ANNEX III - Evolution in Approaches to Development

The pursuit of well-being for all people has found many "panaceas" and disappointments. Starting as far back as the 1950s, the focus has changed numerous times with assumptions and results (Table. 1.)

As argued in the 1990 Human Development Report, a basic distinction is to be made between the means and the ends of development. Human beings are the real end of all activities, and development must be centered on enhancing their achievements, freedoms and capabilities¹.

Table 1. Some of Approaches to Saving the World and Leading it to a Prosperous Future2

In both cases _ human development and sustainable development _growth is no longer valued as the ultimate goal. What are valued are the effects of growth - or the effects of the lack of growth on human beings and the environment. Sustainable human development is not a concept separate from sustainable development _ but it can help to rescue "sustainable development" from the misconception that it involves only the environmental dimension of development.

Sustainable human development is pro-people, pro-jobs and pro-nature. It gives the highest priority to poverty reduction, productive employment, social integration and environmental regeneration. It brings human numbers into balance with the coping capacities of societies and the carrying capacities of nature. It accelerates economic growth and translates it into improvements in human lives, without destroying the natural capital needed to protect the opportunities of future generations. It also recognizes that not much can be achieved without a dramatic improvement in the status of women and the opening of all economic opportunities to women. And sustainable human development empowers people _ enabling them to design and participate in the processes and events that shape their lives, hence the four pillars that underline this concept

1. Productivity - people must be allowed full participation in the process of income generation and remunerated employment;

2. Equity - people must have access to equal opportunities;

3. Sustainability - equity must be ensured not only for the present generation but for future generations too;

4. Empowerment - development must be by the people not only for them.

Experiences from many countries show that there is no automatic link between growth and human development. And even when links are established, they may gradually be eroded _ unless regularly fortified by skillful and intelligent policy management which could be achieved with the investment in Human Capital. More than half of growth arises from HC _ investment in HC, expansion of labor power, expenditures on health and nutrition, investments in education, training and research - is the single most important source of economic growth. "Capital" may be still the engine of growth but the locomotive is human rather than physical capital.

If growth is based on Human Capital formation as opposed to investment in Physical (investment in plant and equipment as the key to progress for capital accumulation) its contribution is modest and exploitation of Natural Capital, the contribution of growth to HD is likely to be larger. The reason for this is that marginal increments of income are likely to be distributed more evenly under a Human Capital based growth strategy than under alternative strategies, for the simple reason that Human Capital almost always is embodied in human beings and hence the returns to HC usually can be captured directly by the individuals who possess that capital³.

¹ Human Development Index: Methodology and Measurement. Sudhir Anand and Amartya Sen, Harvard University, Cambridge, MA, USA, 1993

² What is Human Development? Historical Origins.

3 Culture, Human Development and Economic Growth," Keith Griffin, Department of Economics, University of California, Riverside, 1996