Development v/s Growth ::: Bhagwati v/s Sen debate ::: Gujarat v/s Kerala model

Economic Development

Implications:

Economic Growth

Economic development implies

Economic growth refers to an

changes in income, savings

increase in the real output of

and investment along with

goods and services in the

progressive changes in socio-

country.

economic structure of country

(institutional and technological
changes).

Factors:

Measurement:

Development relates to growth

Growth relates to a gradual

of human capital indexes, a

increase in one of the

decrease in inequality figures,

components of Gross Domestic

and structural changes that

Product: consumption,

improve the general

government spending,

population's quality of life.

investment, net exports.

Qualitative.HDI (Human

Quantitative. Increase in real

Development Index), gender-

GDP. Shown by PPF.

related index (GDI), Human

poverty index (HPI), infant

Economic Development

Economic Growth

mortality, literacy rate etc.

Effect:

Brings qualitative and

Brings quantitative changes in

quantitative changes in the

the economy

economy

Concept:

Normative concept

Narrower concept than

economic development

Relevance:

Economic development is

Economic growth is a more

more relevant to measure

relevant metric for progress in

progress and quality of life in

developed countries. But it's

developing nations.

widely used in all countries

because growth is a necessary
condition for development.

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Jagdish Bhagwati v/s Amartya Sen debate

(Although , I believe ...that this type of debate has been glamourised by MEDIA.and
have gave a political colours to it ....but still v wl see what it is all about ! ...since v r
UPSC Aspirants )

Amartya Sen and Jagdish Bhagwati, tackling each other on what Indias
governance priorities should be.

Sen is a Nobel Prize winner in economics and a professor of economics

and philosophy at Harvard University.

Bhagwati is a Columbia University professor of economics, who has been

nominated for the top honour several times. Along with Sen and Avinash
Dixit, he is considered to be among the three greatest Indian economists
ever.

While Sen believes that India should invest more in its social
infrastructure to boost the productivity of its people and thereby
raise growth.

Bhagwati argues that only a focus on growth can yield enough

resources for investing in social sector schemes.

Investing in health and education to improve human capabilities is

central to Sens scheme of things. Without such investments,
inequality will widen and the growth process itself will falter, Sen
believes.

Bhagwati argues that growth may raise inequality initially but

sustained growth will eventually raise enough resources for the
state to redistribute and mitigate the effects of the initial inequality.

--------------------------Kerala Vs Gujarat

The Bhagwati-Panagariya duo argues that whatever Kerala had achieved was
thanks to a growth-oriented approach. They suggest that Kerala's high social
indicators have much less to do with the so-called Kerala model, and more to do
with global trade, growth-oriented policies and private-sector participation. "To keep
asserting such causality [Sen's argument] is the mark of a lazy intellect and is,
besides, dangerous in its potential for misleading us to make harmful policy
choices,"

But many economists argue that this amounts to misrepresentation of facts. Says
Suresh Babu, a professor of economics at IIT Madras: "In the current debate we
need to be careful to not confuse between 'levels' and 'rates of change'. Professor
Bhagwati focuses more on rates of change, while Sen argues that levels matter. For
Gujarat some recent rates of change might look impressive, as it is on a small base,
while for Kerala even incremental changes on high levels are impressive as they are
difficult to come by."

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