Concept and indicators of development topic no. 1 Development

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Concept and indicators of development



Development - means a progression from a simpler or lower to a more advanced, mature, or complex form or stage. It is also defined as the gradual advancement or growth through a series of progressive changes. Development is a process, not a level. It is a path to achieve certain goals.

Definition of Development



Let's be clear about what we actually mean by "development." Development can be distinguished from a closely related term, "growth." Just like development, growth is a form of progress, yet development is of a higher order. Think of growth as an expansion of more of the same, whereas development is an expansion at a higher level. Whereas growth is an expansion at the current level, development is an expansion at a new, unprecedented level. For example, in business we might think of growth as a duplication of a retail store model into dozens of franchise operations; whereas development was the actual development of the franchise concept in the first place. Development is more of a movement to a higher qualitative level, whereas growth is a quantitative movement.

Meaning of Development

Development is a process, not a level. It is a path to achieve certain goals. There is no consensus among economists as to what constitute economic development. Economists who looked at development from structural change angle defind economic development as economic growth with structural change in favour of non-agricultural activities.

Some economists emphasized the need for institutional changes to bring about structural transformation. By institutional changes they ment facilitating institutions like appropriate policies, systems of governence, markets, attitudinal changes. etc. In this angle economic development is economic growth plus something.

Process of development

Development occurs slowly over time. It is mostly an unconscious phenomenon that occurs on an irregular basis, with zigs and zags, with forward motions and setbacks. On the other hand, if one were to discover the process of how development occurs, and utilize this process in developing policies, strategies, and action plans for society and nation, we could eliminate the irregularities and meanderings of development, eliminate the negatives that block its path, and more positively control its ever accelerating course.


Introduction: The Basic Needs Model or the Latin American world Model, is an interdisciplinary work piece conducted by Amilcar Herrera, also became well known around the world. The Bariloche Foundation in Argentina (1973) first developed a world model to show the possibility of meeting the basic needs of people all over the world based on certain assumptions.

Important points of BNM:

Development must reach to the poorest of the poor and satisfy their basic minimum needs e.g. food, clothes, shelter, education, healthcare etc. by providing employment and income.

It was an attempt to deal directly with the world poverty by meeting the basic needs of the lowest 40% income groups.

The model advocated for the satisfaction of non-material needs for quality of life once the material needs are satisfied.

In this model, the emphasis shifted from measuring income per capita as a growth indicator to measuring the physical quality of life (PQLI) as the indicator of welfare. PQLI is measured by life expectancy, infant mortality rate (IMR is the number of deaths of infants under one year old in a given year per 1,000 live births in the same year. India=55, Sierra Leone=160.3, USA=6.3, World=49.4 IMR as per 2006 United Nations Population Division report) and literacy.
In this model there is increased emphasis on the importance of equitable distribution of rewards, quality of life and meeting basic human needs.

BNM and causes of underdevelopment:

The model points out a few causes of underdevelopment as given below:

Poor organization of the poor. Organization of the poor serves three purposes: first to participate in community life; second, to overcome the mere survival strategy; and third, to break a pattern of powerlessness, exploitation, permanent indebtedness, and a state of dependency bordering slavery.
Lack of proper policy framework for development. It should have multiple growth goals: a commitment to development from bottom-up; local self-reliance; grass-root organizations participating in planning, decision making and implementing in areas affecting communities; substantial allocation of national funds for health, education and housing in favour of the lowest 40% income.
Information Poverty. There is information poverty among the 'have-nots' and communication gap with the 'have'.

Communication Model in BNM:

Decentralization (to give some of the power of a central government, organization, etc. to smaller parts or organizations around the country) of communication networks and democratization of their control would be essential pre-condition for the success of BNM.

Decentralization and rural integrated development in this model suggest two-way communication, both top-down and bottom-up in the development infrastructure.

The top-down communication is from the govt. to the masses for awareness of the basic amenities provided. A bottom-up communication from the people to the development planners for need based programs.

Role of communication in BNM:

In BNM, the emphasis is on inter-personal communication channels, which are used to inform, educate, motivate and persuade the masses with support from the mass media.

The govt. should provide community TV, radio sets and newspapers etc. and make use of satellites and other improved methods of broadcasting, such as short-wave, to the poor who have low physical accessibility to mass media because of low purchasing power or living in areas where reach of the media is low.
Along with physical access, it is necessary to have access to the operation of community media. This will safeguard against information blockage to the have-nots.
The efforts to meet the basic needs and to affect the required attitudinal changes require unprecedented inflow of information into the village capable of reaching the poorest of the villagers as well.

Therefore, it is necessary to develop programs designed to transform the village from the traditional society into and Information Community of a new kind.

Conclusion: Though the BNM is not yet considered as a replacement for development strategy but it has contributed a lot in shaping the policy of many developing countries.


Economic: GDP Gross Domestic Growth) /GNP (Gross National Product)

Social: Physical Quality of life index

  • Human Development Index


  • Communication

  • Democracy

  • Human Right

  • Social Relations( inequality)

  • Happiness Index

Millennium Development Goals (MDGs)

member states and at least 23 international organizations have agreed to achieve by the year 2015. They include eradicating (get rid of/eliminate) extreme poverty, reducing child mortality rates, fighting The Millennium Development Goals (MDGs) are eight international development goals that all 192 United Nations disease epidemics such as AIDS, and developing a global partnership for development.

The MDGs were developed out of the eight chapters of the United Nations, signed in September 2000. There are eight goals with 21 targets, and a series of measurable indicators for each target

Goal 1: Eradicate extreme poverty and hunger



    • Poverty gap ratio [incidence x depth of poverty]

    • Share of poorest quintile in national consumption


    • GDP Growth per Employed Person

    • Employment Rate


    • Proportion of family-based workers in employed population


    • Prevalence of underweight children under five years of age

    • Proportion of population below minimum level of dietary energy consumption

Goal 2: Achieve universal primary education


    • Enrollment in primary education

    • Completion of primary education

    • Literacy of 15-24 year olds, female and male

Goal 3: Promote gender equality and empower women




    • Proportion of seats held by women in national parliament

    • Goal 4: Reduce child mortality rates


    • Under-five mortality rate

    • Infant (under 1) mortality rate

    • Proportion of 1-year-old children immunized against measles[16]

Goal 5: Improve maternal health


    • Maternal mortality ratio

    • Proportion of births attended by skilled health personnel


    • Contraceptive prevalence rate

    • Adolescent birth rate

    • Antenatal care coverage

    • Unmet need for family planning



    • HIV prevalence among population aged 15–24 years

    • Condom use at last high-risk sex





    • Prevalence and death rates associated with malaria

    • Proportion of children under 5 sleeping under insecticide-treated bednets


    • Prevalence and death rates associated with tuberculosis


Goal 7: Ensure environmental sustainability



    • Proportion of land area covered by forest


    • Consumption of ozone-depleting substances

    • Proportion of fish stocks within safe biological limits

    • Proportion of total water resources used

    • Proportion of terrestrial and marine areas protected

    • Proportion of species threatened with extinction



    • Proportion of urban population with access to improved sanitation


    • Proportion of urban population living in slums

Goal 8: Develop a global partnership for development









    • Official development assistance (ODA):




      • ODA received in landlocked countries as proportion of their GNIs


    • Market access:



      • Agricultural support estimate for OECD countries as percentage of their GDP

      • Proportion of ODA provided to help build trade capacity

    • Debt sustainability:


      • Debt relief committed under HIPC initiative, US$

      • Debt service as a percentage of exports of goods and services




    • Telephone lines and cellular subscribers per 100 population

    • Personal computers in use per 100 population

    • Internet users per 100 Population.

Ingredients (5Ms) of Development and Money generation

  1. Method/ Mind

  2. Man

  3. Money

  4. Machine

  5. Material


A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the Home country, and operates in several other countries, known as Host countries.

The first modern multinational corporation is generally thought to be the East India Company. Many corporations have offices, branches or manufacturing plants in different countries from where their original and main headquarters is located.



  1. The exact model for an MNC may vary slightly. One common model is for the multinational corporation is the positioning of the executive headquarters in one nation, while production facilities are located in one or more other countries. This model often allows the company to take advantage of benefits of incorporating in a given locality, while also being able to produce goods and services in areas where the cost of production is lower.

  1. Another structural model for a multinational organization or MNO is to base the parent company in one nation and operate subsidiaries in other countries around the world. With this model, just about all the functions of the parent are based in the country of origin. The subsidiaries more or less function independently, outside of a few basic ties to the parent.

  1. A third approach to the setup of an MNC involves the establishment of a headquarters in one country that oversees a diverse conglomeration that stretches to many different countries and industries. With this model, the MNC includes affiliates, subsidiaries and possibly even some facilities that report directly to the headquarters.






The multinational companies in India represent a diversified portfolio of companies from different countries. Though the American companies - the majority of the MNC in India, account for about 37% of the turnover of the top 20 firms operating in India, but the scenario has changed a lot off late. More enterprises from European Union like Britain, France, Netherlands, Italy, Germany, Belgium and Finland have come to India or have outsourced their works to this country. Finnish mobile giant Nokia has their second largest base in this country. There are also MNCs like British Petroleum and Vodafone that represent Britain. India has a huge market for automobiles and hence a number of automobile giants have stepped in to this country to reap the market. One can easily find the showrooms of the multinational automobile companies like Fiat, Piaggio, and Ford Motors in India. French Heavy Engineering major Alstom and Pharma major Sanofi Aventis have also started their operations in this country. The later one is in fact one of the earliest entrants in the list of multinational companies in India, which is currently growing at a very enviable rate. There are also a number of oil companies and infrastructure builders from Middle East. Electronics giants like Samsung and LG Electronics from South Korea have already made a substantial impact on the Indian electronics market. Hyundai Motors has also done well in mid-segment car market in India.


The list of multinational companies in India is ever-growing as a number of MNCs are coming down to this country now and then. Following are some of the major multinational companies operating their businesses in India:

  • British Petroleum

  • Vodafone

  • Ford Motors

  • LG

  • Samsung

  • Hyundai

  • Accenture

  • Reebok

  • Skoda Motors

  • ABN Amro Bank

Benefits of Multinational Corporations

  • Create wealth and jobs around the world.

  • Their size enables them to Benefit from Economies of scale enabling lower costs and prices for consumers.

  • Large Profits can be used for research & Development. For example, oil exploration is costly and risky which could only be taken out because they make high profits.


Criticisms of Multinational Coporations

  • Companies interested in profit at the expense of the consumer. Multinational companies often have monopoly power which enables them to make excess profit. For example, Shell made profits of £14bn last year


  • In the pursuit of profit, Multinational companies often contribute to pollution and use of non renewable resources which is putting the environment under threat.

  • MNCs have been criticised for using ‘slave labour’ workers who are paid a pittance by Western standards



  • MNCs may pay low wages by western standards but, this is better than the alternatives of not having a job at all.




Foreign aid can involve a transfer of financial resources or commodities (e.g., food or military equipment) or technical advice and training. The resources can take the form of grants or concessional credits (e.g., export credits). The most common type of foreign aid is official development assistance (ODA), which is assistance given to promote development and to combat poverty. The primary source of ODA—which for some countries represents only a small portion of their assistance—is bilateral grants from one country to another, though some of the aid is in the form of loans, and sometimes the aid is channeled through international organizations and nongovernmental organizations (NGOs). For example, the International Monetary Fund (IMF), theWorld Bank, and the United Nations Children’s Fund (UNICEF) have provided significant amounts of aid to countries and to NGOs involved in assistance activities.

Countries often provide foreign aid to enhance their own security. Thus, economic assistance may be used to prevent friendly governments from fallingunder the influence of unfriendly ones or as payment for the right to establish or use military bases on foreign soil. Foreign aid also may be used to achieve a country’s diplomatic goals, enabling it to gain diplomatic recognition, to garner support for its positions in international organizations, or to increase its diplomats’ access to foreign officials. Other purposes of foreign aid include promoting a country’s exports (e.g., through programs that require the recipient country to use the aid to purchase the donor country’s agricultural products or manufactured goods) and spreading its language, culture, or religion. Countries also provide aid to relieve suffering caused by natural or man-made disasters such as famine, disease, and war, to promote economic development, to help establish or strengthen political institutions, and to address a variety of transnational problems including disease, terrorism and other crimes, and destruction of the environment. Because most foreign aid programs are designed to serve several of these purposes simultaneously, it is difficult to identify any one of them as most important.


The earliest form of foreign aid was military assistance designed to help warring parties that were in some way considered strategically important. Its use in the modern era began in the 18th century, when Prussia subsidized some of its allies. European powers in the 19th and 20th centuries provided large amounts of money to their colonies, typically to improve infrastructure with the ultimate goal of increasing the colony’s economic output. The structure and scope of foreign aid today can be traced to two major developments following World War II: (1) the implementation of theMarshall Plan, a U.S.-sponsored package to rehabilitate the economies of 17 western and southern Europeancountries, and (2) the founding of significant international organizations, including the United Nations, IMF, and World Bank. These international organizations have played a major role in allocating international funds, determining the qualifications for the receipt of aid, and assessing the impact of foreign aid. Contemporary foreign aid is distinguished not only because it is sometimes humanitarian (with little or no self-interest by the donor country) but also by its size, amounting to trillions of dollars since the end of World War II, by the large number of governments providing it, and by the transparent nature of the transfers. The level of foreign aid expenditures following World War II dwarfed prewar assistance. The postwar programsof the United Kingdom, France, and other European former colonial powers grew out of the assistance they had provided to their colonial possessions. More importantly, however, the United States and Soviet Unionand their allies during the Cold War used foreign aid as a diplomatic tool to foster political alliances and strategic advantages; it was withheld to punish states that seemed too close to the other side. In addition to the Marshall Plan, in 1947 the United States provided assistance to Greece and Turkey to help those countries resist the spread of communism, and, following the death of Soviet leader Joseph Stalin in 1953, communist-bloc countries donated increasing amounts of foreign aid to less-developed countries and to close allies as a means of gaining influence as well as promoting economic development.

Several non-European governments also implemented their own aid programs after World War II. For example, Japan developed an extensive foreign aid program—an outgrowth of its reparations payments made following the war—that provided assistance primarily to Asian countries. Much of Japan’s aid came through procurement from Japanese companies, which helped fuel economic development in Japan. By the late 20th century, Japan had become one of the world’s two leading donor countries, and its aid programs had extended to non-Asian countries, though much of the country’s assistance was still directed toward Asia.

the vast majority of ODA comes from the countries of the Organization for Economic Cooperation and Development (OECD), specifically the nearly two dozen countries that make up the OECD’s Development Assistance Committee (DAC). The DAC includes western Europeancountries, the United States, Canada, Japan, Australia, and New Zealand. Other providers of significant assistance include Brazil, China, Iceland, India, Kuwait, Poland, Qatar, Saudi Arabia,South Korea, Taiwan, Turkey, and the United Arab Emirates. In the 1970s the international community, through the United Nations, set 0.7 percent of a country’s gross national income (GNI) as the benchmark for foreign aid. However, only a small number of countries (Denmark, Luxembourg, The Netherlands, Norway, and Sweden) reached that mark. Although the United States and Japan have been the world’s two largest donors, their levels of foreign aid have fallen significantly short of the UN’s goal.

Since the end of the Cold War, the United States has furnished foreign aid as part of peacemaking or peacekeeping initiatives in the Balkans, Northern Ireland, and parts of Africa. Foreign aid also has been used to promote smooth transitions to democracy and capitalism in former communist countries, most notably Russia.

Foreign assistance is still used to promote economic development. Although significant development occurred in much of Asia and Latin America during the second half of the 20th century, many countries in Africa remained severely underdeveloped despite receiving relatively large amounts of foreign aid for long periods. Beginning in the late 20th century, humanitarian assistance to African countries was provided in increasing amounts to alleviate suffering from natural disasters, the HIV/AIDS epidemic, and destructive civil wars. Major initiatives to combat HIV/AIDS focused on the hardest-hit countries, most of which are in sub-Saharan Africa.

Foreign aid has been used, particularly in poorer countries, to fund or to monitor elections, to facilitate judicial reforms, and to assist the activities of human rights organizations and labour groups. In the post-Cold War era, when funding anticommunist governments became a less important criteria for the United States and its allies, promoting democracy was elevated as a criterion in foreign aid programs. Aid was provided to some countries as an incentive for initiating democratic reforms and was withheld from others as a punishment for resisting such reforms.

Foreign aid is also used to address transnational problems such as the production and export of illegal drugs and the battle against HIV/AIDS. For example, the International Narcotics Control program allocates U.S. funds to countries to battle drug production, and the Anti-Drug Abuse Acts of 1986 and 1988 make foreign aid and access to U.S. markets conditional upon recipient countries’ actively combatting drug production and trafficking.

Since the 1990s many foreign aid sources, notably the IMF, have made aid conditional on market-oriented economic reforms, such as lowering trade barriers and privatization. Thus, foreign aid has been used as a tool by some institutions and countries to encourage the spread of capitalism.

In the last decade of the 20th century, private capital flows and remittances from migrant workers became the two largest sources of “aid” from wealthy countries to poor ones, surpassing the amount of ODA provided by those countries. However, this form of aid is heavily stratified; most direct foreign investment has gone todeveloping countries pursuing policies of trade and economic liberalization and those with large markets (e.g., Brazil, China, and India).


Significant criticisms have been leveled at both the donors and the recipients of foreign aid. Some groups in recipient countries have viewed foreign aid suspiciously as nothing more than a tool of influence of donor countries. For example, critics of the IMF allege that the required structural adjustments are too politically difficult and too rigorous and that the debts incurred through IMF loans help to create poverty, as capital that could have been invested instead was channeled into debt repayment. The World Bank, which critics claimed in the 1970s and ’80s was insensitive to local needs and often approvedprojects that did more harm than good, altered many of its policies and has generally endured less criticism. In general, opponents of the way that foreign aid programs have operated charge that foreign aid has been dominated by corporate interests, has created an unreasonable debt burden on developing countries, and has forced countries to avoid using strategies that might protect their economies from the open market. In addition, many critics of U.S. aid illustrate the continued importance of political considerations over developmental ones, citing for example the increase in aid to countries allied with theUnited States in the fight against terrorism following the September 11 attacks in 2001, regardless of their commitment to democracy and human rights.

Meanwhile, some groups in donor countries have criticized foreign aid as ineffective and wasteful. In the United States, for example, public opinion polls consistently show that most Americans believe that foreign aid consumes 20 percent of the country’s budget—the actual figure is less than 1 percent—and that most recipients of foreign aid do not deserve it or do not use it wisely. Such criticisms have been bolstered by the generally disappointing results of foreign aid programs in sub-Saharan Africa, where many countries remain mired in poverty, corruption, and civil war despite the disbursement of significant foreign aid. With efforts to rebuild Iraq and Afghanistan, curtail drug production and trafficking, and battle HIV/AIDS, ODA—which had declined throughout the 1990s—increased in the early 21st century.

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