so small is beautiful. A
technology that serves man instead of destroying him requires imagination and abandonment of
fear.

Technology that is appropriate and conductive for development is not a new concept in
development phrasing. Schumacher’s reference to appropriate technology as intermediate
technology seems to have been more concerned about the labour and employability aspects that
the question of the nature and the user friendly technology which would add to the sustainability
question of development project. An important aspect of appropriate technology is that it should
maintain a sound relationship between human beings and their environment.

Accordingly Schumacher advocates the development and the establishment of small- scale
industrial enterprises which, according to Webster, have four features:

 Workplaces should be created in areas where people live

 Workplaces should need neither large capital investment nor costly imports to operate
 Production techniques should be fairly simple, so that demands for high skills are kept
low
 Production should try to use local materials and be for local use.

Schumacher was not anti-technology, nor was he advocating a regressive development

strategy. His notion of intermediate technology represented an appropriate point on a continuum
between basic indigenous technology and sophisticated, modern technology. The gap between
the two was enormous; introduction of the later not only tended to kill of the former, and
dramatically reduce its employment and income- earning capacity, but it also limited the scope
for endogenous technological evolution. Intermediate technology was characterized by more
advanced than traditional but less sophisticated than modern, but in reality very variable
according to local conditions – which was more affordable, more in tune with the setting and
context and more likely to raise productivity without reducing employment. Schumacher
presented intermediate technology not only as an alternative model of development but also as a
philosophical idea about a culture of production. The main features of Schumacher’s alternative
to mainstream Western development are summarized as
The main characteristics of orthodox and alternative development

Orthodox Alternative

Technology Modern Alternative

Scale Large Small

Cost Expensive Inexpensive

Energy input Large Small

Ecological impact Unsound Sound

Pollution rate High Low

Centralization Centralist Decentralist

Sophistication Complex Simple

Production focus Capital intensive Labour intensive

Relation to human needs Incompatible compatible

Adapted from Varma. R (2003) E. F Schumacher; changing paradigm of bogger is better.

Bullettin of science

2.2.4. Intermediate and Appropriate technology

Schumacher used the phrases Intermediate and Appropriate technology more or less
interchangeably. There is no universal definition of appropriateness – there are social and
environmental as well as economic dimensions to be considered and these will be weighted
variously by different interest groups. Appropriate technology would bring the optimum
economic, social and environmental returns to the community concerned set against local
resource endowments and prevailing conditions. It would utilize local materials and power
sources would involve local people as much as possible in the development and introduction of
improved technologies; use existing or easily developed skills and require only limited amounts
of investment; would enhance employment opportunities and require limited movement of
labour, would minimize local, social and cultural disruption; cause little environmental damage;
and would ensure that the main economic benefits go to local people.

Criticism

Schumacher’s intermediate technology agenda has not been without its critics. It is argued
to have created a rather romanticized and blinkered vision of the true situation. Thus while
Gandhi and Schumacher were advocating intermediate forms of technology for rural India to
protect peasants from the pernicious impact of modernization, farmers themselves were actively
seeking to acquire new improved technologies such as were associated with the ‘green
Revolution’, in order to strengthen their livelihoods. By restricting the kinds of technology that
were deemed appropriate, local communities were cast in a survivalist role which through the
use of a relatively inferior technology which was conductive neither to efficiency nor growth,
denied them the possibility of an opportunity for development. To a degree it also perpetuated
the ‘technology gap’ between the rich and the poor, the advanced and the backward.

A second important criticism is that the advocacy of a gradualist and evolutionary

approach to technology development runs against the grain of recent experience. The dramatic
development of east and Southeast Asia from the late 1970’s onward much of it predicated upon
precisely the processes that Schumacher had been so critical of – foreign capital investment.
Western industrial transplants and their advanced technology, export- oriented industrialization,
rapid urbanization, significant rural- urban migration – suggested either that Schumacher got it
wrong or that his philosophy was time specific to a stage of serious underdevelopment.

A third criticism is that the focus on technology tended to downplay the influence of
other contextual factors ( e.g. social, cultural, political, capitalist relations, inequality, power,
repression, disenfranchisement)on the developmental outcomes –such as unemployment,
indebtedness, dependency- that intermediate technology was intended to address. Many of these
problems had little specifically to do with technology choices and thus suggested the need for
social and political change to precede technological change, as the latter is very unlikely to bring
about the former.

II.2.5. Alternative view of M. K. Gandhi

Mahatma Gandhi (the father of Indian nation) had not given us a specific theory on
development. But his writings provide raw materials for subsequent theorising. Gandhi devoted
much attention to identifying the political and economic structures which thwarted the
development of the autonomous self.

The Gandhian perspective on development visualised economic change. Gandhi

emphasised development of

i. An agro- industrial, self – sufficient village economy

ii. An economy based on limited wants
iii. A trusteeship economy

He rejected large- scale production and industrialization irrespective of whether the

economic system is capitalist or socialist. The adoption of large- scale production technologies
inevitably created “a soulless authority” and makes labour soul- killing. An economy based on
limited wants will promote an all-round and balanced development of personality and “save us
from the evils of corruption and prediction”. He saw education as the most powerful instrument
for both moral and material development.

II.2.5.a. Gandhian economics

Gandhian economics is a school of economic thought based on the socio- economic

principles expounded by Mohandas Gandhi. It is largely characterised by its affinity to the
principles and objectives of socialism, but with a rejection of class war and promotion of socio-
economic harmony. Gandhi’s economic ideas also aim to promote spiritual development and
harmony with a rejection of materialism. The term ‘Gandhian economics’ was coined by J.C.
Kumarappa, a close supporter of Gandhi.

II.2.5.b. Gandhi’s economic ideas

 Gandhi’s thinking on socio- economic issues was greatly influenced by the American writer
Henry David Thoreau. Throughout his life Gandhi sought to develop ways to fight India’s
extreme poverty, backwardness and socio-economic challenges as part of his wider involvement
in the Indian Independent movement. Gandhi’s championing of Swadeshi and Non- Corporation
was centered on the principle of economic self-sufficiency. Gandhi sought to target European
made clothing and other products as not only a symbol of British colonialism and also the source
of mass unemployment and poverty, as European industrial goods had left many millions of
Indian workers, craft man and women without a meaning of living. By championing ordinary
khadi clothing and Indian made goods, Gandhi sought to incorporate peaceful civil resistance as
a means of promoting national self-sufficiency. Gandhi leads farmers of Champaran and Kheda
in a sathyagraha (civil disobedience and tax resistance) against the mill owners and landlords
supported by the British government in an effort to end oppressive taxation and other policies
and that forced the farmers and workers and defend their economic rights. A major part of this
rebellion was a commitment from the farmers to end caste discrimination and oppressive social
practices against women while launching a co-operative effort to promote education, health care
and self-sufficiency by producing their own clothes and food.

Gandhi and his followers also founded numerous ashrams in India. The concept of an
ashram has been compared with the commune, where its inhabitants would seeks to produce
their own food, clothing and means of living, while promoting a lifestyle of self- sufficiency,
personal and spiritual development and working for wider social development. The ashrams
included small farms and houses constructed by the inhabitants themselves. All inhabitants were
expected to help in any task necessary, promoting the values of equality. Gandhi also exposed
the notion of “trusteeship” which centered on denying material pursuit a nd covering of wealth,
with practitioners acting as “trustees” of other individuals and community in their management
of economic resources and property. Contrary to many Indian socialist and communist, Gandhi
was averse to all notions of class warfare and concept of class- based revolution, which he saw as
causes of social violence and disharmony. Gandhi’s concept of egalitarianism was centered on
the preservation of human dignity rather than material development. Some of Gandhi’s closest
supporters and admires included industrialist such as Ghanshyamdas Birla, Ambalal Sarabhai,
Jamnalal Bajaj and J.R.D Tata, who adopted several of Gandhi’s progressive ideas in managing
labour relations while also personally participating in Gandhi’s ashrams and socio- political
works

II.2.5.c. Implementation in India

During India’s freedom struggle as well as after India’s independence in 1947, Gandhi’s
advocacy of ordinary khadi clothing, the khadi attire (which include Gandhi cap) developed into
popular symbols of nationalism and patriotism. India’s first Prime Minister Jawaharlal Nehru
was a socialist as well as a close supporter of Gandhi. While Nehru was influenced by Gandhi’s
aversion to the brand of socialism practiced in the Soviet Union, he was also an exponent of
industrialization and critical of Gandhi’s focus on rural economics.

Gandhian activist such as Vinoba Bhave and Jayaprakash Narayan were involved in the
Sarvodaya movement, which sought to promote self-sufficiency amidst India’s rural population
by encouraging land redistribution, socio- economic reforms and promoting cottage industries.
The movement sought to combat the problems of class conflict, unemployment and poverty
while attempting to preserve the life style and values of rural Indians, which were eroding with
industrialization and modernization. Sarvodaya also included Bhoodan or the gifting of land and
agricultural resources by the landlords (called Zamindars) to their tenant farmers in a bid to end
the medieval system of zamindari. Bhave and others promoted Bhoodan as a just and peaceful
method of land distribution in order to create economic equality, land ownership and
opportunity without creating class – based conflicts. Bhoodan and Sarvodaya enjoyed notable
successes in many part of India, including Maharashtra, Gujarat, Karnataka and Uttar Pradesh.
Bhave would become a major exponent of discipline and productivity amongst India’s farmers,
labourers, and working classes, which were a major reason for his support of the controversial
Indian Emergency (1975-1977) Jayaprakash Narayan, also sought to use Gandhian methods to
combat organized crime, alcoholism and other social problems.

II.2.5.d. Modern interpretation

Gandhi’s ideas have inspired socio- economic policies in post- colonial Africa and Asia,
but have also been criticized as impractical and idealistic, especially in the macro- economic
scale. The main attempts at implementation have centred on micro economic initiatives. The
proximity of Gandhian economic thought to socialism has also evoked criticism from the
advocates of free- market economics. To many, Gandhian economics represent an alternative to
mainstream economic ideologies as a way to promote economic productivity an emphasis on
material pursuit or compromising human development. Gandhi’s emphasis on peace,
‘trusteeship” and co- operation has been touted as an alternative to competition as well as
conflict between different economic and income classes in societies. Gandhian focus on human
development is also seen as an effective emphasis on the eradication of poverty, social conflict
and backwardness in developing nations. Gandhian socio- economic ideas have gained the
interest and attention of an increasing number of people across the world.

We have seen that Gandhi rejected the Western model of capital- intensive technology.
Instead he talked of what may be called “appropriate technology” by it he meant the following;

a) Scientific and technological research must be addressed to local problems. Otherwise

they cannot be solutions to these problems.
b) Tools and machines must be capable of being locally produced, maintained and
repaired.
c) Tools and machines must be cheap to produce and hence readily available to the
people at large, that is the ownership of the tools of production and livelihood must be
decentralized.
d) Not only is decentralization of tools and machines a means of guaranteeing
livelihoods, it also that the villages cannot retain the freedom they have enjoyed from
time immemorial, if they do not control the production of prime necessaries of life.

II.2.5.e. Salient features of Gandhian Economics

Gandhian economics is the basic principles of truth and non- violence. Therefore Gandhian
economics refers to all such economic activities undertaken within the frame work of truth and
non- violence and accepted ethical standards in which man is regarded as the central point of
study.

Gandhian economics has recently been regarded as the only alternative to all other
economics or system of economies. The features of Gandhian economics are many and varied
and are listed below:
 1. Acceptance of truth and non- violence as the basic principles of Gandhian economics.
2. Adoption of a simple life, free from modern complexities and complications.
3. As against the trend to maximization of wants Gandhian economics intends to achieve
the minimization of wants.
4. Instead of utilitarian doctrine, Sarvodaya- the welfare of all is to be regarded as the final
goal of man.
5. Acceptance of the Trusteeship theory of property.
6. Achieving self-sufficiency at individual, family, village and national levels.
7. Decentralization of power and administration, so that real democracy is enjoyed by the
people.
8. Refraining from the consumption of dangerous and harmful commodities like
intoxicating liquors, opium, drugs, and achieves total prohibition in the society.
9. Adopting labour intensive methods and opposing mechanization in general and in
particular labour replacing machineries.
10. Manual labour should be recognised as a must and in no way inferior to mental labour.
11. Adoption of Swadeshi culture in which only the home made goods are used.
12. Man should be given top priority. He should be both the means and the end in Gandhian
economics.
13. Prevalence of Khadi and small scale industries which include Home industries, Cottage
industries and Village industries.
14. Adoption of need based consumption so that the genuine needs of others are also
satisfied.
15. Regarding agriculture as a way of life and an occupation and not as a profession.
16. Cultivation of land should be undertaken in accordance with the local needs and adopted
accordingly.
17. Conservation of all important resources so that the nature will not become angry on man.
18. The role of money should be minimized by encouraging rewards from the common pool.
19. Interests of both the individual and the society should be simultaneously satisfied.
20. Man should not only be just rational but ideal and what is known as a Gandhian man.

II.2.6. Conclusion
 Schumacher attempted a philosophy of appropriate technology that included a view of human
being particularly concerned with technology and human flourishing. Along with many
others, including Marx, Schumacher was concerned with the impact of technological
development on the nature of work and on patterns of human settlement. He was also
concerned with technology and human freedom and innovation as part of the freedom of
human beings. He identified that high energy cost and high capital cost requirements for
modern technological development means that power is concentrated in even fewer hands
and deprives society of the innovative capacity held by the majority of people.
 The failure of capitalism leads to the birth of socialism. These changes in the economic
systems continue till a permanent economic system is evolved. Gandhian economic system is
an attempt in this direction. A change from Gandhian economic system is neither possible
nor desirable. It is because of the simple fact that the Gandhian economic system is free from
the evils of other known economic systems it is a system of all possible virtues and is
relevant for all times. As the eradication of poverty, the lessening of inequalities, the
satisfaction of basic needs are the values which inform Gandhi’s philosophy of development.

II.2.7. Model questions

1. Compare the alternative model theory of Schumacher and M.K Gandhi?

II.2.8. Bibliography/further reading

1. Paul streeten “Social and Economic development” Cetre for Indian Development studies ,
New century publications , new Delhi 2010
2. James Midgley “Social Development, Theory and Practices” 2013,
3. Dereze Jean and Amartya Sen “India: Economic development and Social opportunity”
New Delhi ,Oxford University Press
4. Amir Samir, “Unequal Development” New Delhi, 1979, Oxford University Press

II.1.9. Space for note

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MODULE III
Unit 1
GLOBAL SCENARIO OF DEVELOPMENT
Structure
III.1.1. Introduction
III.1.2. Objectives
III.1.3.The concept of Globalization
III.1.4. Meaning of globalization
III.1.5. Characteristics of Globalization
III.1.6. Main features of globalization
III.1.7. Growing inequalities
III.1.8. Inequality between developed and underdeveloped countries
III.1.9. Colonialism
III.1.10. Conclusion
III.1.11. Model question
III.1.12. Bibliography /further readings
III.1.13 Space for note

III.1.1. Introduction
Globalization and liberalization have become very important and highly debatable processes
world over and the Indian society is no exception to it. The nature of these processes and their
impact on Indian economy as well as society form the content of serious discussions in various
social science conferences, government agencies, policy makers and corporate world. The
subject has assumed great significance in the light of the recent changes in the global business
environment and the national economic policy changes in India. The process of globalization has
been identified with the policy reforms in 1991 and the subsequent extension of these in the later
years. This is the reason that globalization and liberalization are seen as twin process in India.

III.1.2. Objectives

 To familiarize the students with the concept of globalization and global inequalities in
development
 The concept of colonialism

III.1.3.The concept of Globalization

Globalization is a widely and somewhat loosely used term, intended to describe the recent and
rapid process of intercontinental economic, social and political integration. This worldwide
integration allows people to communicate, travel and invest internationally and helps companies
market their produces widely, acquire capital and human and material resources more efficiently,
share advanced technology and enjoy economics of scale. While many benefit from
globalization, others are hurt economically, some cultures may be harmed and local
environments may suffer. Globalization, in conjunction with a range of other developments and
policies, produces both benefits and risks affecting U.S national security.
III.1.4. Meaning of globalization

“Development” has always been a subsumption of space by time. The global development
machine that emerged after the Second World War, its policies, bureaucracies and research
institutes, worked on the assumption that cultural differences, alternative social institutes and
organizations and the spatial contradiction divergences of capitalism could be projected onto
time as the great and ultimate dissolvent. The space in which this ironing out was to happen was
first of all the national state. After decolonization the number of national states in the world has
tripled. Underwritten and supported by the UN and the World Bank- the later infamous IMF was
initially meant to help fix the exchanges between developed economies- national states in the
South were made responsible for replacing the discovery of modernity in the West, in economics
and politics and on the social and the cultural terrain. This worked as long as the international
environment was conductive to state- led investment, policy initiation and coordination. The
result, not surprisingly, was continued stagnation and depression in much of the South and East.
In many places the state has all but lost the capacity to lead, initiate and coordinate economic
policies, except for facilitating “globalization’; the practice and ideology of deepening global
connectedness to global governance, to global capital flows, to global trade, to global civil
society, to global migration and to the new cultural imperatives of global modernity.
Development, thus, had become a sub-theme to the practice and ideology of globalization.

The term Globalization means adopting a global outlook for the business and business
strategies aimed at enhancing global competitiveness and mutual inter-dependence among the
economies of different countries. It is multidimensional concept that refers to the transformation
of trade, technology, industry and economy in a universalizing direction. It is, in fact, the attempt
at the global dissemination of free market economy that is driven by the belief that the best
interests of humanity are served when goods, services and finances are allowed to cross national
boundaries untrammelled. Since the collapse of communism, this ideology has totally dominated
world economies. Because of the necessity for growth is a free market dogma, there is intense
pressure for companies to become bigger and bigger so that they can corner a greater and greater
proportion of the particular market in which they operate. This drive for growth has led to the
formation of Trans-National Companies (TNCs) that are global players in the international
market.

Companies which have adopted outlook stop thinking of themselves as national marketers.
The top management and staff are involved in the planning of worldwide manufacturing
facilities, marketing policies, financial flows and logical systems. The global operating units
report directly to the chief executive or executive committee, not to the head of an international
division. Executives are trained in world- wide operations, not just domestic or international.
Management is recruited from many countries; components and supplies are purchased where
they can be obtained at the least cost; and investments are made where the anticipated returns are
the greatest. Globalization views the entire world as a single market; it does not differentiate
between domestic market and foreign markets. In other words, there is nothing like a home
market and international market- there is only one market, i.e., the global market. In fact
globalization refers to the policy of opening country’s doors for foreign investors, reducing
import duties and protecting the interests of foreign investors.

Definitions

 Ritzier 2007 Globalization is an accelerating set of processes involving flows that encompass
ever –greater numbers of the world’s spaces and that lead to increasing integration and
interconnectivity among those spaces.
 Robertson 1992 Globalization as a concept refers both to the compression of the world and
the intensification of consciousness of the world as whole.
 Scholte 2005 Globalization refers to “spread of trans-planetary – and in recent times also
more particularly supra-territorial- connections between people. A global relation can link
persons situated at any inhabitable point on the earth. Globalization involves reductions of
barriers to such trans world social contacts”
 Waters 200 “Social process in which the constraints of geography on social and cultural
arrangements recede and in which people become increasingly aware that they are receding.”
 Lechner “Globalization refers to the process in which more people become more connected
in more different ways across larger distances.
So Globalization is “the integration of the political, economic and cultural activities of
geographically and or nationally separated peoples”.

III.1.5. Characteristics of Globalization

Globalization has become identified with a number of trends, most of which may have
developed since World War II. These include greater international movement of commodities,
money, information and people and the development of technology, organizations, legal systems
and infrastructures to allow this movement. The actual existence of some of these trends is as
under which can be classified as different characteristics of globalization.

1. Economically
a) Increase in international trade at a faster rate than the growth in the world economy.
b) Increase in international flow of capital including foreign direct investment.
c) Erosion of national sovereignty and national borders through international agreements
leading to organizations like the WTO and OPEC.
d) Development of global financial systems.
e) Increase in the share of the world economy controlled by multinational corporations.
f) Increased role of international organizations such as WTO, WIPO, and IMF that deal
with international transactions.
g) Increase of economic practices like outsourcing, by multinational corporations.
2. Culturally
a) Greater international cultural exchange.
b) Spreading of multiculturalism and better individual access to cultural diversity,
for example through the export of Hollywood and Bollywood movies. However,
the imported culture can easily supplant the local culture, causing reduction in
diversity through hybridization or even assimilation. The most prominent form of
this is Westernization, but Sinicization of cultures also takes place.
c) Greater international travel and tourism.
d) Greater immigration, including illegal immigration.
e) Spread of local foods such as pizza and Indian food to other countries (often
adapted to local taste)
 3. Development of a global telecommunications infrastructure and greater transborder data
flow, using such technologies as the Internet, communication satellites and telephones.
4. Increase in the number of standards applied globally; e.g. copyright laws and patents.
5. Formation or development of a set of universal values.
6. The push by many advocates for an international criminal court and international justice
movements.
7. Some argue that even terrorism has undergone globalization, which attacks in foreign
countries that have no direct relation with the own country.
8. Promotion of free trade
i. Of goods
a) Reduction or elimination of tariffs; construction of free trade zones with small or no
tariffs.
b) Reduced transportation costs, especially from development of containerization for
ocean shipping
ii. Of capital: reduction or elimination of capital controls.
iii. Reduction, elimination or harmonization of subsidies for local businesses.
9. Intellectual Property Restrictions.
i. Harmonization of intellectual property laws across nations
ii. Super-national recognition of intellectual property restrictions

III.1.6. Main features of globalization

Globalization is characterised by; growing worldwide interconnections; rapid,

discontinuous change; growing numbers and diversity of participants and greater managerial
complexity. Each of these is explored below.

1. Growing Worldwide Interconnections

Growing worldwide interconnections is one of the features of globalization. Examples,

satellite television and the global teen show us that distinct events stimulate global
interconnections, but the path for these interconnections is not always clear or steady. Some
interconnections can be predicted, others cannot. Moreover, factors other than globalization also
shape events. For example, proximity to vibrant markets, a transportation infrastructure and
abundant natural resources draw a people, nation or region into global trade and other activities.
Poor infrastructure and poor geography are some reasons countries like Chad and Mali are not
well integrated in the global economy. These and many different reasons including, political
corruptions, opportunity, educational constraints, natural disasters, limits resources and interest
in being global explain why a nation and its people are more or less globally connected.

2. Rapid, Discontinuous Change

A second feature of globalization is that this process has occurred rapidly but not at a steady
pace. In other words, a chart of global interconnections would follow an upward slope, but the
regression line would not be a smooth one. Instead, growing interconnections are discontinuous,
following a jagged upward slope. For example, global interconnections tended to slow after the
1997 Asian economic crisis, and then they surged, slowed again and repeated that pattern.
According to a study produced by the US institute of International Finance, nations affected by
the Asian economic crisis also experienced different effects. Discontinuities in the pace of
change make it difficult for organizations and individuals to anticipate, interpret or plan for the
future.

Another source of discontinuity is that events that have global importance travel the world
at different speeds and with differential effects. Accordingly, interconnections can affect nations,
industries, businesses and individuals at different times and in different ways. In other words, the
effect of the same global event can differ. The example of the 1997 Asian economic crisis also
shows how this happens. The world economy took a dip, but major effects were felt first and
later most affected the economies of Thailand, Indonesia and South Korea. In other words, the
process of globalization is disorganized and incoherent.

3. Increased Number and Diversity of Participants

A third feature of globalization is growth in the numbers and diversity of actors involved in
global activities. For example, participants in global business activities now include many small
to medium sized enterprises (SMEs) as well as large ones. Companies from developing and
small economies also participate, as do forms that are owned privately and publicly. The
boundaries that once constrained business activities now are more permeable to many more
people and organizations worldwide. This increases diversity among participants. To the extent
that global markets are characterized by multiple competitors that vary in size, shape, motives
and behaviours, global management may be said to be both less certain and therefore more
complex than when market competitors, buyers and other organizations are of equal size, share
motives or come from similar national cultures.

4. Growing Complexity

Finally the “one world” characterization of globalization exposes most of us to many more
people and ideas whose perspectives on globalization differ. Domestic questions that once
seemed to have simple answers become more complex when we realize that others worldwide
have different ‘simple’ answers to the same questions. Complexity increases again when there
are different answers to the same question and it gives rise to new questions about values and
preferences. The same global event may be perceived to create opportunities for some and create
threats for others. Neither does the world think as one with respect to business activities some
believe global business benefits the world and others believe it degrades it.

III.1.7 Growing inequalities

Globalization has not only engendered growing interdependence, it has also given rise to
marked international inequalities. The asymmetries in the global order are at the root of profound
international inequalities in income distribution.

The growing concern with globalization’s social impact is placing the question of social
inequality back on the political agenda. During the Reagan and Thatcher eras of rampant
economic liberalism social inequality was seen as inevitable, even as a healthy spur for
“competiveness”. Now all the major international organizations such as the World Bank and
even the IMF actually are concerned with the level of social inequality being generated by
globalization, both within and between nations. From a global –justice perspective, this provides
an opportunity to foreground social inequality as a pressing political concern.

Global inequality refers to the unequal distribution of resources among individuals and
groups based on their position in the social hierarchy, which is inequality between people across
countries. This may be refers to the economic differences between countries.
 Inequality in refers to an unequal distribution of benefits, wealth and losses under the uneven
process of a globalized world. This imbalance leads to polarization between the few countries
and groups that gain, and the many countries and groups in society that loose out or are
marginalized. That means disparity between developed and underdeveloped nations.
Globalization, polarization, wealth concentration and marginalization are therefore linked
through the same process (Khor, 2003: 9). It is of note that in the said process, investment
resources, growth and modern technology are directed to a few countries. Pathetically, majority
of developing countries are excluded from the process, or are participating in it in marginal ways
that are often detrimental to their interests. Inequality is also manifested in the fast-growing gap
between the world’s rich and poor people and between the developed and developing countries,
and in the large differences among nations in the distribution of gains and losses.

Causes of global inequality are the following

 Religious inequality
 Gender inequality
 Inequality in the workplace
 Inequality in wealth and income
 Unemployment
 Social inequalities
 Educational inequalities
 Poverty

The implications of the increased inequality on the global are that:

1. There is increased concentration of national income in few hands which does not give
room for faster growth and higher investment.
2. Secondly, the fast pace of financial liberalization has delinked finance from international
trade and investment. Higher interest rates due to restrictive monetary policies have
raised investment costs entrepreneurs resort to buying and selling second-hand assets.

Developed countries have industrial growth, whereas developing countries depends on the
developed countries for help to establish their industries. Developed countries enjoy flourishing
economy, whereas developing countries begin to taste the growth of economy and
underdeveloped country on the other hand face a weak economic growth and poverty.

Other than that, the developing countries are characterized by many shortcomings. These
shortcomings include less awareness regarding matters relating to health, poor amenities, poor
amenities, shortage in water supply, shortcoming in the area of medical supply, a higher rate of
birth rate. The most important and worrying factor in the developing countries are the factor of
poor nutrition and source of food.

Developed countries are not characterized by shortcomings. They are well-developed in all
fronts and are served well by water supplies, amenities, educational institutions, health care
concerns. This is because of the fact that people are endowed with awareness, healthcare
concerns. The absence of shortcomings in the developed countries is possibly due to the fact
there is a low birth rate in these countries.

III.1.8. Inequality between developed and undeveloped countries

Developed countries Underdeveloped countries

A higher per capita income and GDP growth A low per capita income leads to a low
rate leads to a higher standard of living standard of living

Incidence of poverty is low Poverty is existent widely

Industrial or secondary sector and service Agricultural or the primary sector is

sectors are predominant predominant.

Resources such as natural and human resources Resources are underutilized and traditional
are properly utilized and highly advanced techniques are used in production of
capital intensive techniques are used in agricultural farming. Therefore productivity is
production. Therefore, productivity is high low

There is a narrow gap between the rich and the Gap between the rich and the poor is wide.
poor

III.1.9. Colonialism

Late in the fifteenth century, Europeans began surveying the Americas to the west,Africa to
the south and Asia to the east looking to establish colonies. They were so successful that by
1900, the small nation of Great Britain controlled about one- fourth of the world’s land, boasting
that “the sun never sets on the British Empire”. The United States itself originally thirteen small
British colonies on the eastern seaboard of North America, soon pushed across the continent,
purchased Alaska and gained control of Haiti, Puerto Rico, Guam, the Philippines, the Hawaiian
Island and part of Cuba. Meanwhile, Europeans and Africans engaged in a brutal form of human
exploitation- the slave trade- from about 1500 until 1850. European powers dominated most of
the African continent until the early 1960s.

Formal colonialism has almost disappeared from the world. However, according to
dependency theory, political liberation has not translated into economic autonomy. The
economic relationship between poor and rich nations perpetuates the colonial patterns of
domination. This neocolonialism is the essence of the capitalist world economy.

III.1.10. Conclusion

From above mentioned sources it is clear that globalization and liberalization are unable to
solve the fundamental social and economic problems of the developing nations such as massive
poverty, increasing unemployment and under-employment lack of social and economic
overheads, widespread and multidimensional human deprivations, hunger, social tension etc.

III.1.11. Model questions

1. Explain globalization?
2. Analyze the global inequalities of developed and underdeveloped nations?
3. What is colonialism?

III.1.12. Bibliography/further readings

 1. Paul streeten “Social and Economic development” Centre for Indian Development studies
, New century publications , new Delhi 2010
2. Reference Key ideas in sociology by Martin sattery
3. Appadurai Arjun “Modernity at large: Cultural Dimensions of Globalization” New Delhi
,Oxford University Press
4. Antonio. L Rappa, “Globalization” Book well publication
5. Marfleet Phi and Ray KIely,” Globalization and the Third world”London Routeldge,
1998

III.1.13 Space for note

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MODULE III

Unit 2

Emergence of world capitalism, Role of WTO and World Bank

Structure

III.2.1. Introduction

III.2.2. Objectives

III.2.3. Emergence of world capitalism

III.2.4. Role of WTO

III.2.5. Functions of WTO

III.2.6. Impact of WTO on Indian Economy

III.2.7. World Bank

III.2.8. Consequences of capitalistic development in the Third world countries

III.2.9. Conclusion

III.2.10. Model question

III.2.11. Bibliography /further readings

III.2.12 Space for note

III.2.1. Introduction

In a broad sense globalization includes economic liberalization leading to unification of

world markets, development of advanced means of communication, rule of technology in almost
every sphere of everyday life, growing importance and influence on the society by transnational
corporations, people’s migration and more generally increased mobility of persons, goods,
capital, data, information, technical know-how and ideas.

III.2.2. Objectives

 This unit will help the student to understand the idea of world capitalism
 Role of WTO and World Bank
 Outcome of capitalistic development in the third world countries

III.2.3. Emergence of world capitalism

The term globalization refers to the integration of economies of the world through
uninhibited trade and financial flows, as through mutual exchange of technology and knowledge.
Globalization thus is a multidimensional concept in a multicultural and multi- layered society-
conveying different meanings to different people. From the economic point of view that is
prioritized today, globalization entails dismantling of tariff and quota walls allowing free
movements of goods and services facilitating trans- nationalization of production and capital,
legitimization of global capitalism through transformation and or creation of appropriate
financial markets, standardization of consumer tastes and virtual removal of cross- country
boundaries by removing foreign exchange regulations and restrictions.

Globalization is the latest hegemonic expression of capitalism. It can be explained in terms

of economic, political, intellectual and cultural hegemony of the global players. We can argue
that at present globalization has completely been merged with neo-capitalism and the features of
capitalism have already been exposed from the smoggy situation of the archaic types of
capitalism such as market capitalism and monopoly capitalism. It is now been replaced by a
flexible or managerial or corporate type of capitalism. The global capitalists even achieved great
success in penetrating the mind and political culture of the Communist pockets in the third world
countries. A great majority of the deprived majorities are in favour of globalization and most
countries, finding no other alternatives, are accepting ‘capital’ from the multinational companies
and global players posing politically ‘Anti’ words and ‘Anti’ slogans. The ‘Empires’ of today are
real hegemons.

The current phase of globalization aims towards a uniform specialized globally integrated
production and trading network, where the whole world is divided into various sectors or regions
that specializes in producing and supplying particular goods and services to the global market.

The driving force of the capitalist mode of production is the accumulation of profit. Every
phenomenon of a class-based society develops around the extraction of surplus value of labour
from the class of direct producers for the benefit of the owners of the means of production.
However class based societies differ fundamentally in their structure due to the differences in the
social mechanism through which the surplus value extractions takes place, under capitalism, it
takes place through the system of social relations based on the free market, which reaches its
crest of development in the wage system. More specifically, surplus labour under capitalism
takes the form of surplus value. The source of surplus value of labour lies in the difference in the
value of the commodity produced and the value of the labour used to produce the commodity.
This difference is the source of surplus value, which appears on the surface of society in the form
of profit, interest, rent etc.

This astute extraction of surplus value constitutes the driving force of the development of the
productive forces within the capitalist economy. Now, capital itself is made of two components
namely, the capital lay out to purchase labour –power, i.e., variable capital and the capital laid
out on raw materials and machinery i.e., constant capital. The accumulation of capital is marked
by the continuous tendency of constant capital to increase relative to variable capital due to the
growing productivity of labour. Thus, there is a tendency for the rate of profit to fall. In other
words as capital as whole expands, the relative size of the surplus value –producing components
of this capital tends to decline. Consequently the rate of profit, the ratio of surplus value to the
total mass of capital, tends to decline. Under capitalism, the entrepreneur seeks to overcome this
tendency of the rate of profit to fall by developing newer methods of production, based on new
and innovative technologies coupled with state of the art supervision, which increase the rate of
extraction of surplus value from the working class.

The development of such method may create conditions where the profit rate remains
stationary or even increases, but inevitably the very accumulation of capital itself induces a fall
in the rate of profit, thereby pushing capital towards the further revolutionising of the productive
forces in order to try and overcome its effects. Capital is supplied through the issuing of shares
and then put to work in the production process. The existence of the stock market enables
shareholders, including those who many have supplied the initial capital, to move their capital to
another area by way of selling their shares, without the actual liquidation of productive capital
itself. In other words, the development of the joint stock company and the share market were the
historical means through which capital resolved the contradiction between the need for large
quantities of fixed capital on the hand and the necessity for capital mobility on the other.

We live in a time marked by growing international and national imbalances, instabilities and
inequalities. Capitalism is not a static system. The levers driving its motion are capital
accumulation, competition and class struggle. Their complex interplay generates pressures and
contradictions that compel profit –seeking capitalists to continually reorganize their activities, a
process that has profound consequences for our lives. In other words, our social condition is
largely shaped by the actions of the leading business organization. Today, these business
organizations are transnational corporations. as we shall see, their drive for profit has produced a
new, more globalized stage of world capitalism, one shaped by dynamics that are directly
responsible for generating the imbalances, instabilities and inequalities that threaten our well-
being

Capitalism is a system which is inconceivable without money. As the real economy grows,
the degree to which it depends on outside capital for production and service activities grows
larger. Finance has its own existence value, for it enables smooth growth of the real economy. At
the same time, however, finance is a sphere in which there is ample room for fraudulence. When
finance enjoys unlimited freedom, the room for fraud grows disproportionately large. Today’s
world has been witnessing the money game conducted by means of “securitized products”
together with the technique of “leverage” on a global level. These activities, unless some
regulations are imposed, tend toward excessive speculation wrapped with a veil and the scope for
fraudulence is vast.

Globalization marks the triumph of the capitalist mode of production, us under present state
of globalization; the capitalist system is undergoing a dramatic intensive expansion. Capital has
achieved a newfound global mobility and is reorganising production worldwide in accordance
with the whole range of socio-economic and political considerations. This involves the world
wide decentralization of production together with the centralization of command and control of
the global economy in the form of transnational capital. In this process, national productive
apparatuses become fragmented and integrated externally into new globalized circuits of
accumulation. Interestingly, it could be seen that while under the former world economy nations
were linked together through commodity exchange and capital flows in an integrated
international market. The present global economy entails unifying the entire world into a single
mode of production and a single global system and bringing about the natural integration of
different countries and regions into a globalized system.

In the emerging global capitalist pattern, transnational or global space is coming to displace
national spaces. There is no longer anything external to the system. The internal social nexus is a
global phenomenon. The MNCs as emerging strongly under globalization, are giving newer
meaning to capitalism in the globalized world. Further the supra- national organizations like the
IMF, the World Bank and the WTO are gradually replacing the national institutions in policy
development and global management and administration of the global economy. These
conductive conditions are instrumental in the triumph of capitalism in the globalized world. It is
structurally impossible for individual nations to sustain independent or even autonomous
economies, political systems and social structures. Globalization has reconfigured the world’s
social forces in a very dramatic way by encouraging the neo- liberal forces of development. The
last few decades have witnessed more than 70 countries resorting to stabilization and structural
adjustment programme imposed by IMF and the World Bank. Specifically, these programmes
pursue macroeconomic stability as an essential requisite for the activity of international capital.
This mould seeks to harmonize a wide range of fiscal, monetary, industrial and commercial
policies among multiple nations as a requirement for fully mobile transnational capital to
function simultaneously and often instantaneously among numerous national borders. The
expansion of capital can now take place unopposed in presence of a thriving world market. The
main economic aspect of ideal capitalist globalization is that capital and jobs are free to flow
unhindered.

III.2.4. Role of WTO

WTO covers a wide area of multilateral relations, trade in goods, services,

intellectual property, investment issues, environment, government procurement, competition
policy and the like. The functioning of WTO thus impacts the lives of people all over the world,
especially those belonging to the developing countries. The future agenda of WTO should
address the issue of reducing the gap between the rich and the poor countries and thereby
inducing the much needed dynamism in countries of the underdeveloped third world and
secondly should address the various sectoral issues that boost or hinder the development of third
world and do away with inadequacies that are build in such issues. GATT and its successor
WTO has enhanced the growth of world trade but has changed its distribution too. The export
and import shares of developing countries including Asia’s share have been increasing.

The WTO is member –driven, with decisions are taken by general agreements among all
members of the government. This organization also deals with the different sectors of society
such as agriculture, textiles and clothing, banking, tele-cummunication, government purchases,
industrial purchases, industrial standards and product safety, intellectual property and much
more.
 WTO negotiations so far have shown that when countries forge alliances they can generate
synergies and become powerful players. Increasing regionalism had threatened the multi lateral
trading system because it fractured world trade into three distinct competing groups namely
NAFTA, EU, and APEC that produced three giants namely U.S.A, EU and Japan.

The birth of WTO in January 1, 1995 held a great promise for the entire world economy in
respect of international trade. This trade organization will administer the new global trade rules
establishing the rule of law in International trade, which amounted to nearly five trillion dollars
last year for goods and services.

Besides World Bank and IMF the World Trade Organization is now being considered as the
third pillar in the post-war international economic relations. The WTO will have three main legal
instruments. The General Agreement on Tariffs and Trade (GATT) along with associated
agreements and jurisprudence, the General Agreement on Trade and services (GATS) and the
agreements on Trade- related Intellectual Property Rights (TRIPS). Reacting to the establishment
of the WTO and ratification of the Final Act by different countries, trade experts contend that the
significant reductions in tariff and non-tariff barriers negotiated in the round would give the
international trading environment a new dynamism and viability.

III.2.5. Functions of WTO

1. Administering WTO trade agreements with different nations

2. Forum for trade negotiations
3. Handling trade disputes
4. Monitoring national trade policies
5. Technical assistance and training for developing countries
6. Cooperation with other international organizations

The main goal of WTO is to help the trading industry to become smooth, fair, free and
predictable. It was organized to become smooth, fair, free and predictable. It was organized to
become the administrator of multilateral trade and business agreements between its member
nations. WTO acts as the administrator. If there are unfair trade practices or dumping and there is
complain field, the staff of WTO are expected to investigate and check if there are violations
based on the multi-lateral agreements. WTO helps to promote peace and allows disputes to be
handled constructively. Freer trade cuts the cost of living and it gives consumers more choice
and a broader range of qualities to choose from.

III.2.6. Impact of WTO on Indian Economy

India’s signing of GATT agreement in 1994 and joining of WTO as a founding

member in 1995, raised a number of issues relating to its impact on our nation’s interest. There
are major four provisions of GATT accord relating to agriculture and other sectors as under (i)
Reduction in domestic support (ii) Market access (iii)TRIPS and (iv) Sanitary and phyto-sanitary
provisions. The WTO Agreements will be completing ten years of its existence on December 31,
2004. It is of national importance to find out the impact of WTO Agreement on Indian economy
during these periods being the member countries of the organization.

The agreement on agriculture provides a first and welcome step in reducing the
protectionist production and dumping practices particularly these of the EU and USA. A
potentially negative consequence of the proposals is that developing countries like India will be
more constrained in setting up supportive measures for their agricultural production. The
government of India has taken several steps to implement policy commitments made under some
of the agreements, particularly under the Agreement on Tariffs and Quantitative Restructions,
Agreement on Agriculture, TRIPs and TRIMs, General Agreement on Trade in Services (GATS)
apart from others. However, a strategy for tariff negotiations is required. Further, the additional
‘non-trade’ issues relating to transparency in government procurement practices, trade and
competition policy, trade and environment and trade and labour standards proposed in the
Singapore and the Geneva Ministerial need to be addressed for negotiations.

Further, the commitments regarding the technical barriers to trade, social agenda
covering labour standards and environmental and phyto- sanitary issues also require
establishment of certain national standards and technical regulations in a standardized and
transparent system. There are some of the issues on which India has already expressed certain
reservations to the WTO. Some of them are as under

1. During the process of implementation of WTO agreements in the last few years, India has
experienced certain imbalances and inequalities in the WTO agreements. It has been
observed that some of the developed countries have not fulfilled their obligations in letter
 and spirit of the WTO agreements and many of the special and Differential Treatment
clauses in favour of developing countries, added in various WTO agreements have
remained in-operational.
2. Taking advantage of the exception clauses provided in the WTO, most of the
industrialized countries are still enforcing various regulations on foreign produces and
suppliers.
3. India has also experienced and observed that a multilateral framework cannot guarantee
an increase in FDI inflows, although, it threatens to adversely affect the quality of the
inflows.
4. Further, it has observed that the WTO does not address the responsibilities of
corporations, which often impose trade restrictive clauses on their subsidiaries.
5. WTO has not been able to ensure abolition of non-trade barriers being imposed on labour
and environmental considerations, including the linkage in certain Generalized System of
Preferences schemes of these issues.

The WTO was expected to play a crucial role in implementing the new world trade system
visualized in the Uruguay Round. It was expected to enshrine the rule of law in international
economic and trade relations, thus setting universal rules and discipline over the temptation of
unilateralism. This collective profession of faith was expected to mark the end of the Colonial
pact and embodied genuine interdependence. When the WTO was set up, it appeared that every
partner of this organization will be benefited. But in reality it seems that the developed
economies are creating new barriers to international trade of developing economies

III.2.7. World Bank

The World Bank Group (WBG) was established in 1944 to rebuild post-World War II Europe
under the International Bank for Reconstruction and Development. As an international
organization the main function of WB is that fights poverty by offering developmental assistance
to middle-income and low-income countries. By giving loans and offering advice and training in
both the private and public sectors, the World Bank aims to eliminate poverty by helping people
help themselves.
 The World Bank is a UN’s international financial organization that provides loans to
developing countries for various development programs. The main goal of World Bank is the
reducing poverty rate..

World Bank performs the following functions:

(i) Granting reconstruction loans to war devastated countries.

(ii) Granting developmental loans to underdeveloped countries.

(iii) Providing loans to governments for agriculture, irrigation, power, transport, water supply,
educations, health, etc

(iv) Providing loans to private concerns for specified projects.

(v) Promoting foreign investment by guaranteeing loans provided by other organisations.

(vi)Providing technical, economic and monetary advice to member countries for specific projects

(vii) Encouraging industrial development of underdeveloped countries by promoting economic

reforms.

Resources

The World Bank had initially authorised capital of $10 billion subscribed by the member
countries in accordance with their economic strength. The United States of America is the largest
subscriber. The Bank collects funds from members as well as by issue of international bonds.

The current primary focus of the World Bank centers on six strategic themes:

1. The poorest countries. Poverty reduction and sustainable growth in the poorest
countries, especially in Africa.
2. Post conflict and fragile states. Solutions to the special challenges of post conflict
countries and fragile states.
 3. Middle-income countries. Development solutions with customized services as well as
financing for middle-income countries.
4. Global public goods. Addressing regional and global issues that cross national borders,
such as climate change, infectious diseases, and trade.
5. The Arab world. Greater development and opportunity in the Arab world.

The World Bank provides low-interest loans, interest-free credits, and grants to developing
countries. There’s always a government (or “sovereign”) guarantee of repayment subject to
general conditions. The World Bank is directed to make loans for projects but never to fund a
trade deficit. These loans must have a reasonable likelihood of being repaid.

World Bank’s Current Role and Major Challenges and Opportunities

Like the IMF, the World Bank has both its critics and its supporters. The criticisms of the World
Bank extend from the challenges that it faces in the global operating environment. Some of these
challenges have complicated causes; some result from the conflict between nations and the
global financial crisis.

III.2.8. Consequences of capitalistic development in the Third world countries

Capitalism produces a distorted form of development globally, where it produces any sort of
development at all. In the Third world countries the distortions tend to be different from those
produced in the first world countries. The developmental successes of capitalism in the third
world , therefore mainly consist of partially solving Third world problems like absolute material
deprivations and replacing them with First world problems like new diseases.

Some studies shows that capitalism works in the Third world countries through its major
institutional forms, namely transnational corporations, the transnational capitalist class and the
culture ideology that persuaded people of the virtues and necessity of the system. All Third
world countries have been influenced to the same extent or in the same ways by global
capitalism in general and the TNCs (transnational corporations) in particular.

These are also referred to as countries of the Southern hemisphere or developing countries.
Included here are countries from the continents of Africa, Asia and Latin America. According to
Dirk and Nobert (2003:3): Third World Countries are countries at the “periphery”of the world
economy and produce mainly agrarian and mineral raw materials for industrialized states under
mostly negative terms of trade. Furthermore, as a result of high population growth and rural-
urban migration, many of these countries have increasing number of marginalized sections of the
population which have specific settlement patterns and living conditions. Their value lies, rather,
in their heuristic capacity to help us make sense of what is happening in the world. However, at a
point in time there was growing rapprochement between the industrialized superpowers, the one
capitalist, the other communist (the USA and then USSR), which changed the relationship
between the First and Second Worlds. There was therefore in existence, a plurality of
communisms, exemplified in the Soviet black in the form of “polycentric” tendencies of various
East European countries to assert their own identities, despite successive repressions of three
“world” is definitive or entirely satisfactory, for they seek to capture a reality that contains at
least two major dichotomies: developed and underdeveloped, on the one hand and capitalist and
communist on the other. According to the Chinese (Peking Review No. 44, 1974): The First
World is that of the superpowers; the Second that of the developed countries; and the Third, the
underdeveloped countries.

The origin of global rules predate the colonial period. Over five centuries ago, firms in the
economically advanced countries have increasingly extended their outreach through trade and
production activities, (which were intensified in the colonial period), to territories all over the
world. However, in the past two to three decades, this process has been accelerated as a result of
technological development and especially the policies of liberalization. Third World is
perpetually enslaved by the capitalist west. Global rules and domestic policies tend to enhance
poverty in third world countries. The USA, through the “new international financial architecture”
has imposed on the rest of world her own rules that determine how local policies of developing
countries are to be formulated and implemented. Contrary to USA claims this new architecture is
not at all development friendly. Rather, it is project of consolidation of inequality between
nations and between classes within nations (Soederberg, 2004:180).

According to Saul (2006:11): The well known decline in the terms of trade for developing
countries is closely related to unbalanced nature of their economies, as a result of which so many
of them consume what they do not produce, and produced what they do not consume. The IMF
and World Bank do not like quick repayment of loans. They rather prefer a situation whereby
Third World Countries continuously serve these loans from time to time for continued
dependence on them. The IMF policies imposed worsened the situation. Indeed, it becomes clear
that the IMF policies not only exacerbated the downturns but were partially responsible for the
excessively rapid financial and capital market liberalization. This was probably the single most
important causes of the crisis, though mistaken policies on the part of the countries themselves
played a role as well. Trade liberalization, just like financial liberalization, is another way of
sustaining poverty, inequality and underdevelopment in the third world. The argument is that
trade liberation is necessary and has automatic and generally positive effects for development.
Some countries have gained more than others; and many (especially the poorest countries) have
not gained at all but have suffered severe loss to their economic standing.

The WTO is not a simple extension of GATT. It is a legal and institutional foundation of
multilateral trading system. It provides the principal contractual obligations determining how
governments frame and implement domestic trade legislation and regulations. It is the platform
on which trade relations among countries evolve through collective debate, negotiation and
adjudication. In many ways, the WTO is different from the GATT. The WTO dispute settlement
system is faster, more automatic and thus less susceptible to blockages. The implementation of
WTO dispute findings will also be more easily assured. The GATT lives on as “GATT 1994”,
amended and up dated version of GATT 1947, which is an integral part of the WTO agreement
and which continue to provide the key disciplines affecting international trade in goods
Globalization has often acquired a narrow connotation, associated primarily with the
liberalization of international trade and investment. This narrow interpretation is even narrower
and focuses on the particular institutional frame work within which that expansion is taking place
today, involving WTO and related bodies..

III.2.9. Conclusion

We have considered the issues of poverty, inequality and underdevelopment in Third

World Countries and have discussed how unfavourable global rules and lack of proper
implementation of state policies have been the major causes of problems. The globalizing world
does not seem to favour Third World to Developing countries. The advanced North has
continued to dominate the rest of the world; the South on the other hand, has been at the
receiving end of inequalities. This situation is antithetical to development in the South. In the
21st century, much more focus has to be placed on charging the political and economic
behaviour of the world.

III.2.10. Model questions

1. Explain the role of WTO

2. Describe the consequences of capitalistic development in third world countries?
3. Analyze the functions of World Bank?

III.2.11. Bibliography /further readings

1. Manohar . S. Pawar , David .R “social development critical themes an perspective” 2009

2. Reference Key ideas in sociology by Martin sattery
3. Appadurai Arjun “Modernity at large: Cultural Dimensions of Globalization” New Delhi
,Oxford University Press
4. Antonio . L Rappa, “Globalization” Book well publication
5. Marfleet Phi and Ray KIely,” Globalization and the Third world”London Routeldge,
1998

III.2.12. Space for note

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