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Growth, economic development and human development: different meanings, complementary purposes
Wed, 05/27/2015 - 15:26

Karelys Abarca

Los controles de precios, miles de años de desatinos
Karelys Abarca

Karelys Abarca es Economista, egresada de la Universidad Central de Venezuela, y Profesora-Investigadora en la Facultad de Economía de esta casa de estudios. Ha sido dos veces Premio Nacional Alberto Adriani, galardón otorgado por el Banco Central de Venezuela y la Fundación Alberto Adriani. Twitter: @karelitabarca

There is no direct relationship between growth and economic development, much less between economic growth and human development. The great challenge for global society is to create an effective link between economic growth, economic development and human development, in regions with historical lags in these concepts, as is the particular case of Latin America.

Sustainable economic growth has traditionally been one of the main objectives on the agenda of Latin American countries, because it represents the main source of financing for economic development. Economic growth consists of the greater use of available resources. However, there is no sustainable economic growth without developed productive factors. So the relationship is not linear, but rather it is about terms that feed each other in a dynamic process.

Sustainable economic growth is determined by efficiently functioning markets and social institutions. That is, economic growth is a means for human development, not an end in itself, since it depends on certain conditions to become a permanent trend. On the other hand, societies do not stop their level of economic and human development, development is not a fixed goal, it is a dynamic condition that requires the continuous improvement of the well-being and quality of life of individuals living in society.

Economic growth materially drives human development to the extent that it expands the state of production conditions and productive factors (economic development); but the greater the human development, the more sustainable the economic growth and development. There is undoubtedly a very close relationship between all these terms, but they are essentially different. Human development requires economic growth, political freedom, economic development, social equity, community participation, environmental sustainability and human security. The problem of viability of collective well-being arises when human development is claimed and tangible results are not obtained in terms of economic growth and development.

For there to be sustainable economic growth, which finances economic development and inter-generational human development, it is necessary that the surpluses obtained from the economy be allocated to productive investment, which is essential to increase labor productivity and allocate resources to concrete development actions. human. Productive public spending as a means of government intervention in the economy must be effectively aimed at offering quality public goods and services, to improve the efficiency, equity, balance and material development of nations. Therefore, it is imperative to achieve the balance of influences between the State in democracy and the market, understood as two complementary and not antagonistic institutions in society.

The idea that economic growth alone can solve the world's social problems is a fallacy. For this reason, some alternative conceptions have placed emphasis on human well-being, based on the equity of the distribution of available resources and the creation of opportunities for all. Once we have overcome the simplistic ideas of economic development as the only form of development, we can arrive at the concept of human development.

The term sustainable human development formally emerged in the 1990s, when Mahbuh ul Haq was in charge of the United Nations Development Program (UNDP) and proposed an alternative model based on the contributions of economists such as Amartya Sen. From this model, development is a complex state, consisting of the expansion of opportunities and options for people to achieve well-being in a democratic environment. Therefore, it is the result of a process that involves social, economic, demographic, political, environmental and cultural factors, with the full participation of all individuals.

From Amartya Sen's point of view, human development aims to increase people's real freedom. According to this approach, the expansion of freedom is the main means and end of development. Human development consists of the elimination of controls on the types of freedom, which deprive individuals of the possibility of taking advantage of their capabilities and opportunities, and furthermore, without these freedoms development is not sustainable or sustainable. But, to guarantee fundamental freedoms in society, there must be solid economic and social institutions that prevent the social pact from falling apart.

Amartya Sen affirms that human development requires the elimination of the main sources of deprivation of liberty: poverty and tyranny, scarcity of economic opportunities, scarcity of public goods and services, and intolerance or excessive intervention by repressive States. For this reason, if we are guided only by the number indicated by the Human Development Index (HDI), it turns out that Latin American countries where these freedoms are not currently totally tangible (such as the case of Venezuela) appear as having high human development. . Let us remember that the Human Development Index considers life expectancy, educational achievement (literacy and school enrollment) and per capita income as the main development factors; But unfortunately these variables are numerically influenced by massification policies, which leave aside other determining factors.

The human development index omits certain conditions that put individuals at direct risk of vulnerability, such as insecurity, stress, loss of political, social and economic freedoms, and any institutional failure that threatens individual and collective development. According to the latest UNDP 2014 Human Development report, human progress depends on the reduction of vulnerabilities that threaten the comprehensive well-being of individuals and societies, which of course includes economic vulnerabilities.

Even if a country shows a high index of human development, this indicator will not be sustainable if in practice notable results of economic growth, economic development, institutional stability and guaranteed freedoms are not observed. Economic growth, economic development and human development are complementary, but they do not mean the same thing, since the failure of any of them compromises the sustainability of the others. Just because a country has economic growth does not mean that it has economic development and not every country with a high HDI means that it actually has sustainable development. It is important not to confuse the concepts.

Sources consulted:

1. Amartya Sen (2000). Development and freedom. Planeta Publishing House, Buenos Aires.

2. Flores Nayezkha and Rafael Rodríguez. Economic growth and human development. In Labor Observatory Venezuelan Magazine. Vol 4, No. 7, January-June 2011

3. Hernández Andrés (1998). Amartya Sen. Ethics and economics. Economics notebooks, Bogotá.

4. Parra Luzardo Gastón (2001). Conditions and prospects for economic growth in Venezuela. BCV Special Editions Collection.

5. UNDP. Human Development Report 2013. The rise of the south, human progress in a diverse world.

6. UNDP. Human Development Report 2014. Sustaining human progress: reducing vulnerabilities and building resilience.