Development: "The hope of many!"

By Paul Andrew Bourne, MSc. (candidate); BSc. (Hons) Economics and Demography; Dip. Edu.



Development has been treated by economists as if it were nothing more than an exercise in applied economics, unrelated to political ideas, forms of government, and the role of people in society. It is high time we combine political and economic theory to consider not just ways in which societies can become more productive but the quality of the societies which are supposed to become more productive-the development of people rather than the development of things.
Professor of Development Economics: Michael P. Todaro, 2000

Introduction

Despite non-developmental economists position on development in that their definitions lack social coverage and its bias in favour of an economic construct, the fact is, we are seeking to comprehend an economic phenomenon and so readers ought to be cognizant of this fact as we seek to lay a materialist foundation for the evaluation of Jamaica's development (economic) over the decades. Hence, the researcher will broaden the construct of the non-developmental economists' definition of development to incorporate health, education, leisure, increased social amenities and social expansion of resource to people within the geographic locality defined as Jamaica. This position will concur with the perspective of development economists like Michael P. Todaro. In addition, the new definition seeks to address political ideological changes, forms of government and how those phenomena impact on development.

Economic Development is an illusive idealism for most developing economies. In that, poverty, infrastructure inadequacies, poor and inadequate technological advancement and use of new techniques, governmental mismanagements of the economy, low levels of educational attainment of the masses, corruption, dependency on agricultural export products, political tribalism, and sub-standard health care are but a few of the barriers to economic development in those countries. Jamaica, in addition to the entire Caribbean islands, is apart of the construct of developing economies. What is meant by the term developing countries, before we proceed into this discussion? Developing countries are seen as constituting inadequate physical infrastructure; poor social security systems; high level of unemployment and corruption; low use of technology, high dependence on primary products; imperfect markets and information coupled with poor work attitude of the populous. Hence, how is it possible to attain economic growth and by extension development?

Many persons inadvertently and incorrectly interchange economic growth and economic development as though they are synonyms. Economists posit that ?'economic growth' is an increase in the Gross Domestic Product (GDP) of a nation. GDP is the aggregate of all goods that are produced, distributed and consumed in an economy in a given year. As such, an increase entails the employment of more factors of production (land, labour, capital and entrepreneurship). Equally G.D.P is the aggregate of the factor incomes.

Apart from the definitional properties of G.D.P, a thorough understanding of this measurement of production must be understood by the reader in order that s/he is able to grasp the issues that will be critically presented in this paper.

GDP's Growth does not automatically disaggregate into a share of production to each sector within the economy. The growth of the economy may entail all sectors getting proportionately more or proportionately less than other sectors. It has been the case on a wide scale that the owners of capital, the entrepreneurs, have been receiving significantly more of the GDP than the other participants. It is this disparity between the wage earners and the owners of capital that must be addressed in order to develop the human capital of the population as a whole. This is especially the case when capital is very unequally distributed. An increase in productive capacity of an economy may not have been for the general good of all peoples therein but may be due largely to small sub-sector of the populace.

Economic development, however, is significantly different from that of economic growth. In that, "Development in human society is a many sided process. At the level of the individual it implies increase in skill and capacity ………… and material well being". Implicit in that definition is the accumulation of the surplus of individual firms. In order for this surplus to be meaningful as a human indicator of development and large enough to ensure the survival of firms and improve the standard of living of those employed by the firm, the surplus cannot be consumed after a day. If this is done, then the standard of living of the workforce will decline and this decline is concomitant with the lack of development in the domestic economy.

Economic growth in some economies can then be associated with immizerization, in that economic growth may result in misery. This occurs when economic growth causes a high proportion of the population to become impoverished while a smaller proportion accumulates substantial wealth. As such, this growth may lead to impoverishment of a sector or some sectors within the economy but this cannot be the case for economic development implies the improvement in human capital which is not important for growth.

Therefore, the different approaches to development strategies will be discussed in this paper. In addition lessons learnt from those strategies will also be forwarded. This will be done within the framework of critically examining the Jamaican economy between the decades of the 1950s through to 2001.

The 1950's: The Decade of Economic Growth

At the start of the 1950's, the Jamaican economy (economy) was very dependent. The economy was dependent on exports for foreign exchange and also dependent on imports to provide essential commodities that the economy did not produce itself. Jamaican imports during 1950 have mainly consisted of food along with smaller amounts of manufactured consumer and capital goods. This economic dependence on food is a longstanding structural feature that had begun during slavery. "The economy in 1950 typified the colonial model of dependent underdevelopment. It was an open, import dependent monocrop economy: 90% of its foreign exchange was earned from one crop, sugar. The labour force was primarily agrarian, distributed between wage labour on the plantation and in the sugar factories and small farmers, over 80% of whom owned less than 5 acres."

The economy was very dependent on foreign countries (which provided the markets for the export products and the foreign direct investment necessary to produce the products). The development strategy of Sir Arthur Lewis (Economic Development with unlimited supplies of labour) was being carried out which came to be known as industrialization by invitation. This theory stated that the economy of developing nations would improve if there was foreign direct investment. This strategy included various policy prescriptions which would make the economy become more attractive to the overseas investor. (1) Low minimum wage which would decrease the wage bill (relative to other countries) of the potential investor. (2) Decreasing tariffs on imports and exports related to this industry. (3) Providing the investors with the best location for the industry. (4) Providing the potential investor with all the utilities which are often times needed by at reduced prices. The result was that foreign investors exploited the Jamaican economy. When absolute values are used more output was produced but the Jamaican economy did not experience development (i.e. growth with development). The surpluses did not accumulate in the island; .it was repatriated to the home country of the foreign investors.

As a direct result of the high levels of foreign direct investment, the decade was characterized by rapid economic growth. Development of the Jamaican economy did not accompany the economic growth-taking place . One reason for this was that the national income of Jamaica was unevenly distributed. The sectors of the economy that were experiencing rapid growth and foreign direct investment included Bauxite, Tourism and agriculture (including food processing). Foreign investors owned these industries. The surplus of these industries was repatriated to the homeland of the foreign investors leaving a bare minimum in Jamaican. These industries can then be seen as enclaves. An enclave is "a portion of a territory that is surrounded by another territory whose inhabitants are different in character, culture and ethnicity." Those industries provided high wages for few of the native inhabitants of Jamaica that is the local bourgeoisie and the managerial elite with almost none being distributed to the local masses. There were few backward linkages in these industries to the rest of the economy.