Development and the economy

The idea of ‘economic development’ is usually interpreted in terms of national economies, though it could also be seen as a characteristic of regions – geographical areas where there are distinct patterns of economic activity. At the simplest level, development is seen in terms of the establishment of a formal economy, and incremental growth in the value of what is produced – judged by the gross national product or (almost the same thing, in terms of the figures) the national income. Production, income and economic growth can happen only when there is a sufficient infrastructure, mechanisms for communication and exchange and engagement in trade. Much of the literature on growth and development is fixed on the narrow issues of income and wealth; development means much more than that. Consider, for example, the effect of living in a place where there is no connecting road; where electricity supplies are either unavailable, or at best intermittent; where there is no piped water supply; where standing water is not drained, or where people do not have basic sanitation. This usually goes under the general heading of ‘infrastructure’; assessments of national income are liable to leave it out, but it makes a considerable difference to people's quality of life, and beyond that to the kinds of things it is possible for them to do. Hettige describes the impact of new roads in rural areas of the Philippines, Sri Lanka and Indonesia, transforming communications, trade and social relationships. There is a social infrastructure to consider, too: identity papers, a postal address, the development of education systems, health care, and increasingly of social security benefits. Much of this is difficult to count; if it adds to estimates of national income, it is usually only considered in so far as it adds directly to economic transactions. A social arrangement offers people much more than ever appears in national accounts. The National Health Service in the UK is a paradigmatic example: every person has effectively the equivalent value of health insurance, and while expenditure on health care delivery is counted, the value of the insurance is not.