World Bank Reprint Series: Number Seventy-six

T. N. Srinivasan

Development, Poverty,and Basic Human Needs:Some Issues

Reprinted from Food Researcht Ilistitilte Studies,voL XVI, no. 2 (1977), pp. 11-28

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

T. N. SRINIVASAN*

DEVELOPMENT, POVERTY, AND BASICHUMAN NEEDS: SOME ISSUESt

From the earliest days when development planning was at-tempted in many of the developing countries, raising the standard of living of thepoorest sections of the population to an acceptable level has been one of the majorgoals, explicitly stated as such in the development plans in some countries andimplicit in others. However, over the nearly three decades of experience, theperceptions v the strategies to be pursued in trying to achieve this goal havechanged. 1 The early development plans aimed at accelerating the rate of growthof real national income, focusing essentially on the process of capital accumula-tion and its allocation. The need for raising domestic savings as well as supple-menting it by excernal capital flow was emnphasized. The debates were on thesectoral allocation of investment, such as between agriculture and manufacturingindustry, choice of technology, and import substitution versus export promo-tion. The questinn of how the benefits of growth in national income were sharedby different socioeconomic groups in the society was infrequently raised. Onereason for this neglect was, of course, the belief that even the poorest will benefitfrom growth, more so since institutiornal changes that were promoted at the sametime, such as some land reform and an increasing role of the public sector, weresupposed to facilitate this. Perhaps the main reason was that in the framework of amixed economy that excluded any revolurionary restruccuring of production andexchange relations, excessive emphasis on redistriburic,n at an early stage in thegrowth process was thought to retard growth and hence the long-run feasibility ofsustaining any aippreciazble increase in the levels of living of the poor.

The conviction that sustained and rapid growth is the desirable route toward abetter life for the poor countries as well as the poor in these countries was sharedby the major aid donors. Once the poor countries reached the srtage of sustainableand sustained growth, that is, the "take-off' stage in the terminology of the

* The author is Special Adviser at the Development Research Center of the World Bank andResearch Prolossor at the Indian Sratistie 4 Instirute, New Delhi.

t I wish to thank, without implicar.:ag them, Messrs. M. S. Ahluwalia, B. Balassa, C. L. G.Bell, H. B. Chenery, J. Duloy, G. Lamb, C. Liuch, P. Streeten, and a referee for their valuablecomments on earlier drafts. I also thank Ms. Rachael Weaving for her editorial assisra nce. The viewsexpressed are personal and not necessarily those of the World Bank and the Indian StatisticalInstitute.

I See Minhas (r8) for a wider discussion of these issues,

Food Refearnh l5rrtitute Studies, XVW, 2, 1977.

1 2 T. N. SRINIVASAN

times, they would increasingly look like the mature economies of the West.FUrthermorc, the late start of these countries would enable them to rake advan-tage of modern technology and, with aid, to sllorten considerably the periodneeded to reach the take-off as compared to the historical experience of the matureeconomies. Aid was vieweoi as lielping thiis process of modierniz,ition withoutrevo lt ir inm ar! chbang ie,

In the early i6 o . at least in one major developiing coutlrly India, doubtsbegan to he raised whether in fact the poor had benefited from the grow,vth innational incormie achieved in the 1 9 2s.2 Further, by the middle and late rT96os,there was igrov. ing disenchantment witlh foreign aid in some of the majordeveloped lcout1cries for various reaisons. B3tut it did rnot reflect any significantret liinkin, i ot (levelop mlent problems. in tfact, thle Pearson (Ciomin ission reportingto the Presidtent of tle World Blank in I969, hieldl thalt during the first twodecaides of developmentat efforts, the less develolpedC oLIunlr rit grew faster than theidutld rialized COuLtries Lidl at a correspto ndLin i stage in their development. It wasaisci argLeLd thlat if only the' indi UStrialized co(O1.ntlties would fight off their aidweariniess anrd(i ati%Ck\ aUllgment the tlow of aIil, the less developed couLntrieswould succeed in lilf'lltg themsilSeVes OLut ol thet dIepthtlS of underdevelopment inreasonable time' (o ).

Events SlUbselJUcr to rthe reort ot tlhe Pearson ( C non i i nion shiovedl thlat aidw.earilness dli(d il(t nrisappear. Thle ( ommission's target for aid flws was not onlynlot aichiievedt blut the ratio o)faid flowv to gross naitionial p)rOiIdict (GNP) began todecline for some of the majolr aid donors. Byx' tIlC early 1(r)S, cLOnCLril aIboutenvironmentitl polluzvtia ledi to .1 (Lucsition1inc1 of both the feasibility and thedleoirabillit) of fuLrthet- growith of GNP in many developed cOUncries, includingthe tTnited States. Tills ptriod also marked( thie realization that thle problems ofthe poor in devclopedkC COLuntries Nwere far harder to solvet trhrouLgh p ublic welfarepolicy than had beeni beli'eve(i carlier. 'These dlomnestic concerns led to someclhange in clte indclrert.iildng of development isslews Is weCll. Mayt) aid clonorsexplicitly shifted clit emphasis in aid policies to the problems of' the poor.

The concern about the distributional, aspects of growvtlh was reflected in appealsby the International LlboUr Office 1i1.0) .an-id otlhers to makle the creation ofpro0dLuctivT ili tymer opportunities. rather thlianl aiggregate income growth, aprimary ol"jetviv of policy, "A Iu idainci it ,il redirection of developmentttr.ratey was called fOr Lc)lloitil)t fof rural trtlee l tilat "foCUses on increasingthe pr IdLIL iX it% of the small ftarmner andI the selt-lemptloed tris better accessto lan,Ll. water, creLit. markets and otier faciities" ld an urban stratreg of[. resrrw turi ctie modern sector to make.; it 11oi'e respmonsive to the opportl-

nitv Cost of lablbor andI cLapitall . .. anld poliCieS t es(I,ignLe.d to reaic the self:employed andici to mnake snial -s .tIc pmtidiers-o more efficientit' (S, P. Vxii-xviii).

Subsequent emphasis in thle \World Bank on in- ktgrareel rural development

2 Pro me inister Nehrul 0t IndKilawas one1 (the earliest to Vl( e d0Uhts about the impact of suchsErategies on the pour. Thlec ( nmntllittee on t'lir.l rI lbM) tot InLomne and Levels of Living wasaippointedt tlhe (;ovscrniietir t IntiLai in % tf:o inquireti into thle c-h.anges in levels of living duringthe First au;d Second Plans, to studyI the trends in diistribution of income and wealth, and inpartular to as irtain the extent to whi. h the otpratton of the ectono)mic system has resulted inotrn entration ofwealth and mneans t prodUCtio7,n til p. ml.

I)DEVELOPMII'ENT, POV'ER7 ). AND) BA.SIC: f IIA. N 11U AN I)S.D

srralc:gies and the clhoice of urban projects for Banik suplport rellett(.ed tllisperception.

The apprehen,ion. thait even , thl estd Sllitt in emphasis tow

nment goaIls May nlot be enoLugIl t tackle the problem ot f p l ren \\ xt tihin areasonable time led( the IL() togo i st ,L further. The declatrat ion op print iples andpro,gr.im of action idipiedtl by the Tripartite W'orldi ( omii ctic. wii.e 1 i Finplom wI n'rorgani,l.d by the L() pIOproposed thiat strategies and tiarional dexelopment plansandl poliCies SholdItl include explicitly, as a priority objtivc thle promotion ofemployment and the s.itilskt riOll of basic nleeds Of eahcilCcountr 's population. Itftirthier specified thliat basic nieedls shiouldtl be understood to includeQ certailnmin imIIumLI re(lLIirenen,t s of a tfimiln for private C tolL ln lt I ion , such as adle(I atefooi, shelter, and(i clotlling as Well a1S ceta11inl 1houLsehold e(uttilpmIlellt Ind futirnitture,as wvell as certain essentiall services, sucLh aS salf tdrinikinfg waiter, W.riiitu ion publictransport. Ind heaeithI, CILILational aIntId cltural fUi lit i (I () ).

It is of interest to note that jtist as redistributional concerns were first Cexpresed

inl Ind(ial, tinp lVnIc LIllt genleration in addition to incomne growN'thl Wats incldeld asaIn objective as ea ,lrly as I (o56 in India's Second Five-Year Plan. F urtlher, the rmlainideats of the basit bsneeIs approac-h to the problem of the poor (an be traltced to thepaper by ctie late Pitamlbar Pant of the lidiaii Plml.il,,icimi ( ilniuii, III (I i ). Theanlt hort xpll it irly posed the problem ofpoverty allev iationi in termns of prt ,\ ,liiy altleast a miinimmLtii level of living tb(r thie etntire pnop1utlation1. Tllis ininiiilmtl llineedsba,sket inCludLKI(l eSssentill itemS of c0isLiIotll"0i11 c such1 as fIod, Ia'L an111d 1lghtC,

II itwh ij, and shelter, as wvell as services sudh as lhealtlh, sanitation, safe dIriik- iiLlwater, and edUCatiOn to be provided tlhrotli1l the government budget. The althorr:cogwni1CLd that some sections Of thle IpO5Ip.Iti lt R might not benefit frotm develop-ment that creaites produLCtiVe p1111inc-111ilt tpp (rcIi iWis be.us Of tIlC high

dUepundlenc ratios in tlheir households. These gr ip, were to bie provtidle(l theirminimunL level olm Iix n-thirom:l inhomet traners. ThIle problemn wvas also posed ofdLeterminiiing a rate of incomIIe groNvtIl thalt WoLIIdL not be so 11ighl as to ble infe1asINile,

bUt hlighl enlOulg,h to enable the mininlmum nleedLS tO be mleIt. Itn one sense thils articleis a precursor of Chenerv .8) with its emphasis Otin the intome-ealirnillnc.iypairy of the imajoritv of the popu.1,ilation1, bUtIt itlso goes beyond in explicitlyfocusing on basic or minllmu'lm ntedLs. I1 .c\ cr, it had liittle i lICeiCC on IndiaTn)olicy tintil J t- , when thVe .lppri 'i IiaPrer on the Fith Five-Year Plan inlIt.iLded

aI IIIin mimIIIim n'eed.s progiraml as part of the planl thalt WiaS (ILitlyt dropped( in thedraft ias well as thie flinatl version of the plan.3

In the remainder of the p.aper, it is proposed to examine the extett tt) whic, hI thedcevclopinent purc'rirnicc' of scime of the ma 1ijor develuipimig couit'ries \m il1corroborte Ithe preml ies nil hc'rlviilg tile "1new" perceptions on (le\lL ilitiltevaluate tlhe basic niec(is itpIL t II, ,tln finally raise soirie p)OliCV ISSUeS. It Willd raw on bothI aialvticald tmL II aL onaILcl(i 011 Ati l exp\ricil (c inl VlriOLIS L()LitIr rIesin11. dilaldn tilhe Ipers prk"HE an1d1 111the disc tissi L1s a orkshop 1rg.illi/iCcI byth1e WVorlci Bank otn An idysis of D il';l bl.;OI]1I1 TsSLICs in I)ec.elcLi T Planningllalnd hleldI in ct.ll, I;I, Italy, d turinig April 22-27, iy-'r. A complerte list of papersis given in the ApeLn1dix.

IF1 th1t cariv; ,- e t1wrn ux, c.Lxteive discLusion .nicong Indiai ecunnlikts 11on L ILIuIlI I.L1tlic' vxrlir ill Ier[nt) r 'IS Wrel .1J L)[I thlL ot'poht- WL purllu. It rtIeLI tomardl p rIVttV abate a zment Sect.Srin vs-.I.n .tdid luau I.L I

I,f T' N. SRINIVASAN

POVERTY' ANI) INCO.ME DI)STRIBUTION: CROSS-Sf( :TIQNALEVIDENCE AND TIME TRENDS

The extent o)f poverty in a country or region can be measured using eitherabsolute or r 4 t ve indicators. Perhaps thle most -widely used a1bso1lute measure ofpoverty is che proportion of the population below some poverry line. The familiarmeasures of irlLone inequality, suclh as thie Gini coefficient, variance of thelogaritlhm of individuial incomes, coefficient of variation, share in income orconsumption accruing to the bottom and top deciles or quintiles, are relativemeasures, in the sense that thiey reflect the relative positions of different indivi-duals or groLups of' individuals in respect of their income or con[sumptIlion. It isperhap. better to describe them al. sunimnary measures of the inequality of incomedistribLution rather than as poverty measures. There are a number of conceptualand measurement problems associated with botlh absolute and relative measures,none of which will be discussed in this paper. (See 22.)

Cr,osv-t ctPifinell 2 't inWe

Kuznetr, from hiis hisorical slUdy of the developnpenr of some of the presenclydev.elopeld countries, hyvpothesized that insom-ne inllCJL.lity) first increases and ther.decreases as development proceeds. In testingg this hypothesis, Ali ILIW] ia relatedthe share in income of various income (c.lsscs the lo,gari-thmi of'per capiti CGNPin c ointanr I.UI.S. dl()IL.rs of 6... (eloped and dIevelo(ping) coLIunries, in theform of a tcU.ilrati. -eg ressioni 4 The relationship was estinmated sep arart lN for theenrire sainple and a sub-sample of44 developing countries. His results showedthat as per capitra GNP rises, the share of income accruing to the poor-say thebottom 40 percent of the population-first falls, reachles a minimum, and thenrises. The estimated per capita GNP at the "tturning point," at which the sharebegins to rise again is $468 if the ent ire s.ampIrle is Lused and $ ;, i if only thedeve loping countries are co)nsidered. TIheir percent slhare in income falls from anaverage value of I- at a per capita GNP level of$ ioo to i i at the turning point,and rises to 1 5 at a level of$2, This cross-sectional result appears to confirmthe Kuznets hypothesis.

There are well known difficulties with rinterpreting and projecting a cross-SecLriLical rel.itionshlip over time. The c ross-secrional curve essenrially representsan 1Vera.gtge rclat ions1iip. The (leviation ofan indlividUal country observation fromthe estimalteCL Curve coldILI be viewed as the effect of the policies being followed i5well as othler relevant spec ific features of that couLntry. Two types of projectiornscan be madle froim the curve: in one, starting firom any level of per capita GNP,one project Is the per capita income for a futuire year and fi;on the c rve reaks off theshlrc of the bottom 40) per(nit. M.aking p uroje nsrions in this way, onel is really.01rilpa),<ing tile expe(cted iincome (hlyporheric l .avra,^ge) share of che b)Otto) 40

percent inl COUntries wlhiclh hiav'e the initial level ofper capita GNP to the expected

share in courntries where incomIe has rea. lied thec projected value. This type of

projection is clearly not country-specific. In the second1 type of projection, onestarts from the given initial income level and the initial share of the bottom 40percent, then one adds the change in the share as estimated 'rom the curve to the

4 'I'he lintoin elasses werem top 27' percent. middle 4: percent, lowest 6(. percent, 40) perdenr,

t111l1 2 p,erent otf trhe pip.ulaclon See ALu.IWA4 I , pp. -V--,I2).

IO)l ! MI,(ll llNTI, POVEXRETY. AND) BASIC lU ALA"N NEEl)S: i

initial share to obtain the shIiare a,soc. iarced withl th' projectedi terminial Intome. Intithis exercise, SOme .11loWance is m.lade t(r thte o,oncry 's specifi: initiall cir-CLInmstinces. Projecriorr' nof either type, ifthley mean an lli aIt all, mialnchitc xashajtmight hlappe:l if incomes changed but the 11iht iliati il aInd( Other p)olicsy envi-ronment did not chanitige signlilIE ly. It wouild be wvroIlg, thiereforc, to itinterlpretthe curve aindI the proje trin from it as representing some strt ot 'ironi law" ofdevelopment. It is, however, P isshhleL- tO make: somile lii01iLtCi and stl ti/ed polc v

simulations basedl oni tlle Curve.

7limiie Trnizds in Parerti

Turninlg now froiml cross-sectiinal stuilies to time trentds in poverty. (;rit-hand Khan (oi I LidCed charilt d . lpnienc of tihe type exuperieln,ed bV the inajoricxof Third World Loltlnrrics in the Iast q.uarter kcItUtry has nmant, Ior very largenumbers of people, increased inpcrihmlnieii" (ii.;). Thllis conluIIsioIn seemls to beMImiewhl.r hlasty sinlce contintous and comparable triei series atL.a.I on the size

diiS1ribL1tioIn Of inlcomne or expendlitUre atre not avalilable for imiost of the develOpingcountries. At best, datla rellatinlg to two )r tlhree pi-ints in timile are LuStiall

ava.ilable. but eveni so these clata sets are rarely comiparable, bet aiuise of cIharni e- inconcepts aod cs:rer.iL:g. InIdia1 is a ruI.jI Jr eXtc ptiown In chat allnual clta onl acomparable ,'a%is aire available on roslrnp CxioCu diptnLIrc b7y ho1ISeol0dS SC-pa-

rately for the ruirall and urban area of eath 4 the major states, as Well as lI r thecouintrv as a wlhole. TIhie dlara for lIndia dol nIot contfirii the (CriIfi ii- Khan Lconc InL-

sion.

Ahluwlalia usedi tile Indian ctla to sho-N . rlrr, tchat in c-or.il areas, whierc. nearly

8XD percent of Irndiai's populatiol lives, the pro)portion of the ptyLIl.Iio1n below a

normativelv defiied poverty line fld clcre,tCL ntll-rscanh iallt over tlhe leriodI () 9 S6/57

to i -c7i/-74 , fulling initially from over s pert enr in nthc iitlid ) 9 .s to.1ar IilIld 9percent ill the eairly i o6.,s, and thien rc-aciniLg,Ll a peak oi tnearly -," percent In[

I (96-7 /68 before declining (., ). SiC ()InI. there v. . o eviene ofa significant trendin thesef luuttiarions over time. TlirdL, tlhouglh tle t uLi(ttations in tlhe ic id'c l c-Leof

poverty in indR% idoLal states largelV fllo0v the iall-Iiall't paIttenCCr showing nio cleIar

tredti, thlere iS at Sr.iistic.Illy silligtn Lant poiu t timie trendlt (that is, the prolor-tion of pcicple below the poverty Iline stead ilyI ricea-sedl) in threQe states, and a

neg,ative tren(i in rIL' state. Thlie stitae of Ptunjalb is .mn1om1 , thlwc( s"how iig no 0 le.r

trenidI sirrisisiidv, sitnce real iciVen lndI (wril cLa11.Al (lurpuitjr grt\'% f',irer lhererhan in rnoot otlher states. IoMruli, for India als a %% hiclc r'here is a ,iL'ni,lh( ant Inverserelationshlil between the inlcidence Of rtirurl p-)overty and reatl gril. ultuiral incmoieper head. Thils is also truIe in SCVetvl i;divid ul.1 States (again with the sorpriiuiexiptnunri ofi'iinj.ib), covering trwo-thir(s Of the urairl 1(cPIlaIoIiC10 in) Indija. lI Ii,tiherelaitive ic(rieialirc, as me.usred by (bV Gi -i liO cits ,, of thedld iribcic Wi of perapita hlrioulsehold c cisiii t i lilotic ellb\ d(1eclinjed( in eight states out of thirteen.whilelt the ro.(niiniriii five shiowedI nio trendl. Thulls Ahiwalii '0ocind 11(o sic'riicilr

iHurc,as it0 tile prOpcti-ti (If poor in India, and relative ic-'c bta ity appeared tohave dec rca.setd. Indirect c.Vidlecle, sLuLch as the rhisng eXPU tration Of lif' at blril rcand declining nt)rtallii) (ichiLdtlinlg infamnt mortality) andl tfrtility races wouldi

seem totirrorb,kricte the cOix Ilisitn thiart zlicrcC ou(l tnot aitve been al seriotus dIecliniein tile living sr.iridard(I of the poor.

i 6 7'. N. .\RINIVASAN

It miiglht be ar,LLed tlhalt the fact tlthat nearlyl halt the Intdian 0op1.. i lat io.n fillS

bIelow tle povert line int spite of over 25 i'eirs ofLdevelopment prlanning is in itselfproof of tle failure of tlle deCelopmIIent Sc aiLtgy pcUrsued by India. It is beyond tllescope of the present paper to ealnla.re Indlia's deselnlpllmenr efforts. It suLffices tosrate:

h . Whatever its other results, 11dlian IlInnin g did nott result in gross th rates ofreal national incorlle as high or as steady as those inr some othler developingtounLtries.

Even. he lmoderate groxvth aIclhievedl 1ilis decelerated since the Ilate i/, s- -*aperiod( thalt was tlso marked by)( a steep drop in the external resource intlow, theOnset antL screngthening of inflalt ion, andl a substancial drop in the -irowt hi of real

pUbliC iI1%T1ril)iLnr, .I as Well as whiat sorne believe to be a slowintg in tihe gro)wth oftoO(d OUtpUt, despite the Oreen Revolution. Not sUrprisingly, in the late IL)6 :s

the inCidenCe o) poverty rose some after falling fro(zm thle milddle I 5)nS onwards.T.h'e economL ic 1l0 iCCs pursued, such as the bias against export,i( civiti.u, Iuse

of adiminist ratiet c, ntrols as a resource al localtion rnechankim and, albove ltlI, thefailurC to enforce legislated institutional thanges, such as land reform, meant thathothI gro,rth and iiicomne distribuLtion perf Ormnn .e were Nworse tlhan tlhey cotuldotherwise lhave been. India is c le.irls riot an ex.mplel1 w.Tre a successful growthstraltegy filet(i to lhelp- the 1,(oorer sectiols of the soL ie 5'

Based oni data for six vears itn the I9)6: s, instead of onlv two as uised by Grihririiandi Khlanlt, and thlrce dlift'erent poverty lines Corresponding to a calorie intake of95, 92, a ndl *) piercent, rcLpecri)ClY, of theI IC1]li ilr'llr III, NaLeII shIowed thatthe p-roportion of the rural populaltion of Palkistan below the first potvertv linedecreaised initially andl then ino.re:..Ned. while there is no trendl if the other twopoverty lines are used (Up). However, ir shoukld be pointed ()Lt that tlhere areconceptual diffiCuLlties -with using a caloric re.ci.ireniciit based p-overty line. Theseare (liscussed later.

(ontrasted With India's unspectacular growxt rehcord, Brazil ha.1s had an averageannual growth Oif real income exce`eJin-i 6.5 percent since 195). BLit clara on thesizecl isrrilbt itii of income are availatble only for the years I *) 6and I -7frorn thedemographic cenSUS data indI ftor the vyier iy- 2 from a special hiousehold survey.The cenisuis data do not inclUde income in kind, Llirect tax pymenc:, andcinrealized Capital gains. Some of the Contro versy on the Brazilian incomedistributilon '( I arolani c' arises Out of clifferitng interprettations and adjclstrmentsmade to the censius data. Otherdata 0o1varying cLul .llirya-nd ( .ni1iti areavailablerelating to is r.iee x ages, (occip.i iona.l wages, foctor shirres, and (ci srrilbCion ofearnings in the formal uLrbian sector. V"hile it is ha/ardousP to base statementsabocit riic tretnds onml i two or three observations, FIihlow%\- reported a cL cnsenstisai )ll[ig scholars that relative inctpia.IirV incLreased in ttle ecadue( of thes i9f6 ;s,thocigh not c.onlit.,411 to force cOlwn the absolUte incLOImes of tlle poo)r (9).HIowvever, some wNoclcd argmc to tlc cLontrary o0n thec bhasis of the reported inc rteasein itinfnt mortality rates in somiie areas. Also, tlhe regionalc COnn"m1itc cIisp,ariries inBrazil where, for strulCtural reasolns, tlhe N. l rnheasnsc ut nilLnc to be relatively poor,have to be kept in miind. Amiciiig those whlo dio not dleny that ino.lme distriluLrion

Flo ftLrtlicr deradls sce 11haicsat inl a cs.od D 5 (i I, HImp %cu and Sriniv,csan ifu) irnd Sriniv,isanand li.Brdhall ii,)

DEVELOPMEILNT, PO'VERTY. AND BASIC 'AIN NLI)t.1

deteriorated in a relative sense in the it)(6)s, there aIre tWvo pt-valent schools ofthought. One focuses on the uinequal ,1iz ili eIIffcts on1 inconles of wage in Irulse. fortskilled labor, demannd for which incrcaisingkl' uxt eudIs supply as aggregate growvchaiccelerares. The other stresses clte imprrrtInLe of the post - )6 964 wage S(olLiUcm,

which slowed (lown inlaition somewllhatt, bUt wrvith rapid growth ailso allowed

shares of profits and cop rmunc'ner.1tiolrm to inLre.re. Bacha and lTaylor are "agnos-tic but predispxosed toward thle waige suLeeze exp.iiniols" (4). Fishlow rejet. sthe hypothesis of 'unequal izilng inevitable effects of growvtl th" rg oiHg thalt thle"Brazil ian experience seems to have b1 one in whiicli the strains of grtwrrh havebeen amplifiecd rather thant CoLntrteractedI by policy" and that a polkv of increasedgovernmenral trainsfers that are linikedi to educational investment in rural areas isnot only feiasible buLt Will help offset Some of the concentration in imt omies (o)).

Korea and Taiwan prvidit.C exampl"es ot countries where real inocome ! ro\% tlh wvasboth rapid (withi annual grovthl rates ex\ xedm IIig - percent sinceith rle early 96 :-s)and apparently shared-and incLreasinlIy--by those at the bottom of the intomeILdistribution. Reliablec data are avaiilaible for Taiwan on a ,cnti iuibsis onlyfrom the mid-i96 -)s. Sonm: liar less reliable data for two years in tlhe r -.s showthat Gini coefficients then were comnpiarable to thiose in othier less developedcountries. The (4ini ?ocf it iilrt for all houlsehOldS inf XTai winI maI n virl IIIV

constant at about ;. 2. t\ ( ci1 i o61 and it608, and then dec( Ined bi ov e-r I I

percent between r 968 and I 2. I0oth Korea and 'Iaiwan v. crcj Japanese col(onesanti w^ent through mlaljor sttL ric l cIn.]ZItI fi ilL bi iw 'in g tiSleon 'World WN'ar,re(distribuLIing lani(d and othler productive assets not destroyed (IInriIIg the war.Botlh have followed similar policies in respect Of foreigni tradtle. Rasis argUed thalt(2 0 )

the dominant caulse of the relativelv favorable Inooncoe distribUtion perfor-mantce in TaivwAan . . . [wils] then- massive shift't of rurail households ftromI1algrico.11to.ral to non-agyrit LiltLir,il activity In the prcsc'c of( a dy nai.t ag-riCLiltLire and in thie n.C e otlfmSSiVe rural urban igratio .I I\ . in

conntinUetl to inVest healvily in its cIcenrrli,c'J in(frastroL tUre . . . encotr-nIgecd rural indLstry dircc rlt vial rural electrific.tion grici, the mnamincrancn e Of

equality in power and fuel rates as between ruratl anti urban locations, altIthe establishment of rural-indlPtitrial estates, bonded tactories andt 1lroess-ing iones located with an eve to rural location and mobility [SLsu-ceedled] in thie maintenince of a stiUrprisimLldv hiigil labOr share in ii trhiinMlistLriall 111/ service activities [ thrm iiuli a lab1or-intrensive nollUtpt milx antdtechnologics, intimatelyb tietl up-, with thie relative mildness of" importsUhst ito t ion (c"inb1i 1cLI Withl [srlcoltentL] tlilrjituzii liberalh.iation efforts.

In the Korean ca.se also the slhare of agrit lture in employment tle .linedsulbst.antialkl- while theshalreofthe manLfiLtinrin eysetorir nc reased -with rcniir1;.t-bly little capitail deepening as replortetd by Rao (2 ). \\ Wrhin nanltfac.turingsubsrantial growth of labor-intensive export cttivities has octorred. Rural-urban

income differentials Nvere narrowed thiroughi a variety of policy instruments,

including intervcention in the tterm rnmilritin of grain prices. For the e onomy ias atwhole the average real wav.ge: has inc rci.>c-d by abotit - percent per year (dtiringi963-75. \W"hile che regime hias nor tIlLtotiral.l' unLion activity, aind strikes hive

t8 7. N SRINIVIASAN

been illeg,l, there is apparently government pressure to impj.)rove the ealrniingslevel of low wage groups. Emphasis on primary e ctL.lion and a successftilcampaign of adult ect-LL,11ion have reduced illiteraicy to negliigible levels. This hashelped the idu.Jljsrria;lii'ation process by making available well-trained and traina-ble workers.

The brief review of dlat.a Suggests thatt it is simpliscic to argute that in spite ofgrowth poverty has inc.re.ased in dcveloping Lount ries. 6 'Ic does c learlv intlicatei,hiowever, thiat othier policies that w ere (or equally were not) being iv0loxwedl alongwith the emphasis on aggr:regaite income growth had a lot to d(o w!ithi stuccss orfailulre in achieving grimwrh ias well as eqUity. Also, it is not Casy to sol.lte theeffect of c11.hnc1cs in -1 ini.l condicions" on whiich li micies muLst be !bro0Ughr tObear-s uLCh as those wv ro lg i t by social revoluItion (Clini. niCuba) or by wiar (Korea,Taiwan)-either in b)ri n ing abou.t eqLuity initialfly or in in. re,ising the ChallnceS ofsuLCCess of eq uity-promocintg policies sL1b.s(qL Cenrly).

There is no denyingt htowever, that the extent Of AbSol 2ue poverty in the lessdeveloped CoLlntries as a whole, and in some of the pooret, larger, andi moreIp)oplniN .im0lng them, ts indeedl saciggeringv. It is this, rather than any claims ofitS logic ,l evolution in dcvelopmenr theory with emphasis first on incomegrowth, then on cimplomnLent, and tinil ly on asici ne11eck, hvIiih necessitiares acarefiul analysis of the lroipseudl hasic neCLIS srrategy. 7

BASIC NEEI)S APP1(ROACH: DISTINGUISHING FEATURES

The approach to the problem of poverty contained in Chenery (8) aind even intihe Minimum Needs Progr,in ofthe Indian Fifth Plan in essence is a strategy! ofin urinr that adCeq ualte real purchasing power is placed in the hands of the poor.Except for the socially provi(ded services, the consuImption pattern is to bedetermined byL rivate market decisions. lhe l Indian approacl is to determine thenecessary level Of purCh.hing powetr on the ba,iis of thle cost of the minlimumoMnSumption needLs basket, again excluiing socially provided SeLrv ices. Except for

those grouIS among the poor who cainnot take advantuige of employmnienr andincomile generation opporrtunicies and who are to be provided trat :fer income, thepoor are to he tea ilied trirouLgll the in onie generaition process.

The basic needs appra ILi, oni the other hand, does not rely solely on income"Uneraritiin or rrinsfers, and plaes primary empliasis on the prodtuciiion anddelivery to tIle intCendld groLils of the basic needs basket through "suLpplyn1ianag,1em1CenC aind a "delivery systemn . 8 In a s)ystIem in whichl prodUCtion and

istIiiptriOin de. ikit)iiN are primarily niediared tlircuLIit the market, the failure of

NeedUaleUss to sw. t he respo(nsibl li ty [oXr the' p.irtic ul.ir use ( c riltie .il or othw erwisel ot thr1e dat.i a1ndthe Intor.ripr lmis derived lie with rtie athror, ot the pipers presented .ai the workshop.

Ilhere Is also .i vynical interpretation of the (onversion of some dc 'el, pcd countries to the

basic needs ipproach. By linkingr aid to perhormante oft developing cLLuntries in p'ro it in'rL the basicneeds of their population (anc ,given the iniltoe rti dith tilty f11 SU(tCesstiUl basic needs stratregy, suchdeveloped cocintries can de tacto redute their aid comnmtrtenrt while still appe.aring ro be Loncerned

about poverry! F'Iurher. insofar as basic needs goods are prini.crink .curcz .iltiir.l. emphasis on basicneeds will have the added conse(luence (f slowtng diowtnI ndUStrialteation of dc st yl piic. (oudntriesandl hence growth of their demand fir non-renew,kable resource.

W While there are bv now tIcimber of articles and pamphlers on the basic needs approach. theclearest and miiost balanced acLount is given in Streetein (2.1.

DEVELOPMLENT, POXVERTY, AND BASIC HUMAN NEEDS: rc9

the poor to get their basic needs presumably refec s not only the unrequLal initialdistribution of real purchaising power, but also market imperfections and failures.In such a context redistribution of plirclasing powxer Alone may be insufficient toinsure that the poor receive their basic needs: imarker interventions may benecessary on a coot iOtlll.Os batsis.

It Can be argLediL that by selective direct inter%otniolln in tlle p)roIducion anddistribUlioln processes (rather than rltroulgll creating prun.ibsing power in thehands of those who need it andi expecting them to consLumel the basic needlsbasket), thie basic needs approach may lead: to the provision of b,iasic needIs topeople at much lowver levels of .g,regare income per head than Would otherwslsebe possible. Further, it is possible thalt in tackling nutritional deficien. iCs an1dsimilar problems, thie income route may be inefficient., if only because ignorani.eofnutrirional principles orpreference for less nutritioLs foods as incomiies rise. Thekey issue then becomes one of delivery: is it possiblu to insure tllat the poor get anutritionally adequate diet in a cost-effective way? A similar issue L rises in theprovision of health services and water supplv. If the government or the rulliugelite's n-referencLs result in the public buIdget being used for arms, airports, bigurban hospitals. and higher edlucation, instead of ruLral clinics, xi.rer Supply.roads, and primary education, the key qIuestiorn becomes how a slift itn thesepreferences might be brouglht about. In analyzing the delivery issue its politicalimplications are inescapable: the qluestion really is "Nwhat sort of feasible prod uo.-tion orginizarion, institutiional reform, andl interventions are reqJUired in this orthat particular country to provide basic nieked on a sustainable .basis!' Somioe ofthese issues will be taken up in the policy discussion below. But first it isnecessary to discuss the (JLUantiiticion of the basic needs bundle.

Measurement of Basic Nreebf

Even if the basic needs pro,ir.inl were to be foCuseed siniplv (on eliminating

inadequacies in the caloriL. content offooId COnsuLImpIl on. qIuantification would notbe easy. 9 A person's calorie "retluircment" depends on his aige, sex, and normalactivity, so there is a distribution ofcalorie relquiremenrs fora given population atapoint in time. 't Wlhere . sillgle null.lber is used tocchiraccterize this distribution,it is very often calculated so as to incorporate a substantial safety margin, in thesense that if every menmber of the I)pOpla.ti(in took in this specified numnber ofcalories per day, the actual ctalorie reqjuiremenc of, say, at least 95 percent of thepopulation would be met. While the true measure of the nopulLtion w^titlldeficienc in calorie conumnprion is that part of the population whose memnnbersactually consume less calories than their indix'idul-111 recJUirenreo ts. the uuaIlSestimares are based on a oeimparison, for the population as a whlole, of thlie a tullconsumption withi the sinple ntumber estinmate of the calorie rec'o.irenitcr for thepopulation as a whole. " Estirnates of a pit Ipult mon5IIS calorie dleficir madle this way

9 Some 'c'u.irs .ira . il.irnih vx ere r.osedl about prorein dcebt iency in the diets oxf rhc' poor and the dilreconsequences tiercof. It was later estaiblishedl rhat protein dle'h iency is part of a broader problem ofinadequare f)ood and energy intake. Prorein deficiencv bv itself without orher dehi lent ls isinfrecluenrly ob,erved.

'f A pcrson's requirement can vary from day to clay. See Sukhatme (25 ).H t Household survey-based lata give toral or per capita calorie consumption of each househld0o

thus averaging otut intra-household variations. An additional element ot hias arises out Of thissituarion.

20 7 . N. SRINIVASA SN

can exceed or fall short of the true value: to consider an extreme example, ifeveryone actually consumed the same number of calories but the individualreq.]uirements varied, the estimated proportion of the population with caloriedeficiency could be either IOo or 3 p.-rcent, depending upon w%herher theidentical actual conMsumpntrion wvas less or greater than the norm. The true propor-tion, of couLrse, will be sonenvlhere in between. Suikhatme showcvd that if, insteadof using a p(overry line based simply on .iverage calorie requirements, allowvance ismade for va,riations in indiVidual calorie requirements, clte esimated inciidence ofpoverty is brought down from about - to about 25 percent in urban areas, andfrom about 4.D to about r percent in rural areas (25). The literature onmalnutrition has very little to say on the effects of mild malnutrition. 12 Thisaspect becormes relevant if for lack of resources or other reasons it is not feasible tomeet the calorie requirement of the entire poplulation fully.

Another, perhaps more serious, problem is tlhat nltUric ional intervention alone,better water supply, or curative medicine may have little effect on the mortalityor morbidity of a poor country, though if they are combined their impact can beconsiderable. This sUggests that the quantification of basic needs, if feasible at all,will have to be in terms of a blundle of thiings togerller rather than specificrequirements independently derived of the elements LOItS[ituring such a bundle.This issue is discussedl furclter in the policx SetLtioIl below.

Ic is sometimes asserted chat the great strengtclh of the basic needs approach isthat by jut usinrg directly on niltrit ion, health care, and so forth, it will have a veryfavorable impact on fertility, infant mortality, or labor produLtiviry. But theseeffects malx' be present regardless of NwIhether the poor live better because they havehigher incomes, or !e)t atUi their b.asket of basic needs is delivered to them. Thisbeing the case, the issue is really whether a basic needs approach will succeed inraising the quality of life of the poor more effehcrively than other types ofpolicies.Again this dlepenids on the policy framweork.

It is clear that it makes little sense to attempt to define universal standards ofbasic needs, and that effirsi at glob.al modelling along this direction or at globalcost escinmtes for nmeetin- hasic needs are futile. 13 The measurement problemmay leal somie to conclulde that it IWoald be a sheer w!aste of time to wait for theresults of research} on resolving these, and that the need of the hour is to pushgoverriments to a comlmitmlientlr to seeing that basic needs are satisfied on asust,ainalble basis over a reasonable period oftinie. Many would arguLe on the otherh.inJ that wlhile the clic icl that "the best need not to be enemy of the good" hassome measure of validity, the issue is one of irriv ing aIt an appropriate set ofpo Ic ies.

Polio r 134. hh {. P ff I., ;.

Approaches to develop) ltenr proble'm- o(ther than basic needs implicitly orexplicitly face the iSSLIe of Cempo11ral tradle-offs in the sense that raising the incomes

12 The proportion ot the popufa tin thlit is mal no Lurishi(t'd, Mea'iUtred as th0se "Ltonsuming lesst alories" than their requiremenr, can k dit it'rent trotn he proportion obtained it'm alnourishmentis definecd in terms of body weight In relation tol some standard.

1 I'lIere are a tfei h,rd! .stil; who a(,.rti undeterred by concelptuil or data problems. For flights oftfan,v in glib.il estimation, see andt kHale u -) and Burki and Vn-arhowe (-).

DEV'ELOPMENT, POVERTY, AND BASIC HUMAN NEEDS. 2 1

of the poor through redistribucion now, if pushed, makes it difficult to suistainthese incomes if the redistribution cuts too much into savings for growth. Thleliterature on basic needs has not adequately discuLssCd the issues of trade-offsamong different basic needs (food, shelter, or healtlh) at one time and over time,that is, satisfaction of a basic need now, versus Imnore of this good or anotlher In thefuture. Given that resources are scarce, inCre.ising the sLIpply of one set of goodsinvolves the sacrifice of one or more olther goods, if the sysrem is proditvelyl eefficient initially. Either basic needs involves the production of a dltlrentconsumption basket withl the same resources that were eairlier devoted towardconsumption, in which case investment (in he aggregatre though not in compiposi-tion) is not affected, or, even if resotirt es have to be diverted away fronminvestment activities to producing basic needs, thle prodUctivitv-iyra ing .Ip(ect%

of basic needs will be sufficient to offset the loss in futiLire piciNic non po;i ili Iusthat would otherwise have occurred. Whether the tralde-off probleill is serioLls ornot then becomes an empirical issue. Both Sri Lanka anid TanzLani have fb011.oc:d abasic needs-type strategy apparcnrtly at the expense of growth. and thUs oftutuirecapacity to provide basic needs, and it is possible that both will find it dlif.iltllr tocontinue this stratregy. 1 4

The distincrion between councries in wvhich a moderate re.discribUt'iol Ofcurrernt income flows would be adeuat11ce to meet thle b.idic l'dl. of, the etit'repopulation (for example, Brazil, Mexico) an1d coMnrries where even ctie mnoscradical redistribution feasible will still leave a large section off che 110tLILiliol s\ t;lldeficiencies in thleir consumirion of basic needs (Banglaidesh. India, Paikistan) islurly inmportant from a policy angle. The temporal trade-off.nentioned earlier isfar more serious in the latter group Of CoLuntries. In the other group, poo1 IL ies tOclose the basic needs gap need not necessarily involve maijor strutIcural change.

The extreme fuzziness in the basic needs literature on policy aspects can beillustrated with reference to nutririnn progr.mis. As mentionedi eairlier, it isbelieved that raisingc tle incomes of the poor need not eliminate their 1itirr iololnldeficiency since, left to themselves, the poor may spend their additional incolneseither on foods of lower nutcritional content than those consum-end at low levTels-for exanmple, replacing coarse witl finer cereals, such as rice and whea.t-or onnon-food items. On the other hand, direct nutritional-supplemencing program:,oriented toward target groups, suchi as pregnant or Lactarting mrothurs or schioolchildren, have often run into SUbstituion priblenms: for example, if pregnantwomen treat the special foods merely as subtituteLS for what they Would ha-Iveeaten at home, or where the supplementary food pro% ided in a schlool program isoffset by reducing the food intake ofcblildren at home. This may not be altogetcrhrbad, in the sense that the 11ouseholcd as a whole benefits either be.icuse others eatmore than they would other% iRe have, or becLuse some resources are released forconsumnprion of other items. But the primary objective, namely co reach thetarget group1s, is not achieved. In(direct eVidCen1Le for this phenomenon has comefrom several studies which show only insignificant dlifhcrences between theaverage weight gain or healch situatrioni ofjntended heneficiaries of special feedingprograms and the weight or health observed in control grouLps. B3esides being

I' There is somt doubt wherlter Tanzanian income inequalicy has del.ined as much as claimediby some.

22 7-. N. SRINIVASAMN

i neffec tiVe, suclh programs are very costly ways of doing wrong thlings. TheApplied NUrrition Programis that have been part of the Fivc-Year Plans in Indiafor over a decade have run into simrnar problems.

It was mencioned earlier that there is a significant complernentariry amongo11hicarli, s.nirti cion. water supply, and nutrition progr.mns. In the absence of a safewiraer ,,ipply and control over communicable diseases, eff)rts at inmproving thlecuEriti.nal status of the popul.criom, may be ineffixtive and cusrly. Ancl in clte

aIbNece of adequate nuLtrition, resistance to diseases will be lower and the cost ofcurative hcealth progrars will be hi,gher. A critical minimum effort may beneeded in all these directions simulltaneousl) ifeach is to have any effect at all! Theimpact of the spread of eduatrion on raising the productivity of in%. enrlllir in allthese areas in general and in nurtrition programs in particular may be sigr ificantbut is as yet not fully researched.

Another important issue in providing many of tle basic needs is the question ofappropriate technology and delivery systems. A wsater sulyIN' sil enme wxhichiwould be prohibitively costly if it used the urban technology of advancedcounrries may become feasible if local initiatives and resoUrces are used inconijunction with a technology whicLh does not necessarily involve individualhouse conneLion to watermains. Thus thesociopo lirica.l institutional franmework-in which the basic needs programs are to be inmplementmcd may be tlle ol'ervwh1iclh-ing decernminant of their feasibility and eTicnLiveness.

The imnporrafne of the content and the system of dlelivery of healtlh care cannotbe underestinmat(eL. Refercncce has already been made to the inadequaate bucdgetshare and the ill-conceived delivery system (modern large urban hospitals) ofhtealtth care in many of the developing countries. However, there are CoLires(even if the People's Republic of China is left out), such as Sri Lanka, or regionswithin a country, such as Kerala in India, where the conceprion and del iverv o(hlt cllh care have differed nmiarkedly from that elsewhere in developing CoLuntries.C(ritical eValui. ion of these efforts in a comparative framework wOl1ld yieldvaluable policy lessons, as would a similar analysis of policies toward edcatLICaionand literacy. It is no coinci(lente that the contrast in the educational policies ofKorea and Taiwan on the one hand and of Brazil on the other is remarkable.

Apart from the vaIgUeness of a basic needs approach in respect of crucial policyispeCts, there is an inlierent contradiction in the position adopted by some basicneeds prop nenrt . It blames the existing sociopolitical framework with its vestediriterests for pre\enring thepoor from. slLring in the fruits ofdcevelopment. whileiat the s.amie time these institutional bortlenecks are assumed to be somellho lessrelevant for a basic needs strategy.

I)i| t i;ZzitJz l Piclzvi. Moekh, f. F. ,i,- . nesl Po>liticsr

There are by now a numnber of computable developimenc models incorporaringreTdistribUtiona 1l con.s,ideratcions in one t(1rmi or the other. The consumption vectorsin soImec of the eairly exercises in the i96os on input-output based consistencymodels for India wvere derived uising estimated EngeLl curves and alternativeLorenz ratios of the di iscribut iOn of consumption expenditu re. An updated versionOf this type of Ncxercise was part of the Fifth Five Year Plan (I2). These exerciseswere of linni ted uise since the policies thitii were to bring aboLut the remductiol in

DEVELOPMENT, POVERTY, AND BASIC HUMAN NEEDS; 23

inequality of consurnprion expenditure were not part of the model. By contrasr,the models for Brazil, Korea, Malaysia, and the Philippines attempt to linkincome generation to factor endowments through factor prices in a generalequilibritum framework in which most factor and commodity prices are deter-mined endogenously. Some of these mondels. for insrince, the one for the Philip-pines, include a demographic sLibs)sren as Nwell.

The ConluCIsLionIS that emerge from the policy simulations of the Korea andPlhilippines mo(lels are:

i. Th. size distribution of income remains exceedinigly stable even in the faceof sUbst.inrilI policy) intervenitions.

2. Further, thie relative dlegree of poverty and wealthl as a whole is muclh lessofftcteC than tlle loca.tion (rural or urba.in) or poor and wealthy.

'. Limiting populiltion growth leatds to a deteriorating income distributionand incre.ising poverty in the short and medium term; bereCficiLl effects emergeonly in the verv long term. Rural-urban migration is the most importantdemogr.ih ic varialle in improving income distribution, up to a 25-year horizon.

4. App:ropriare tradle srrategy will hielp increase the absolute incomes, as wvell asthe share, of the poor.

5. Agricultural terms of trade aire the most important policy instrument forimproving the lot of the ploor.

Above all, onk a wisove, wide-ringing, balanced and continued arrtack onpoverty and naldist ribUlion of irlLllt has muchL chance of succeeding; lessermodifcaictions t) existing strategies will fail. Successful planning of incollme

discribu1ion0 can be devised using an integrated array of policies, without chailntg-ing the fundamental rules of the economy ().

It appears that the specification of these models explained some of theircounter-intuitive results. The resLult f'rom the Korea modelel that any increNdst inagricultural producticvity would he absorbed throuLghi a redctLc rion in the igriCLl-

tural terms of trade, and hience worUld increase inequality, stemn mcLi directly fromthe model's peculiar lack of attention to foreign demand for agricuLltuLrail oirpolr;ionnsidericion5s of comparative advantage and access to the xworld nmaIrketr weremodelled inadequately in respect to the agricultLral sector. For small oleneconomies, sulch as Korea:,. this dloes not make sense. The reSLlt thait limitinligpopulation growth had negative effects on income distribution, except in the verylong rtun, seems to arise from the effect on the agric lto.r,il terniim of tra(le of thlesllift in (lemand for a,riciLLtlUral prodLucts, relative to thleir supplyr1, Wh11ic1h is AuSeCdby lower populaItion grow-th. This suLgeSts that the 1.yni. olttUral sector had beeninappropriately modelled. The remarkable insensi t ivicy of "size' discribotiols top0oli.y chainges may be dLe to the fact that these modiels basicallv desrinbc thefiuinct io nal income d istribnlt ii in, the size distribution being derived more or lessmechani.il ly from it. The flexNiblit)y of money w.mges and prices built into themoJcl along with some yerinti flowus fixed in nornina.tl term.s. meaint thia,tsUbStantial changes in exogenotus (Iemand had. limirded efTfecrs on the overall levelof economic activity and the dlistribLution of income.

The models for Brazil reviewed in the paper by Baclha and Taylor foK us On thesavinigs-investrmcnrt equilibrium (4). As exogenous denlm,nds for investment,exports, or government consLmimpltion shift, relative prices and employment (andlilhence income flows) aldjmst to maintain the macro-economic hbalain-ce, while the

24 T. N. SRINIVASAN

exact mechanisms of adjustment vary from model to model, As investmentdemand increases w ith growvth, income distribution becomes more concen ratred.to the benefit of high saving ,ro1ups. Wlhile the model results are by no meanisconclusive, Bacha and Taylor believe that their models are no w^Norse, and perhatpsbetter, than other explanations of Brazilian inconec tI.C(]L.11 it) .

The ahbove discussion sLl,ggCers that cgeneral eCJUIliblriuLm1 neo-classical mod1els

with fairly smooth price adjustments mnay nOt ibe hlatis'lutro)y tools for analyzingdlynamic processes airising out of discrete jLumps, ratlher than gradual changes,from an initial position of dliSeqliili brium. Indeedi most of these models areessentially comparative static in charaicter, and in the dynarnic models thepostLulated dynamic adjustment MCL kinism1 , sLIcl as the detertnination of aggre-gate investment and its sectoral allocation, are often nimnlistic . It is conceivablethat structural changes (in ownership of assets, labor force participation, skillacquisition, and demographic characteristics) are the dominant forces in effectingany significant changes in income distributions and available models are in-adequate to portray the process of structural chang,e.

Country E.pi rit,-

In evaluating the policies pursued in countries thiat hiave experienced im-provement in their income distribution (Korea, Taiwan) and cdeterioration(Brazil, Coloribi.i, the Phillipp ines) two divergent clharaicterizaitiotns are piossible.One cOLild aictribute the "success" of Korea and Taiwvan more to thle clhange intheir "initial" condlitions brought about by the iviolence of war, occt LI .ion bynon-native regiimes (mainland Chinese in Taiwan) and the interest of the domi-nant military allies of the regime (the United States in both Taiwan and Korea)than to their subsequent economic pox,l icies. In chis view, the success of Korea andTaiwan was not rcplicable in other LotinrriLs ,witlh diifTerent initial contditions. Theother clar:icrcuriz.ition, while not dlenving the importance of initial conditions,would suggest that the mix of eolnomic policies acILally pursued did matter agreat deal. Taiwan, while initially following import substitution policies inconsumeIrgoods, soon enough switched to apolicy ofencouraging labor-intensiveindustrial consumer gooid. On the other hand, Colombia and the Philippinesmaint.6in1ed3 an import-substitution strategy, extending it to more capital-intensive inLtrnmediatrc and capital-goods industries. The location of indUscrialestates itn rural communities enabled Taiwan tO IpuL.rsue a balanced agriculturaland non-agricultural rural growth. Korean growth involved very little capitaldeepeniing in the aggregate and its emphasis on labor-intensive manufacturedexports was similar to that ofTaiw,in. This enabled Korea to absorb a growth inthe labor force of more than ^ percent per annum during I96 3-'75 and to reduLIceunemployment significantly. Both in Taiwan and Korea, real wages rose sig-nificantly once the labor surplus p hase was over. Rural-urban wage differentialswere not alloxved to dleteriorate, and in fact were improved by governmentinterventions in the dCItrmin.ri-on of agricultUre's terms of trade. The contrastwith the policies pursued in the other group of countries, particularly in Brazil,could not have been greater. The success ofTaiwan and Korea, it couild be argued,strengthened the case for a feasible reformist straregy in other countries.

Dl T'El_OP,1f.EN, POVERTY, AND BASIC HUM INNEEDS: 25

Poli/ica,l Fnilnetwork ani Distrihitiajon,l Policies

At the risk of sounding naive and ignorant politically, a few remarks on thlepolitics of income distrilbLition will be offered. It is obvious that except in theunlikely situation whcre everyone benefirs from a policy change, the gain ro tlhepoor .n a redistribution policy has to be at the eNeo.SCe (at best relacively in(d a:'worst alb0solutcly)) of the non-poor. If a reformist strategy orientedi toward redis-tribution is to be suCCessfully implemented either the regime h.as to be suffic ienylyauthloritarian to be alble to impose it, or, in a liberal and plural framework, those inpow\er have to beable to count on orable to mobilize the supportofa broad coatlitionof necessarily different interest groups that nonetheless advck,oc,ite the reforms pro-posed for their own reasons. Some would argue that historically speaking majorredistributions of wealth have resulted only after a war or occupation by a foreignpoxver or they have been imposed by an 1aLcthoritarian regime or at violentrevolution. However, these events are either exogenous or unlikely to be dieliber-ately promoted b) governments in power. Reformist, rather than radicaL,scr.aRegies are likely to be the only feasible options for improving distribution inmost countries. While it is of great interest and inmportaulc. to understand howxviable, progressive coalitions of interest groups could( be formed in differentsituations, this process is not easily mo0delled nor cani it be orc hestraited fromout.sidC. The brighter side of the picture iS the filCt that the teclhnologi(,l andinstituti)onal (in a broad sense) conditions undler which a reformiiist scrateegy coulldbe puLrsLued in the third quiarter of the twentietl century are not thle same as thosethat existed in countries -where redistriburion took place after violence of one sortor another. For instance, the technology of the so-called Green Revolution is, ifanything, scale-neutral. New high-yielding varietius raise outpLt p)er acre ascompared with traditional varieties, even if no addicional inputs of fertilizer orwater are used. To the extent that this is vAlid, lack of lhorooUglIguoilln landreform is less serious a bottleneck than it would otherv isu have been. To say this isnot to nminim ize the need for land reform.

SUMMARY AND CONCLUSIONS

Before offering some concluding remiirks, it is usefuil to summarize briefly theabove disUi.:sion. The cross-country data seem to support the hiypothesis ofIKuznets that as develolmrenr proceeds, income inequality worsens first before itimp roves But Cle arly this is not an iron law of development as is evident fronm thevariatrions in the perfornmiance ofdifferent countries. There is no strong evidence tosuggest thiat the problem of absolute poverty in dev-eloping countries has wors-ened despite growth in GNP in the last three decades. In fact, the evideince ismixed: poverty has been significantly reduced in some but not in otlhers of thegroup of filst growing Mountries. Similar mixed evidence was obtained withresp-ect to slow growing COuntries as well. A. shift of development policy, to theprovi ion of basic needs to target groups through selective interventions in theprc(luction and distribution processes, in spite of its appeal on the surflce,appears ro be based on an inadequate understanding of the conceptuAl andmeaisureinenc problemis in quantifying basic needs and on an almost naive belief

26 7. N. SRINIVASAN

that the very same institutional bottlenecks that prevented the benefits of growthfrom reaching the poor to any significant extent, would somehow be absent if thepolicy is the provision of basic needs to the poor. It appears that the only sensibleapproach is to emphasize growth as in the past, but supplementing (rather thansupplanting) the growth strategy with policies toward better distribution ofbenefits of growth and experi mentaction witlh alternative .appro.alhes and dieliverysystems for providing food, education, health, water supply, and sanitation to thepoor. The question then is whether such a "reformist," as contrasted with arevolutionary," strategy depends for its adoption and success more on favorable

initial condiiions, which in the past have been brought about by exogenousevents such as war or occupation, than on the economic policies pursued duringthe course of development. No firm answer seems to emerge from the analysis ofthe development policies and performance of the developing countries since theSecond World War.

It would be a serious error to conclude that the growth performance of thedeveloping countries is insit.nificainr and that there has been no improvement inthe levels of living of the poor. The growth rates achieved by these coLinrries since15!; are impressive compared to their own past record and to the record ofpresently developed countries when they were at their initial sr.lge of de%vel'p-ment. Nor have the poor been completely left out of clte developltment process.Indicators such as expec .tat ion of life at birtl, mortality rates (in p)arti. '.ir, infantmortality), and sclhool enrollntni rates do ,LiggLesr that some improvement hastaken place in the levels of living of the poor. I Tdoutedlylb grow rh hL( hlice%nencshave fallen short of expectations. But it would be tragic if the serious misun-derstanding of the performance of past development strategy leads to the adop-tion of development policies based on ill-defined concepts suclh as basic needs, tothe detriment of growth. A development sr.itre.gy cannot be foilly articulated onthe basis of the need to provide t limited set of goods and services to a part of thepopulation. Nor can any soccess achieved in the pro%ision of basic needs besustained in the future without growthrl. Instead of turning into a blind alley,students of deveelopmenr should devote their efforts to the difficult task ofunderstanding the SiOicipol itic.C I Clar.mcteristics of che development process. Suchan undersrtinding is the first step on the road toward deVeloping a framewzork fordefining and eValu1dting Altrern.aiVC' de%lelopnenc straitegies for poverty allevia-i ion.

(CITATIO )NS

i I. Adelman et al. "A (Compiarison of Two Models for lnu)nlo:e IDisribtlitionPlan.n11ing," paper presented at the World B3anik \V'orksloip on Anyils'sk of I)is-trihL1ution.l Issues in )evelopment Plinninog. BUI LLgin, Italy, April 2-2 1977.

2 M. S. Ahltiwali.a "Inequality, Poverty, and Devclopnent," *Jft/(r)al h/J

D,i L /u fllt'Yt r ,L'JnfJh I, , Io- r)..3 "Rural Povtrty) and A-riiliiir:il Growtrh in Indii,'' paper pre-

senited at the Wlorld Bank \\'orkshop oni AnAlysis of Distrilbutional Issues inDevelopmienr Planning, BelLagin. Italy, April 22-27, 1977.

4 E. L. Bacha and L. T.iylor, EBrazilian Income D)istributiorn in the i96-Ds'Facts,' MdOelk Results and the (hnrurivrs,y," ap'ur presented ait the World Batnk

DEVELOPMENT, POVERTY, AND BASIC HUMAN NEEDS: 27

Workshop on Analysis of Distributional Issues in Developmenr Planning, .Bel-lagio, Italy, April 22-27, 1977.

5 J. Bhagwati and P. Desai, India. Planning for Iidustricalisation, OxfordUniversity Press, London, 1970.

6 J. Bhagwati and T. N. Srinivasan, Foreign Trade Regimes and EconomicDevelopment: In1dia, Columbia University Press, New York, 1975.

7 S. J. Burki arid J. J. C. Voorhowe, "Global Estimates for Meeting BasicNeeds, Background Pajoer," Policy Planning and Program Review Department,World Bank, August 1977.

8 Hollis Chenery et al., RJelifs/,tih' iiuith Growth, Oxford University Press,London, 1974.

9 Commission on International Development, Patrlners i)n D2rdopnint,Praeger, New York, I969.

io A. Fishlow, "Brazilian Income Distribution: Does Trickle-Down ReallyWork?" paper presented at the World Bank Workshop on Analysis of Distribu-tional Issues in Development Planning, Bellagio, Italy, April 22-27, 1977.

i I Government of India, The Report of the Commlozittee on Dist,'ib.v'iiou of lncome andLevels of Living' Part I, Planning Commission, New Delhi, February I964.

I2 ,A Technical Note on the Appr oach to the FiJh Five Year PlI. n of lintdi.I974-79, Planning Commission, New Delhi, April 1973.

13 X, Pepeclive of Deu dopuitet i96f-I976: bliplications o/'Pll.inin./;)l- aMinimumon Level of Living, Planning Commission, New 1Delhi, I 962; reprinted in(23).

I4 K. Griffin and A. R. Khan, "Poverty and the Third World: Ugly Facts andFancy Models," paper presented at the World Bank Workshop on Analysis ofDistributional Issues in Developing Planning, Bellagio, Italy, April 22-2-,

1977.I5 International Labour Office, "Poverty and Landlessness in Rural Asia,"

Geneva, 1976, mimeograph.I 6 , Meeting Basic Needs, Geneva, I 9 -.

17 John McHale and Maigda Cordell McHale, Basic Hum^can Needs: AFraineirork for Action, Center for Integrarive Studies, University of Houston,Houston, April I977.

I8 B. S. Minhas, "The Current Development Debate," Institute of Develop-ment Studies, Sussex, February I977, mimeograiplh.

I9 S. M. Naseem, "Rural Poverty and I-;andlessness in Palkistan, Dimensionsand Trends," International Labour Office, Geneva, April 1977.

20 G. Ranis, "Equity with Growth in Taiwan: How 'Special' Is rthe 'Spcc i alCase'?" paper presented at the World Bank Workshop on Analysis of Distribu-tional Issues in Development Planning, Bellagio, Italy, April 22-27, 1977.

2I D. C. Rao, "Economic Growth and Equity in Korea, " paper presented atthe World Bank Workshop on Analysis of Discributiona,il Issues in Dev,elopmenrPlanning, Bellagio, Italy, April 22-27, 1977.

22 T. N. Srinivasan, "Poverty: Some MNeasuremenr Problems," paper pre-sented at the 4ISt Session of the International Statistical Institute, New Delhi,December 5-15, I977.

23 T. N. Srinivasan and P. K. Bardhan, editors, Poverty and Incomie Distribui-

28 7. N., SINIVASAN

tion in Indlii, Calcutta Statistical Publishing Soc iert, Calcutta, 1974.24 Paul Streeten, "The DistinCtive Feattires of a Basic Needs Approach to

Development," Progtram andl Policy Review Department, World Bank, AugustI9'77 mimeograph.

25 P. V. Sukhatme, "NLutrition andl Poverrty," Ninth Lal B1ha11duLrI SihastriMemorial Lecture, Indian AgriCultUre Institute, New Delhi, 1977.

APPENTDIX

PAPERS OF THE WORDI) BANK WORKSHOP ON ANAL.YSIS OFDISTRIBLT1: IONAL ISSUES IN DEVELOPMENT PLANNING, B3EILAGIO,

ITALY, APRII 22-27, I.7-

i. I. Adelman, M. J. Hopkins, S. Robinson, G. B. Rodgers, R. Wtery, "AComparison of Two Models for Income DistribLltion Planning"

2. M. S. Ahluwalia, "Rural Poverty and Agricultural Growth in India"3. M. S. Ahlu;walia and J. Duloy, "Poverty Alleviation andl Growth Pessi-

mism: A RC'ex.l11irn ation1 of Cross-Country Evidence"4. E. L. Bacha, "lhe Kuznets Curve and Bc)'yondl: Groxvli andi Changes in

I nequoalities"5. E. L. Bacha, and L. T.aylor, "Br.iiili.iri Income DiriStitiUriml in the l9)605s:

Facts, Mfodel Results and1 the Controversy"6. (. L. G. Bell, "A Simlple I)ualistic Econiomy in a (:u1njz.)r.i'XT Statics

Serting"7 NI. Bruno, "DkiribUtion.il Issues ilt Development Planning: Some Reflec-

tions on the State of the Art"8. H. B. Chenery and N. Carter, "International Asprects of Poverty and

Growth"c9. A. Fishlow, "Brazilian lIL1nn D)KhrihUt ion: D)oes Trickle-D)own Really

Work'"io. K. Griffin and A. R. Klhian. "Poverty in the Third World: Ugly Facts and

Fancy Miodels"i i. G. Lamb, "DistribUtiVe Politics in Tanzania"I2. D. Lehmann, "Tlhe Death of Lantd Reform"I. . "TI'Ie PolitiLh of Arn.iggedon: Chile 1(70-7i'I.$. MI. Lipton, "T'he TeClh1n1olg), the System andel the Poor: The Case of the

New Cereal Varieties"i 5. C. ElILch, "On Simple MsIacroeumonnii Aft)lels''i6. G;. P.itt, "-..Linr Markers and trhe Etlic icL v of Labor"17. G. Raniis, -rF(L1i1 with (m-th in T;6%v.in: How Special is the Speci

C( , iy r"i8. I). C. Rao, "lconomic Growth iud Equity in Kore.t"19. G. B. Rodgc'rs, "Demnntcr,c phy and D)istribiron11"

20. F. Stewart, "Inequality, Technology and(i Pa)mentr S);senms"2 I. P. Streeten, "Basic Needs: Ani Issues PAerUl"2z. L. Taylor and F. Lysy, '`Va.nrinnisLo Shlort-Run Income Rechistrihutions:

Keyne-sian Clues a boUt Model Surprises"