From Growth to Basic Needs

curity of tenure—they have been displaced ; by landlords, or the landowners have cap- tured much of the increase in surplus. In sum, rural development often describes a process involving changing atti- tudes (including those of bureaucrats), in- stitutions, and old ways of doing things. Experience shows this is often a good deal harder and more lengthy a process than, say, constructing a new power station or planting a new forest. Often, too, results seem to accumulate slowly—almost imper- ceptibly to the day-to-day observer or par- ticipant. Experience also sometimes shows, though, as in the extension projects in In- dia, that once the breakthrough is made, the results can be spectacular. Prospects We are as yet far from the point at which the impact of the overall lending effort can be fully and reliably assessed. The major, From growth recent part of the Bank's program to reach the rural poor is still being implemented; many of these pioneer projects will need to to basic needs be followed up through successive stages involving perhaps an overall 15- to 20- year horizon; a number of critical supporting elements and institutional changes will also take time to come to fruition. Ultimately, success in this field is to be measured as much by the creation of a local capacity for long-term development—a ca- Over the past 25 years, the emphasis of development strategies pacity for sustained change—as by any im- has been adapted to changing experiences. From an initial mediate benefits, important though the concentration on growth, we moved to stressing the creation of latter may be. Most important of all is the employment, and then the redistribution of benefits to the poor. requirement for sound domestic policies to Although the purpose of development was sometimes lost in the ensure that increases in agricultural pro- technical complexity of the means, it was then, as it is now, to duction are sustained and that low-income reduce mass deprivation—to give everyone the opportunity to live a producers are given every opportunity to increase their output. Increasing invest- full life. This article describes how the latest approach with its ment and the supply of external capital to emphasis on basic human needs evolved, and why it is more finely agriculture are important, but in our view tuned to its objective than previous approaches. making better use of existing investments, with comparatively modest incremental Paul Streeten outlays to improve efficiency, can yield very high returns. National policies on How is it that, in spite of growing hostility called for changes in the approaches pricing, land reform, taxation, special facil- and misconceptions, the concept of "basic adopted by development policymakers. ities for low-income producers, and so forth human needs" has been so widely ac- Otherwise we might be tempted to say that are at least as important in influencing pro- cepted as the principal objective of devel- the international development community duction as the total flow of resources to a opment policies? Among the advocates of takes up, from time to time, new fads and particular country. a basic needs approach to development are fashions, or that we are acting out a com- A number of recent Bank-financed proj- not only bilateral and multilateral donor edy of errors. Basic needs is not just an- ects are associated with such policy and in- agencies, but also thinkers from the Third other fad. (Nor, of course, is it the revela- stitutional reforms. The costs of continuing World whose views are expressed in doc- tion of ultimate truth.) It is no more, but and expanding Bank efforts are increasing, uments such as The Declaration of Cocoyoc also no less, than a stage in the thinking particularly as projects move into progres- (1974), What Now—Another Development and responses to the challenges presented sively less developed regions, and attempt (1975), prepared by the Dag Hammarskjold by development over the last 20 to 25 years. to deal with more difficult problems. But if Foundation, Catastrophe or New Society? If, in the following pages, the deficien- the additional resources and governmental (1976), prepared by the Bariloche Founda- cies of the prebasic needs approaches are commitment are forthcoming, and if ex- tion in Argentina, and Reshaping the Inter- stressed and the virtues of the basic needs pectations are cast in the right time per- national Order (1976). approach overstressed, this is done in or- spective, our experience shows that the In order to understand the wide appeal der to bring out sharply its distinctive fea- chronic poverty now prevailing in many of this approach, it is helpful to reflect on tures. It is not intended to imply either that rural areas of the world can be significantly how the concept has evolved and on the the previous approaches have not taught reduced through such efforts. HO way in which accumulating experience has us much that is still valuable, or that the 28 Finance & Development I September 1979 ©International Monetary Fund. Not for Redistribution basic needs approach is not subject to many process of belt tightening, while the bene- not only academic thought but also politi- of the objections raised to earlier ap- fits from development would go mainly to cal action in the early days of development, proaches, and some additional ones. the rich. But if the rewards of the rich are did not turn out to be true for three rea- Basic needs is concerned with removing used to provide incentives to innovate, to sons. (1) The differences between rural and mass deprivation. The approach can be de- adapt, to save, and to invest, the accumu- urban incomes were much greater than fined briefly as one which is designed to lated wealth will eventually benefit the Lewis had assumed, owing partly to trade improve, first, the income earning oppor- poor. union action on wages, partly to minimum tunities for the poor; second, the public This view was supported by analysis wage legislation, and partly to income dif- services that reach the poor; third, the flow based on the U-shaped so-called Kuznets ferentials inherited from colonial days. (2) of goods and services to meet the needs of curve, which has strongly influenced The rates of growth of the population and all members of the household; and fourth, thinking about development. According to of the labor force were much larger than participation of the poor in the ways in this model, the early stages of growth are expected. (3) The technology transferred which their needs are met. All four pillars accompanied by growing inequality. Only from the rich countries to the urban indus- must be built on a sustainable basis. In ad- at an income of about $600 per capita (in trial sector was labor saving and did better dition, basic needs must be met in a shorter 1973 dollars) is further growth associated at raising labor productivity than at creat- period and at lower levels of earned in- with reduced inequality (measured by the ing jobs. come per capita than has generally been share of the lowest 20 per cent of the pop- The reaction to the growing dualism that true in the past, or than would have been ulation). had resulted from modern, industrial achieved via the income expansion associ- growth was to turn to the need to create ated with growth alone. Dualism and unemployment employment. Since 1969, work by the In- The early discussions of development in Each of these three assumptions turned ternational Labor Organization's missions the 1950s had the same concern with dep- out to be wrong, or at least not to be uni- to seven countries has shown that "em- rivation. But, strongly influenced by Sir versally confirmed, as we gathered more ployment" and "unemployment," as Arthur Lewis and others, these discussions experience. Income did not automatically these are defined in the industrial world, concentrated on economic growth as the trickle down to the poor, except possibly in are not illuminating concepts for a strategy most effective way of eradicating poverty. a few countries, with special initial condi- to reach the poor in the developing world. It was on the growth of incomes, especially tions and policies; nor did governments Experience in many countries showed that in modern, organized, large-scale indus- (not surprisingly) always take corrective "unemployment" can coexist with con- trial activity, that the hope for improve- action to reduce poverty; and it certainly siderable labor shortages and capital un- ment in basic welfare was built. At this was not true that a period of increasing derutilization. (Gunnar Myrdal had criti- early stage, it was quite clear (in spite of poverty or inequality was needed in order cized the employment approach in Asian what is now often said in a caricature of to accumulate capital and stimulate entre- Drama earlier.) past thinking) that growth was not an end preneurship. It was found that small farm- "Employment" and "unemployment" in itself but merely a performance test or ers saved at least as high a proportion of only make sense in an industrialized soci- an indicator of development. their income as big landlords, and were ac- ety where there are employment ex- There were three types of justification tually more productive in terms of yield changes, organized and informed labor for the emphasis on a country's economic per acre, and that entrepreneurial talent markets, and social security benefits for the growth as the principal performance test. was widespread and not confined to large unemployed who are trained workers, One was the belief that the gains from eco- or foreign firms.

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