DEVELOPMENT:

A LOOK AT DEFINITIONS AND MODELS AND THE PHILIPPINE EXPERIENCE

By Mark Anthony Siason, MPA August 2012

DEVELOPMENT: A LOOK AT DEFINITIONS AND MODELS AND THE PHILIPPINE EXPERIENCE By Mark Anthony Siason, MPA The concept of development has, over the years, been changing in scope and meaning as well as on the manner of attaining it. As such, various definitions of development have emerged along with so called models or theories of development that explains conditions of underdevelopment and prescribe perspectives on development and the ways of attaining development objectives with their some specific criteria and parameters for measuring the same (UNDESA 2003). This is so, as governments perspective on development will determine the strategies to be undertaken together with the types of programs to be carried out that would be relevant to the context of the country and the development objectives sought for. The trend is seen that parameters for measuring development have been from purely economic indicators to more social and environmental, and recently towards rights-based. However, this paper argues that a convergence approach is necessary since economic growth is needed to propel a development along social and environmental spheres. In addition, the ideas evolved about development find congruence and convergence in the UNDPs sustainable human development model. But central to achieving the same are necessary institutional and governance reform especially in the public sector. Definitions of Development It must be emphasized that there is no single agreed-upon definition of development, as development theoreticians, scholars, or organizations would each have their own definition and ways of representing and interpreting the related concepts into a model, and that there is close connection between definitions of development and the models of development. Arbitrary choice for discussion must take note of the evolutionary and historical context of the concept of development as it has been changing and conditions that brought about such change. From these definitions and models therefore can be isolated 2 models for discussion and its application to the Philippine context. Early definition of development is based on the classical economic growth or diffusionist (Khan 2003) model of development, which focuses entirely on macroeconomic indicators of progress in terms of overall and per capita GNP. Hence development in this term has been denoted in the United Nations First Development Decade as having a GNP increase of 5-7%. Development in the classical diffusionist perspective purely means economic growth. But as to where the economic growth is invested or utilized is largely unclear in this early definition so that while there has been substantial growth in terms of aid, capital, technology and investments, there hasnt however been substantial reduction in poverty incidence and increase in the economic conditions of the poor and underprivileged sectors of society. The assumption that the growth would provide for a trickle-down effect to the masses has been largely unmet.

The failure of the First Development Decade to bring about qualitative changes in the human welfare and improve the levels of living of the masses of people brought about a rethinking of the concept of development. Notable scholars provided the initiatives and influence to redefine what development is. Among those who are considered to have a profound influence in redefining development are Seers (1969), Dag Hammarskjold Foundation (1975) and Todaro (1977) whose ideas on development emphasized social dimensions and espoused the centrality of man not only as recipient but as active participant in development. Dudley Seers (1969) averred that development is the realization of the potential of human personality which necessitates substantial improvements in eradicating 1) poverty, 2) unemployment, and 3) inequality. Hence, based on this definition, for a country like the Philippines to be able to claim that it has attained development it must somehow be able to justify that there is dramatic decline in poverty incidents, should be able to provide adequate opportunities for productive employment and that unemployment rates are substantially down historical levels, and that there isnt much disparity between levels of income of the rich and the poor. Apparently, Seers definition is a complete departure from the classical-economic-growth view of development, which only points to the centrality of growth in income of a country. The model or perspective advanced by Seers can be lamped into what Khan (in UNDESA, 2003) characterized as Basic Needs Model of development as it puts forward the significance of developing human capital through provision of basic needs to address poverty, unemployment and inequality. Michael Todaro (1977), on the other hand, stressed that development must be regarded as multi-dimensional process involving major changes in social structures, popular attitudes, institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of absolute poverty. He further explained that development must represent the whole gamut of change by which the entire social system, tuned to the diverse basic needs and desires of individuals and social groups within that system, moves away from a condition greatly perceived to be unsatisfactory toward a situation or condition of life regarded as materially and spiritually better. Todaro emphasized the good life that individuals and societies ought to pursue as based on three (3) core values : 1)life sustenance, 2) self esteem, and 3) freedom from servitude. Todaro here, thus provide a normative philosophical and humanistic dimension to development but taking on a much holistic integrative perspective by emphasizing the need for accelerated economic growth along with social and institutional component. By this, he points out that the problem of underdevelopment and inequality is largely structural in nature and proliferated by existing institutions in society the promotes rather than prevents inequality, inadequate redistribution of wealth, blocks access to basic services, and are the very cause of deprivation thereby impeding attainment of development objectives on top of efforts and interventions being done. Thus, he defines development as a holistic cultural, social and institutional transformations (multi-dimensional) largely brought about by substantial changes in existing institutions into ones that takes cognizance of the importance of the human person and thereby provides adequate services to support life-sustaining, basic human needs, promotes self-respect and dignity thru the entire societys and including

the governments respect of rights and liberties of individuals and thereby changing the attitudes and culture of a mass of people, rendering them free and capable to live productive meaningful lives or what he refers to as the good life. The same theme of improved quality of life is carried by the Dag Hammarskjold Foundations (DHF) Another Development. Another Development is peoplecentred, geared to the satisfaction of basic human needs for all both material and, in its broadest sense, political; it is self-reliant, endogenous, ecologically sound and based on democratic, political, social and economic transformations which alone will make possible the attainment of the other goals. Another development also encompasses the search for societies overcoming discrimination of any kind be they social, sexual, ethnic or economic. It is a participatory and pluralistic process (DHF 1975). The definition provides a wider more integrative and holistic meaning than earlier proposed but on the other hand build from these earlier conception especially on the social and humanistic component of development thereby putting the human person and the human condition as the primary gauge of whether development is attained or not. It departs from the classical and diffusionist definition which supports massive importation of technology capital and cultural elements from developed to non-developed countries even as Another Development gives importance to self-reliant or endogenous changethat is, harnessing the core of the countrys rich cultural heritage, resources, and human energies and creativity. Most importantly, this definition of development mainstreams the importance of the environment (which is not present in previous definitions) as it advocates for sustainable utilization of existing natural resources such that society does not transgress the regenerative limits or carrying capacity of the environment. The definition of development advanced by DHF builds from Todaros institutional perspective by grounding development on democratic, political and social transformation. Meaning, it also advocates substantial change and restructuring the way existing institutions operate to serve developmental aims and thus also calls for dramatic change in popular attitudes guided by democratic principles of participation and political and social transformations based on human rights. These various elements of the definitions apparently flows thru current conceptions of rights-based approach to development as well as sustainable human development and also informed the various models of development that have emerged in last coupe of decades. Models of Development

Various models of development exist, as there can be various permutations of classifications that can be arrived at. According to Khan (in UNDESA, 2003), the models of development may be lumped into three : 1) The Diffusionist, 2) The Basic Needs Model, 3) and the Political Economic or Entitlements Model. Under this broad classification, two important models shall be discussed one is the Classical Economic Growth Model which belongs to the Diffusionist Model based on Khans, and second is the Sustainable Human Development Model, which has elements characteristic of the Basic Needs and Political-Economic Models combined. Then on, the applicability of the Classical Economic Growth and Sustainable Human Development Models to Philippine Government conditions shall be discussed with the perspective that development strategies ought to be context dependent and the choice of development models must be based upon sound analysis and choice of the elements

that can be beneficial or practicable to an existing countrys socio-economic and political conditions. This is so, as the various models have their set of setbacks. Classical Economic Growth Model The Diffusionist Model was the dominant development model during the 1950s until the mid-1970s. What this theory basically propounded was that developing countries were poor because they were technologically, resource-wise, and culturally poor and backward. The solution was to export the technology, the capital, and even the norms and values of the developed countries to the developing countries. The theory was that these transfers would then automatically generate a process of upward transformation, lifting the developing countries from a state of underdevelopment to a state of development. In pursuance of this theory, most developing countries witnessed an inflow of second grade technologies, advisory services and some capital to promote development. Nyilas (1977) explained how the scheme worked. The diffusionist model perceived development and underdevelopment by means of a summary of certain typical features or factors that hindered development. These typical factors were then compared with the static features of the developed countries, together with a number of socio-economic indices. Records suggest that such a strategy did not work. Based on the centralist, or dirigisme, doctrine of state intervention, the diffusionist model of development relied heavily on three principles: production first and distribution next; change of cultures and values; and, the state to act as the main intervener in the transformation process. In this scenario, it was assumed that rapid industrialization was the answer to development and that, with the help of the West, industrialization would create a spiraling effect in the economies of the developing countries, spreading the benefits of development right across the board. Most developing countries accepted this theory and jumped into the bandwagon of industrialization without much consideration to the market, the issues of complementarities (i.e., the agriculture-industry linkage), human capital, and local institutions and traditions. The result was that many unsustainable industries, often with second grade technologies, were built and unsustainable products were produced at a very high cost. Many governments had to pay heavy subsidies to maintain these industries. Furthermore, these initiatives, undertaken within the framework of market restrictions, licensing and control, often contributed to patronage distribution, corruption, and other anomalies. These actions, for obvious reasons, also contributed to inefficient allocation of scarce resources, growth of rent-seeking behavior, and rising inequality in and stagnation of the economy. Under the Diffusionist Model would fall the Classical Economic Growth model that guided the thought of the UN First Development Decade in the 1960s. Hence, concept of development in the 1960s (regarded as UN First Development Decade) was purely economic-oriented and therefore gauged on increased overall or per capita national economic output ideally around 5-7%. With this, it has been strongly

posited that the manner of attaining development is thru extensive industrialization and together with development aids and loans from multilateral and bilateral aid institutions. Earlier theories and conceptions of development show this focus as in the Rostows Stages of Economic Growth and the Harrod-Domar Growth models. The general assumption then was that the economic growth would have a trickling down effect on the quality of lives of the people and therefore would cause standards of living to increase dramatically. The logic was that industrialization would increase job creation and dramatically increase economic output and income thereby raising the amount available to propel further growth and investments in infrastructure projects and services that improves lives of the people. The setback of this development model however, was that there was very slight qualitative improvement in the human welfare and the trickle down effect was not substantial as proportion of income between rich and poor have instead drastically widened. In summary, during this time many countries witnessed two emerging trends: firstly, rising inequality as the poor became poorer and the rich, richer; and secondly, an increasingly arrogant and insensitive public policy institution with little or no accountability. As a result, most public institutions and the public policy processes became reclusive, elitist and highly authoritarian, serving mostly the interests of the rich and the elite. This is the same condition that the Philippines have been before, during and after the Marcos regime. The Sustainable Human Development The Sustainable Human Development is an offshoot of the Basic Needs and Political Economic or Entitlements model, such that discussion of these two broader classifications would be necessary. The Basic Needs Model came into prominence during the mid-seventies. Pioneered by Robert McNamara of the World Bank and Mahbubul Haq, the Pakistani economist, this perspective for the first time focused on human resources development as a key component of economic development. It argued that human capital was as important as financial capital for sustained economic growth and poverty reduction (Haq, 1970; Haq and Burki, 1980). It was also during this time that the issue of poverty started to find a place and legitimacy in the development literature. Hence, the condition of the human person, his capacity to meet basic life-sustaining needs became the focus of development and development programs were implemented aimed at directly addressing these concerns. On the other hand, the Political Economic or Entitlements model argues that the poor are poor because the existing institutions disadvantage them. It further argues that the poor are very capable and, indeed, are very keen to change their lives, but the institutions that govern their existence function against their interests. This school asserts that the legal system, land tenure arrangements, the financial systems, etc. have evolved in societies to serve the interest of the haves and not of the have-nots. It also argues that these are the systems that put constraints on the poor in the exercise

of their free choices, thereby impeding their (poors) ability to make progress. Two important researches and the experience of an important action-research program demonstrated how institutions remained at the core of the debate on poverty. By following the political economic perspective, Robert Chambers (1983), through his seminal work, Putting Last First, argued that the poor were poor because they were caught in a deprivation trap and that the elements of deprivation, namely, vulnerability, powerlessness, poverty, remoteness, etc. were inter-linked and institution related and keep the poor in poverty in a self-perpetuating way. To overcome the malaise, according to him, is to bring about fundamental changes to the existing institutions, especially those that relate to the powerlessness of the poor the access to resources, the access to the decision-making processes of the state, etc. The entitlement theory of development, by implication, prescribes development strategies that can enhance the entitlements to livelihood through the creation of income earning opportunities, and not by giving handouts to the poor as seemed to have been the practice until recently. The Sustainable Human Development capitalizes on important elements of these important development models and rightly finds congruence with development definitions advanced earlier by Todaro (1977), Seers (1969), and DHF (1975). This model puts people at the center of development; regards economic growth as means and not an end; protects the life opportunities of the present as well as the future generations, and respects the natural systems on which all life depends. Development under SHD involved the development of the total well-being of a personeconomic, cultural, social, politicalwithin the context of ecologically friendly and future-minded development activities. It is integrative and inclusive in that it recognizes the importance of economic growth put forward in the classical model, but also integrates the social dimension of poverty alleviation, increased employment and provision of social safety nets for the poor and underprivileged and as in social development, recognizes as well the people as participants, especially the women and thereby promotes not just equality and equity between genders. But as in sustainable development, equity is advanced in terms of the right to access to natural resources by present and even future generationsotherwise known as inter-generational equity. Therefore, Sustainable Human Development is pro-people, pro-jobs, pronature, and pro-women in that Sustainable Human Development gives the highest priority to poverty reduction, productive employment, social integration, and environmental regeneration. According to UNDP, there are five aspects to sustainable human development all affecting the lives of the poor and vulnerable: Empowerment - The expansion of men and women's capabilities and choices increases their ability to exercise those choices free of hunger, want and deprivation. It also increases their opportunity to participate in, or endorse, decision-making affecting their lives. Co-operation - With a sense of belonging important for personal fulfillment, well-

being and a sense of purpose and meaning, human development is concerned with the ways in which people work together and interact. Equity - The expansion of capabilities and opportunities means more than income - it also means equity, such as an educational system to which everybody should have access. Sustainability - The needs of this generation must be met without compromising the right of future generations to be free of poverty and deprivation and to exercise their basic capabilities. Security - Particularly the security of livelihood. People need to be freed from threats, such as disease or repression and from sudden harmful disruptions in their lives. Hence, countries adopting the model focus on four critical elements of Sustainable Human Development: eliminating poverty, creating jobs and sustaining livelihoods, protecting and regenerating the environment, and promoting the advancement of women. Developing the capacities for good governance underpins all these objectives.

Applicability of the Models to the Philippine Development Situation It is worth mentioning that path toward development is context dependent. That is, not all aspects of the models that have been successful in one country may be readily applicable or practicable to another country on account of varying social, political, and economic condition therein and therefor there should not be a one size fits all approach to Development (UNDESA 2012). Thus in assessing the practicability or non-practicability of the aforementioned models to the Philippine condition, certain important characteristics of the Philippines and the Philippine government environment have to be put into consideration. For one, it must be emphasized that substantial and accelerated economic growth is essential to provide for the financial requirement of redistribution, of infrastructure ad institutional capabilities for better public social services (Midgley 1995). Therefore, along with economic growth should be establishment and enabling reforms of institutions of society to better carry out governmental and other pubic functions that provides services to the people, protect they human rights and provide for security. Central to this according to the United Nations, is a government thats serves and a Public Administration and Governance that is participative, transparent, future-oriented, predictable, promoting the rule of law and human rights, and empowered to serve. Hence, while the Philippine government, the pubic sector, and perhaps society as a whole have been ranked as most corrupt in Asia, any model would seem to be doomed to fail and rendered impracticable. Hence reforms in the public sector is imperative even as the UNDP sees governance and therefore public administration being part of the wider governance environment as underpinning the success of sustainable human development.

But for purposes of discussion, we can assume that a condition where institutional reforms in the public sector have been met, and a synthesis and integration of aspects of the two models discussed above are highly practicable to the Philippine government sector if also only to address and mitigate internal weaknesses of the system. 1. Need for Sound Microeconomic Management. The Classical Economic Growth model is very much relevant and practicable to the Philippine development condition based on the need for sound macroeconomic and fiscal management of the countrys economy. The classical theory on increasing capital resources for accelerated growth of the industrial sector (Harrod 1939, Domar 1946) may be necessary to provide for higher value added products and services that create jobs and provide for higher returns and increasing capabilities of local industries. But, industrialization has to be in balance with the need to create according to Reyes (1992), middle-ground industries, that takes cognizance of the need for labor-intensive growth in a rather high unemployment rate of the country and a backdrop of increasing population. 2. Knowledge Transfers and Attitudinal Changes. Knowledge and technology transfers and attitudinal changes (based on Modernization theory, Knowledge, technical know-how, and even institutions and policies from more industrialized countries, as espoused in the classical model and Modernization theory (Parsons 1964), is also relevant for replication to the Philippines insofar as resources and the socio-political context warrants. But great caution must be taken as to their effect on local socioeconomic and political condition. Issues on trade liberalization and the WTO for example have had potential flashpoints for conflict, which has had detrimental implications on the local economy of the Philippines. Liberalization is based on the assumption of Smiths invisible hand to be taking place that would benefit consumers and improve peoples living conditions. Accordingly markets operate on perfect information and that markets dont fail. But in fact, in reality, markets have imperfect information causing prize instabilities and steep fluctuations as in presence of cartels and speculators and in fact markets do fail as in the financial crisis of the late 90s. 3. External Inducement and Cooperation. Also due to the global and interdependent nature of the world economies, the classical economic growth theories in terms of the significance given to external conditions (technical and resources) and the effects and responsibility that industrialized countries have to aid less developed countries makes sense as the world has been witness to how vulnerabilities in one countries can affect the entire world economy as in the case of the global financial melt-down and hence, the need for less developed countries like the Philippines to join regional partnerships like ASEAN as well as on the global partnership and cooperation for development in order to gain better expertise and support to

cope with internal and external development challenges such as meeting the Millennium Development Goals (UN 2001). Hence, classical economic growth models are practicable to the Philippines in the sense that it better provides for explanation and expertise into the creation of broader financial base needed to finance public infrastructure and social services and a government that is able to serve the people. However, it itself it is incomplete even as economic growth have to be tied up with social and cultural, as well as environmental aspects of development. There are also aspects of the classical economic growth model that would not be practicable: 1. Market Mechanisms will not lead to development. As earlier mentioned the assumptions that markets operate on perfect information and they are never vulnerable to failure are completely inapplicable concept in the Philippines were markets are vulnerable to monopoly and often price fluctuations and movements are easily influenced by speculation. Adam Smiths invisible hand has never moved in the way of serving the interest of all but those of the producers big firms and therefore with the effect of widening disparities in income and thus increasing incidence of inequality. What is needed therefore is an effective governance environment for the operations of market guided by a public sector that serves the interest of the people to ensure that indeed markets would not fail and that if they do, it mitigates its impact on the vulnerable sectors. 2. On Comparative Advantage. Classical models speak of zeroing in growth on some commodity industries that are the strength of a countrys economy since it cant be replicated by other countries and would be a source of economic advantage. This concept has greatly failed in the Philippines even as it made way to capitalize on its agriculture, fisheries and forestry sector as sources of comparative advantage to the detriment of the environment and at the end leaving the country even agricultural insufficient to provide for its own people. According to Schumpeter, a country only achieves development when it has developed innovative ways of endogenously reorienting production by utilizing advances in knowledge and technology even as a country receives foreign technical and financial aids from other countries. On the other hand, assessing the Sustainable Human Development model, it can be readily perceived that it is very much practicable in the Philippines based on the values being maximized in the model pertaining to widening choices and opportunities and respect of human rights (political and civil liberties), the rights of women and the disadvantaged sector for greater or more equitable access to public services on account of the Philippines status as a developing country and a restored democracy. The five aspects of SHD provide for sound theoretical bases for its practicability in the Philippines. 1. Empowerment. On account of empowerment, the democratic values highly inculcated among the people could make for solid foundation for people and community empowerment into advancing development aims as in Community-

Based Resources Management Programs. However certain institutional and policy reforms have to be improved on aspects of peoples and institutions adherence to rule of law and human rights. Broadening the base for participation across all governmental levels would allow for greater empowerment leading to more transparent governments and better service delivery able to listen and respond to peoples needs. 2. Cooperation. SHD provides for a wider agenda for development and may be much more relevant and practicable to Philippine government condition. While empowerment is needed, so too is cooperation both internal and external, of consolidating efforts and resources to advance the plight of the vulnerable enabling puny lives towards productive income and better living conditions even as SHD shifts the focus from income to outcome in terms of change in the quality if life of the people. 3. Equity or increasing access to basic services and governmental programs for the disadvantaged entails institutional and policy reforms initiated by an empowered people who are educated and who knows their basic rights. This too is clearly potentially practicable in the Philippine situation even as the Philippines has among the highest literacy rates and able to comprehend some basic political issues of the day. What may be needed are reforms in government that makes it responsive to the people through truly decentralized and empowered governmental services that truly funnel in the views, the aspiration and needs of the people in order to render them capable to cope with their economic situations. 4. Sustainability. SHD also promotes the value of sustainability; of future-oriented progress and ensuring inter-generational equitythat the present and the future generation have the right to access to the bounties of nature. The Philippines is among those that has been poor in the management of its natural resources with more than 90 percent of its forest cover lost only within the century. Therefore values on sustainability of growth, of protecting and regenerating the environment is applicable to the Philippines, but as to practicability it has been showing progress with the increase of environmental NGOs and CommunityBased programs for sustainable environmental management and provision of alternative livelihood and closing open-access to protected areas. 5. Security. Overall, what SHD seeks to create is a secure life for the people. And for a country like the Philippines, which is constantly plagued by political instabilities, calamities, peace and order problems, high incidence of poverty and unemployment, price hike and high inflation, and even shortages in food, security becomes an overarching objective of the government, and a goal to be worked for. Hence, values and principles of Sustainable Human Development finds congruence with the Philippine government situation. While it presently lacks transparency and accountability, the movement towards more participative means of tackling societys problems provides some hope into better implementation that also

empowers the people and the community. This then also improves implementation of policies since it involves the people from formulation to implementation and thereby also raising adherence to the rule of law and human rights rendering the people secure and able to ventilate their concerns to a government that responds and serves. Institutional reforms that integrate the Sustainable Human Development model has to be reworked however in the Philippines and this entails a great deal of financial resources base which can only be attained if the Philippine macroeconomic and fiscal policies are sound. And this is when the classical economic growth theories which are in actuality economic development theories, can greatly inform the technical and external aspects of growing the economy to provide for allocative effectiveness and efficiency (Chenery and Srinavasan 1988).

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