Social Dimensions of the Economic Growth - Essay Example

Introduction The world has been obsessed by economic development as it is one of the measures, if not the only determining factor of progress – thatis, progress in monetary terms. Is development merely measured in monetary figures and by a country’s GDP? If this is so, why is it that despite this mad rush towards economic development, poverty and hunger is an all too consuming reality? This paper is an intent look on economic development not just as a measure of a country’s or the world’s economic progress as a whole but as a human development issue incorporating the social dimension in the context of the economic development. It will try to take a look beyond the numbers of a country’s GDP but at the real scenario of poverty, hunger, inequality and the collective lack of basic necessities such as basic healthcare and education. Economic Development Economic Development is understood as the “the analysis of the economic progress of nations” (Economic development, Anon, n.d., par 1). However, looking at the core of it as well as its entirety, it becomes more than just the monetary computation of the economic value of the country, rather it is “an amalgam of sociology, anthropology, history, politics and, all-too- often, ideology” (Economic development, Anon, n.d., par 1). Dudley Seer argued in 1969 (as cited in Economic development, Anon, n.d., par 13) that development “was a social phenomenon that involved more than increasing per capita output (...) [but necessitates] eliminating poverty, unemployment and inequality as well” (Economic development, Anon, n.d., par 13). Later on, economic development was redefined and it included “structural issues such as dualism, population growth, inequality, urbanization, agricultural transformation, education, health, unemployment, etc” (Economic development, Anon, n.d., par 13) and were considered by their own value in relation to economic development and not just as accessories of it (Economic development, Anon, n.d., par 13). A look at the Economic Development of Some Countries A country’s economy is measured in terms of Gross Domestic Product or GDP. As per definition, GDP is the “total money value of goods and services produced in a country in one year [while GDP per capita] is a measure of the value of products made and services provided by each person, (...) a measure of the average productive capacity of people in one country” (Gross domestic product per capita, Anon, n.d., par 1). The United States of America (US or USA), which is considered the largest and most important economic market in the world has a GDP of about $13.84 trillion in 2007, three times bigger than the second largest economy which is Japan with GDP of $4.4 trillion (CIA World Fact Book as cited in The US economy, Anon, 2008, par 1). From the dark years of World War II, Japan surprised the world with its phenomenal economic development which placed them as the second largest economy in the world with a GDP per capita of $33,600 as per 2007 data. The rapid growth until the 1980’s could be attributed to its sound fiscal policy, wide economic freedom, strong private sector, a focus on science and technology and a positive work culture. However, the burden of globalization forced the economy to plateau and became stagnant by the 1990’s and the recent economic downturn started to affect Japan pushing an inflation after a decade of deflation or annual dropping of prices. Because of this, Japan started to line up some of its stimulus ideas to ride through the recession and preserve sustained growth rates and keep economic stability. Some of these are: managing the inflation rate, increasing the service sector productivity which comprises 73.1% of the country’s GDP, enforcing a tougher look at fiscal consolidation by controlling government expenditures and reforming their tax system and labour market (Japan economy, Anon, 2008). China, on the other hand, “has brought its huge economy forward by leaps and bounds” (China economy, Anon, 2008, par 1) in the last 30 years with an astounding and almost unbelievable annual growth rate of 8 per cent of GDP. “The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars by 2007” (China economy, Anon, 2008, par 2). The Purchasing Power Parity (PPP) of China, which is measured by comparing the value of goods in one country using the US dollars taking into account the general price difference of the countries being compared (GDP per capita, Anon, n.d., par 2), is said to be the second biggest after the United States. “Most analysts project China to become the largest economy in the world this century using all measures of GDP (China economy, Anon, 2008, par 2). “China has adopted a slow but steady method in implementing their economic reforms” (China economy, Anon, 2008, par 4 & 7) with market liberalization as one of the important factors of the economic development in China. Economic reforms were initiated since the 70’s and 80’s decade starting with a focus on agriculture, which was shifted from farming to household. It was followed by gradual market liberalization and fiscal decentralization. China, being a communist government initially owned business enterprises but as part of the economic reform, more independence were accorded to these firms which necessarily translated to more privately held companies. Another major reform is the opening of its doors to the world market for trade and direct foreign investment. Due to the successive reforms implemented by the Chinese government, the banking industry widened and the stock market was developed. All these contributed to where is China now economically” (China economy, Anon, 2008). As with the case of India, their economy is the fourth largest in the world in terms of purchasing power and the twelfth largest worldwide with $1.089 trillion in GDP. The bulk of which accounted for 24 percent of the country’s GDP coming from trade which is roughly 1 percent of the whole world’s commerce. Thus India has been considered as “quickly emerging as a powerful trade partner in the global economy” (India economy, Anon, 2008, par 2) after being an undeveloped, closed-off economy, it is moving forward becoming a strong economic force in Asia, rivalling all in the region (India economy, Anon, 2008, par 1). The World Going Hungry Despite these economic developments of some countries especially those mentioned, the world still watches its people go hungry. The following facts had been exposed by the website Poverty and Hunger: “More than 854 million people in the world go hungry. One child dies of hunger-related causes every five seconds, equating to 16,000 poor and hungry children each day. Rising food prices may soon tip 100 million more hungry people to the edge of starvation. The prices of wheat, corn, rice, and soy have doubled or tripled in the past three years” (Lee, n.d., par 1). The website also mentioned that poverty is a reality not just in third world countries like Haiti and Kenya but also in a developed country like the United States which has the largest economy in the world and the highest GDP as mentioned above. It is estimated that in the US alone, “28 million hungry people will rely on food stamps in 2008” (Lee, n.d., par 2). The world through the different agencies like the United Nations (UN), World Bank, Food and Agriculture Organization (FAO), World Food Programme (WFP), International Monetary Fund (IMF), etc have always been vigilant about this very alarming global issue that pervades our world today. In a World Food Summit two years ago, the participants vowed to reduce the incidence of undernourishment by half by the year 2015 and yet, it is a disturbing scenario that due to the current economic downturn that the world is experiencing now, an increase in people going hungry has been observed instead, especially in the third world countries. “The ones that suffer the most are the poor and hungry children” ((Lee, n.d., par 2). The United Nations included in its 60 ways UN makes a difference programs that are all geared towards alleviating hunger. It includes: promoting development, alleviating rural poverty in developing countries, supporting industry in developing countries, fighting hunger, improving global trade relations, promoting economic reform and turning slums into human decent settlements to name a few (UN website of Economic development). Hunger and Poverty Why is this then the real scenario that stand in sharp contrast to the figures exposed above about the GDP of countries mostly amounting to trillion of dollars or as high as the $80,000 GDP per capita of Qatar (African economy, Anon, 2008, par 5), by far the richest people in the world? Because it is the same economic development that we talked about which becomes the culprit of hunger and poverty. The fast growing economies in the world are the ones that make a negative impact in terms of available food supply for the mouths to feed in the world. One reason is that urban expansion lures people from rural areas, therefore reducing the work force in agriculture. Urban perimeters also started to encroach on previously agricultural lands and convert them to either industrial lands for manufacturing spaces or residential district to house the people pouring into the urban areas. “China has lost an average of over one million hectares of farmland annually, so must now look to foreign farms to feed its 1.3 billion people” (Lee, n.d., par 4). Another reason is that “emerging economies particularly India and China, put pressure on resources of not only food, but also land, water, and oil (Lee, n.d., par 4). Shah wrote in Global Issues that “meaningful long-term alleviation to hunger is rooted in the alleviation of poverty, as poverty leads to hunger” (2008, par 2). He espouses that efforts miss the real problem. The world is intent on providing food, improving production or promoting development. Such things do not necessarily address the structural root cause of hunger. He also wrote that: “There are many inter-related issues causing hunger, which are related to economics and other factors that cause poverty. They include land rights and ownership, diversion of land use to non-productive use, increasing emphasis on export-oriented agriculture, inefficient agricultural practices, war, famine, drought, over-fishing, poor crop yields, etc” (Shah, 2008, par 3). GDP and Poverty Still, the world, especially the developing countries who are intent on their economic development agenda turn a blind eye to the reality of poverty and just focus their sights on GDP as a measure of their economic goals. All that matters is the figure that is generated that reflects their GDP and fool themselves to believe that it is already the comprehensive representation of their countries economic growth. Worse, other countries adopt the belief that the good performance of their countries GDP will solve a lot of their problems, including poverty. In India, experts declared that “solution for eradicating poverty in the country lies in scaling up the gross domestic product (GDP) growth rate to up to 15 per cent” (5% GDP growth will eradicate poverty: Experts, 2007, par 1). However, Sharma (in an earlier statement has already) countered this declaration when he declared that the Indian government must accept the fact that economic growth does not translate to reduction of poverty. He stated that “the gross domestic product (GDP) is not an accurate measure of human development, especially in less developed countries, where a lot of production takes place in the household economy.” (Sharma, 2000, par 1). The developing countries are transfixed on GDP as a measure of economic growth and totally ignored the reality that it is not equivalent to human development as GDP is “simply a measure of the money that changes hands” (Sharma, 2000, par 18). Poverty and Hunger and its Impact on the Economy Because of the narrow-minded focus on GDP, countries overlook that poverty and all its attachments such as problems in healthcare, education, etc create a negative impact on their economy which could not be probably countered by rise of their GDP. In truth, poverty burdens the economy and exerts its toll on the GDP. The World Food Programme website reported that a study conducted by the United Nations World Food Programme (WFP) and the Economic Commission for Latin America and the Caribbean (ECLAC) in Central America and the Dominican Republic in 2004 found out that undernutrition in the countries under study cost their economies US$6.7 billion – or 6.4 percent of the region’s entire GDP. In the region of study, there were 880,000 underweight children or translated to 14% of the population of children under 5 years old. This “severely undermines international and national efforts to eradicate hunger and poverty” (Study finds child hunger costs Central America billions of dollars every year, 2007, par 1). These data and facts have been calculated from the “effects of hunger and undernutrition on health, education and productivity and then estimates the costs which include increased health care and education needs as well as decreased economic activity through lower productivity” (Study finds, 2007, par 8). It reported that 90 percent of the economic losses are from hunger-related illnesses, educational levels and mortality rates (Study finds, 2007, par 9). The study also reported that the calculated cost of undernutrition varies from 1.7 percent to 11.4 percent of GDP of other countries (Study finds, 2007, par 11). Conclusion In the end, efforts at increasing the country’s GDP will always be negatively countered by the reality of poverty and hunger as was presented in the points of this essay. The fixation with GDP as the sole measure of a country’s economic growth and development is useless if the facts and data about pressing issues on human development pervade the country. A country may boast of rapid economic development but if their citizens are scrambling for food to fill their stomachs, the effect of this hungry citizen, even if they turn a blind eye at that point, will pull down their GDP and the country’s economy as well. Economic growth is more than the numbers. If the supposed economic development does not trickle down to feed the hungry mouths especially of the children at the grassroots level, the numbers are insignificant. What will matter in the end are its people and their development as humans. If the citizens go hungry, the government will be burdened more for the need to feed, clothe, shelter and educate these people. On the other hand, if their basic needs of food, shelter, clothing, healthcare and education are met, they develop to be more productive citizens who can positively contribute to the economic prosperity of the country. In the end, the country’s economic viability and prosperity which translate to growth and development is in its people. They are at the core of economic development. Bibliography 60 ways the UN Makes a Difference, n.d. Economic Development. [Online]. Available at: http://www.un.org/un60/60ways/ec_dev.html. [Accessed 27 April 2009]. Economic Development, n.d. [Online]. Available at: http://homepage.newschool.edu/het//schools/ develop.htm. [Accessed 27 April 2009]. Economy Watch, 2008. African Economy. [Online]. Available at: http://www.economywatch.com/ world_economy/africa/. [Accessed 27 April 2009]. Economy Watch, 2008. China Economy. [Online]. Available at: http://www.economy watch.com/ world_economy/china/. [Accessed 27 April 2009]. Economy Watch, 2008. India Economy. [Online]. Available at: http://www.economy watch.com/world economy/india/. [Accessed 27 April 2009]. Economy Watch, 2008. Japan Economy. [Online]. Available at: http://www.economywatch.com/ world_economy/japan/. [Accessed 27 April 2009]. Economy Watch, n.d. South Africa Economy. [Online]. Available at: http://www.economy watch.com/ world_economy/south africa/. [Accessed 27 April 2009]. Economy Watch, 2008. The US Economy. [Online]. Available at: http://www.economy watch.com/ world_economy/usa/. [Accessed 27 April 2009]. Express India.com, 2007. 15% GDP growth will eradicate poverty: Experts. [Online]. (8 Sept. 2007). Available at: http://www.expressindia.com/news/fullstory.php? newsy=91941. [Accessed 27 April 2009]. Gross Domestic Product (GDP)/capita, n.d. [Online]. Available at: http://ucatlas.ucsc. edu/gdp/ gdpmap.html. [Accessed 27 April 2009]. Inside Asia Pacific, n.d. Undernourishment in the Asia Pacific Region. [Online]. Available at: http://hunger.undprcc.lk/insideap/pages/article2_2.html. [Accessed 27 April 2009]. Lee, T., n.d. Stark and Unsettling Facts about World Poverty and World Hunger. Poverty and Hunger. [Online]. Available at: http://www.povertyandhunger.org/. [Accessed 27 April 2009]. Nation Master.com, 2009. Population below poverty line (per $ GDP) (most recent) by country. [Online]. Available at: http://www.nationmaster.com/graph/eco_pop_ bel_pov_lin_pergdp-below-poverty-line-per-gdp. [Accessed 27 April 2009]. Sen, A K. Poverty and Development. [e-book] (press). Available at: Google books Available at: http://books.google.com/books?hl=en&lr=&id=LFk3pHpFiG4C&oi= fnd&pg=PP17&dq=amartya+sen+on+poverty+and+development&ots=JMhH90IZRY&sig=OwuX0Ue0nuBtzFp0z4PxSFzCxag. [Accessed 27 April 2009]. Shah, A. (2008). World Hunger and Poverty. [Online]. 6 July 2008. Global Issues. Available at: http://www.globalissues.org/issue/6/world-hunger-and-poverty. [Accessed 27 April 2009]. Third World Network, 2000. Poverty: Look Beyond GDP growth. [Online]. (August 2000. 27 April 2009. Available at: http://www.twnside.org.sg/title/2086.htm. [Accessed 27 April 2009]. World Food Programme, 2007. Study finds child hunger costs Central America billions of dollars every year. [Online]. 06 March 2007. Available at: http://www.wfp.org/ node/357. [Accessed 27 April 2009]. Read More