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Why "Development" should Focus on People, Not Economy

Updated on March 19, 2015
Development should focus on people, not economy.
Development should focus on people, not economy.

People should be the Focus of Development

“People are the real wealth of a nation.”

This is how the historic first Human Development Report titled “Concept and Measurement of Human Development” in 1990 opened, outlining the onset of a new thinking on what development should be and how to go about quantifying it. Since then, each annual human development report has touched on a specific theme around “human development” and catalyzed the developmental policies around the world.

These reports underscore the point that people’s sense of well-being can’t be described or measured in monetary parameters alone and outline “what is development”, “why it should focus on people” and “how to go about measuring it”. Reading these reports year-after-year, clearly shows how countries are stuck with “merely economic growth” in the name of development and are actually paying a huge human cost to achieve it. The point is made amply clear by Nobel laureate economist and philosopher Amartya Sen in this quote below:

"Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it." –Amartya Sen, 1998

When development is correctly viewed as an all encompassing development of societies by putting people at the center-stage, fresh new insights develop in the understanding of poverty which can be seen as a lack of well-being (or as ill-being) of people. What comes out is a new perspective of poverty, not possible from the income or monetary vintage points.

The most notable impact is that poverty no longer remains neither an economic problem alone, nor income the only solution; the importance of its social, cultural and political dimensions also becomes clear. For example, social exclusion comes into picture because it promotes and sustains poverty, and weak gender of women becomes an issue because it increases their vulnerability to poverty. Such things remain hidden as long as poverty is seen form the monetary perspective. This brings out the multidimensional nature of poverty which enables policymakers to create more effective and realistic anti-poverty policies.

School Meal - Food for Body and Mind both
School Meal - Food for Body and Mind both

From the Human Development Report, 1996

♦ The imbalances in economic growth if allowed to continue will produce a world gargantuan in its excesses and grotesque in its human and economic inequalities.

♦ Development that perpetuates today’s inequality is neither sustainable nor worth sustaining.

♦ Human Development is the END, economic growth a MEANS.

♦ Human development and economic growth should move together, strongly linked.

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♦ Investing in women’s capabilities and empowering them is the surest way to contribute to overall development.

♦ From the human development perspective, poverty means denial of choices and opportunities for a tolerable life.

Why Development needed Redefining?

The 1980s saw emergence of development approaches in the West which equated development with economic growth resulting in top-down market growth strategies. Under the leadership of economists, programs of privatization and deregulation were launched with the assumption that the economic growth would trickle down to the poor and end poverty – and everyone would be happy.

However, the idea of economic growth as a universal panacea to solve all social ills proved illusory. Social dynamics and complexity of human lives proved too much to have such a simplistic approach. It resulted in things unacceptable to most rational thinkers. For instance, highly unequal wealth distribution and the oligarchy of the rich few controlling everything; acceptance of entrenched poverty even in rich societies and things like child labor; social exclusion of the weak and poor; neglect of the environment; increasing crimes and weakening of community fabric despite increasing wealth in the societies.

It made consumption the sole standard of development resulting in an increasing competition for consumption of natural resources. In fact, it evolved a culture where wealth and its accumulation became the sole lifestyle. [Three decades later, the impact of this narrow brand of development which views people as mere input to the economic engine is clear in the worldwide wave of money based monoculture that excludes everything else people grow up valuing.]

As a result, scholars and thinkers began questioning the monetary concept of development and poverty. Researchers started talking about ways to measure human well-being, in terms other-than income or consumption. Many, such as Dr. Mahbub ul Haq, the Pakistani economist who later played a vital role in formulating the human development reports, recognized the need for a better development model.

Initially, the basic needs approach (BNA) to poverty dominated the minds of leading development experts like Haq and the World Bank, after it evolved in the International Labor Organization (ILO). The BNA recognizes that the poor need certain basic minimum goods and services such as food, healthcare, shelter, education etc to lead a decent life. The ease of implementation was perhaps its biggest strength. But it was not a complete development model and concentrated only on goods and services – decided by the experts. It left the poor as mere passive spectators. Moreover, the BNA is limited to mere consumption of goods and services; not with the true objective of development which is to lead a decent and fulfilling life. The BNA is also silent about non-poor.

Ultimately, it was Amartya Sen who provided a coherent and theoretically sound framework for development through the people-centric capabilities approach.

The Human Development Approach

Amartya Sen’s capability approach sees development from a much deeper perspective. It views development as enhancement of people’s potential to be and to do, in terms of people’s capabilities, so that they are enabled to live a long and healthy life, have access to knowledge and a decent standard of living, and participate in the community activities and decisions affecting their lives. It considers income and commodities as important means, but remains focused on people’s capabilities and the freedom to lead life they value. It is relevant to rich as well as poor societies – a big advantage over the BNA. Sen’s theory and others working on the similar theme provided the conceptual foundation for an alternative and broader human development approach.

The capability approach challenges the popular commodity based understanding of poverty and discards the measurement of poverty based solely on income. It does not see people as mere tools (means) of development (seen as economic growth); they are the “target” of development. It is comprehensive and recognizes the important role of economic growth and technology along with many other factors which are social, political and environmental but only as means towards expansion of people’s capabilities – the real development.

Poverty is Lack of Human Development

The human development is concerned with enhancing people’s choices and freedoms in order to make them more capable so that they can lead a long, healthy and creative life enjoying a decent standard of living, dignity, self-respect and respect for others. In this context, poverty must mean denial of opportunity to lead such a life. It is a situation that that deprives people of basic capabilities that are essential for people to live with some minimum well-being in the society.

For example, absence of economic infrastructure; social discriminations, whether based on class, gender, race, religion or region; inability to access public services of say, healthcare, educational or banking, for whatever reason; hunger and poverty; inability to participate in economic, social and political activities and processes for whatever reasons; and so on. All such factors restrict the development (of people) and cause or sustain poverty.

Thus, the human development model will address issues like social exclusion that denies the poor voice and participation in social and political processes, gender inequality that limits the freedoms of the weaker gender, all forms of discrimination because they limit participation and freedom of people, and so on.

From the policymakers’ perspective, the poverty of choices and opportunities is often more relevant than the poverty of income, because it leads directly to strategies of empowerment and other actions that enhance opportunities for everyone.

Education is highly empowering.
Education is highly empowering.

"Development" should revolve around People; not around GDP growth only.

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Putting Theory into Practice

Mahbub ul Haq, and his team consisting of BNA and capabilities thinkers, is credited for putting Sen’s ideas into practice in the human development approach. He also created the configuration of the Human Development Index (HDI) as an alternate measure of progress, within the UN Development Program’s annual Human Development Reports. It was a major shift away from the usual income or economic growth (GDP) considerations of the World Bank’s annual World Development Reports (HDRs). The HDI combines measures of life expectancy, literacy and command over the resources to enjoy a decent standard of living.

The annual HDRs published since 1990 have considerably enriched the understanding of development from the perspective of enhancing human capabilities and freedom through the yardstick of the HDI. When countries are ranked on their HDI score, an entirely different picture of the world emerges – repeatedly underscoring the fact that high national income does not necessarily enhance the wellbeing of people. These reports have had a profound impact on development policies around the world.

By now policymakers around the world have come to recognize that good human development involves inclusive economic growth, equitable distribution of income and well targeted social expenditures. It has also emerged that empowering girls and women through education and participation is perhaps the most effective social development tool.

The HDI, as constituted, is in no way the only index possible. Sen has remarked – the idea of human development goes well beyond the HDI.

Poverty and Development have Several Dimensions

The HD approach framework, while underscoring the shortcomings of income and basic needs approaches, brings out a multidimensional picture of poverty as well as of development. Most importantly, it goes beyond monetary and consumption based assessment of poverty and focuses on participation and empowerment – in order to eliminate exclusion and marginalization of the poor and to give them the opportunities to be heard and freedom of choices. It also goes beyond physical conditions or possessions to institutional and political elements. Most importantly, the poor are not seen as patients diagnosed with a disease called poverty; they are seen as active agents of change in their own lives.

The very idea of the HDI also gave rise to other indexes: gender related development index, gender empowerment measure, human poverty index which in 2010 gave way to an elaborate multidimensional poverty index.


Although the idea of people development has been around since Aristotle, the efforts to introduce the human development approach should be seen as a course correction so that people become the focus of development – through expansion of their freedom and capabilities. It provides a blueprint for enriching human life – as opposed to enriching economy – of the current generation without jeopardizing the well-being of the future generation through advancing inclusiveness, fairness and justice in the world.

The HDI may tell us a little more about the human quality of life than does the GDP, but assessing the quality of life is a much more complex exercise than what can be captured through only one number. Nor can it be left to the experts and their math skills. But it certainly makes sense to say that people should be the end of development, not economy which is just a mean, at best an important mean.


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