There have been some recent changes on the blog and so it seems like a good time to become a bit more active as well. I’m a former KF student who left Graz a while ago and I’m now in the final year of a MSc program that specializes on Economic Development and Growth. This will also be the focus of my blog entries.
On the impossibility of being developed
As a profession we, economists, like clear concepts. When we use a term such as “market”, “capital” or “inflation” we tend to define these terms to get a clear understanding of what we are talking about. Studying a masters in development economics I’ve started to realize that the term “development” has become such a common word in our everyday language that hardly anybody pauses to think about what we actually mean by it.
This blog entry is the first one of a series I am going to write over the next couple of weeks that will deal with the questions of what development is and how we can measure it over time and space. These are obviously important questions, because without a clear idea of what we mean by “development”, “progress” and how we can measure and compare them, most of the things we can say in development economics become quite meaningless.1 In this first part of the series, I focus on discussing “development” and its relation to “progress”.
Let’s start with some basic definitions. The Oxford English Dictionary states:
What are we supposed to make of that? – Essentially, what this tells us is that while the term development can be associated with terms such as growth, advancement or changes over time, it is not associated with improvements or goals. Instead, it is “progress” that is defined as a development towards an improved or advanced condition or a goal. Why does this matter? It matters because in our everyday language we are often not careful and clear enough in stating that “development” as such is not a goal. It is a process that takes place over time. This means that we can certainly measure the “development” of something by choosing an appropriate indicator and tracking its performance over time. The resulting series of measurements can then show a rise or a decline of the indicator. Regardless of which, the series will show us the development of a certain measure. To assess whether this development could be called a “progress” though, we need to move onto normative grounds and define a goal or at least define what we consider an “improvement”.
Which leads us to another important point: what does it mean when we say that a country is developing or developed? Unless we can claim that there is some state of development that can’t be reversed, the distinction is complete humbug, because, per definition, all countries are developing. They all undergo a process of constant change.2 What about the term “developed”? I’ve said before that we can choose and indicator, such as GDP per capita, for instance to monitor the economic development of a country, for example. A country could then be considered “developed” if it surpasses a certain threshold of income per capita. However, this choice of a threshold is completely arbitrary and based on our subjective goals, because there is no such thing as an objective level of development. Let me re-emphasize: to define what we consider as “developed” we make a normative judgement and somehow connect it to our idea of “progress”.
While this has all been very philosophical, where have organizations drawn the line between “developed” and “developing” countries in practise? Interestingly enough, the OECD states that:
While this may seem strange at first, there are two very straightforward reasons. First, there is the before-mentioned problem that it is insanely difficult to justify the choice of a threshold on non-normative grounds. Secondly, development is a multidimensional process. While we often think about GDP per capita in relation with development, this is one of the most narrow definitions we can use. Instead, development has a variety of social aspects that are hard to measure and even if we can come up with a comprehensive list of everything that matters to assess development, we face the problem that somehow we have to aggregate and weight the variety of indicators. This problem of how to measure development has led to an interesting body of research that ranges from 300-page reports on the shortcomings of GDP to a variety of composite indices such as the Human Development Index, Happy Planet Index or OECD Better Life Index and Subjective Well-being research. In the following blog entries I will devote some time to discussing these research efforts.
For those of you who already feel like exploring a little bit, you can start by playing with the OECD Better Life Index.
1 While I will try to put in references (for the interested reader and due to considerations of transparency) this is a blog and not a paper: therefore referencing may be incomplete; but you can always write me a message if you have questions.
2This does clearly not apply to all disciplines: In biology, we could talk about the “full development”, of an embryo, for instance. We can do this, because we have a clear idea of what the final embryo should look like and can assume that the development will not reverse itself. Unlike economics, biology often has “goals” that are non-normative and given by nature.