MODULE TWO

OBJECTIVE ONE

CONCEPTS AND INDICATORS OF DEVELOPMENT

This refers to the sustained level of economic and social wellbeing of a country. It refers to the
advancement or progress of a nation state in terms of improved standard of living and improved
wellbeing. The concept emerged out of the decolonization era in the latter half of the 20th century.
Development is multi-faceted and includes 3 main components:

1) Economic Development
2) Human Development
3) Sustainable Development

Development is concerned with growth but growth can be superficial. Signs of growth might appear in a
particular area but at the expense of others.

FACTORS IN EXAMINING DEVELOPMENT

 Infrastructure- roads, communication

 Technology
 Environment
 Health
 Employment
 Security
 Education
 Industrialization
 Eradication
 Provision of Social Services
 Welfare
 Entrepreneurship
 Government Policies/ Ideologies
 Good Governance
 Equity in Judicial Structures

When examining development, we must be concerned not only with indicators of growth but evidence
that this can be sustained over time. Countries are labelled as developed and developing. The labels of
"underdeveloped” and "undeveloped” have fallen out of favour because of the negative connotation
attached to them. In light of this, development refers to how a country's resources are used to meet the
basic needs of the population, and examines the quality of life of the majority of its people. There are

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several bodies that aim to monitor and improve development in the Caribbean. We will examine the
UNDP and the Caribbean development bank.

UNITED NATONS DEVELOPMENT PROGRAM (UNDP)

In 2000, the UNDP produced some Millennium Development Goals with the aim that they be
accomplished by the 2015. These goals are:-

1. Improved Maternal health

2. Improved infant mortality / child health
3. Combat Human Immunodeficiency Virus (HIV) / Acquired Immunodeficiency Syndrome (AIDS)
4. End poverty and hunger (at least up to 50%)
5. Create a Global Partnership
6. Universal education
7. Gender equality
8. Environmental sustainability

MICE PUGE

CARIBBEAN DEVELOPMENT BANK

Formed in 1969 by the then CARIFTA, the CDB aims to reduce poverty in the region and provides access
to funds for many worthwhile projects throughout the region. The CDB established goals to be achieved
from 2010-2014, which are in line with the UNDP Goals, are:

1) promoting broad-based economic growth and inclusive social developments

2) supporting environmental sustainability and disaster risk management
3) promoting good governance
4) fostering regional cooperation and integration
5) enhancing organizational efficiency and effectiveness

In 2010 the CDB disbursed us 232 million in loans and grants.

When examining growth and development in the Caribbean countries it is important to remember that
not every country would necessarily develop at the same rate or even follow the same pattern of
development. This is contrary to the theories of modernization by WW Rostow and industrialization by
Emile Durkheim and Karl Marx, who established frameworks for economic and industrial development
which they felt each country would fall into. The Caribbean region was put at a major developmental
disadvantage with colonization and establishment of the plantation system. The resources from the
Caribbean were extracted and exported to Europe. The extent of this was so great that Eric Williams

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argued in his doctoral thesis and in Capitalism and Slavery that the plantation system kept the region
economically and developmentally backward by the extraction of resources and limited investment in
colonial infrastructure and methods of production. Williams even argued that the profits of British West
Indian sugar funded the Industrial Revolution in Britain leading to development in Britain at the expense
of the colonies.

Some of the factors that must be considered when examining growth and development in the Caribbean
are:

1) Current maturation of the country

2) Geography, history, politics, economics, culture, religion, technology and ideology
3) Strategies to achieve development
4) Challenges to development
5) Effects of economic growth on overall development
6) Ability to sustain development over time

INDICATORS OF DEVELOPMENT

1) Levels of Income- GDP/GNP per capita

2) Productivity
3) Social and Economic Equalization
4) Modern Technology and rates of accessibility
5) Adequate provision of social service
6) Improve institutions and infrastructure
7) Environmental Factors
8) Ideological basis to support development

SUSTAINABLE DEVELOPMENT

This is the use of resources in a way that will keep them available for future generations. Suitable
development meets the needs of the present population but allows future generations to fulfil their
needs. It is linked to environmental factors such as the tremendous environmental costs as the rush to
modernisation E.g. Cattle farming in Guyana and Brazil. The term responsible environmental factors
imply that countries and individuals need to act in environmentally responsible ways. Government
incentives and public education should allow and promote “reduce, reuse and recycle” thinking as far as
possible. Resources should be use efficiently to control wastage and lessen the environmental impact of
development. The environmental impact of the Caribbean tourism is also very significant. At the same
time, while fostering environmental sustainability and the preservation of resources over time, the
original goals of economic and human development must be pursued so as to ensure a steady rate of

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 progression over time. There the concept of sustainability must also include compatibility with
economic, ecological, social and political factors.

Sustainable development can only be possible with individual involvement, towards pursing the four
major developmental objectives (RISE):

1. Reduction of poverty (R)

2. Increase in literacy rates (I)
3. Stability of growth (S)
4. Empowerment of the majority (E)

DEVELOPMENT (ADVANCEMENT)

- Improved Standard of Living

- Increased Well-being

ECONOMIC DEVELOPMENT HUMAN DEVELOPMENT

- Individual Development - Human capabilities

- Modernization - Democratic Freedom
- Infrastructure

ECONOMIC DEVELOPMENT

Economic development therefore examines the productive aspects of a country in terms of its economic
activities and earning of a country in terms of its economic activities and earning capabilities. This is
usually measured through a country’s per capita earnings and through productivity. Per capita earnings
refer to finding the average income of the country for each member of the population. It is found by
dividing the GDP/GNP by the population. This does NOT represent the person’s average or actually
earnings but it’s useful for comparing economic factors between countries. Still, any per capita
estimation can mask any economic disparities within a country. Productivity is the balance between

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inputs and outputs. It is an attempt to assess the efficiency of economic activity by comparing the
amount produced compared to the actual cost of production.

INDICATORS OF ECONOMIC DEVELOPMENT

Political Indicators
Economic Indicators Level of Infrastructure

Productivity Indicators of Economic Development Social Indicators

Employment Sustainability
Per Capita Income

1) Levels of Infrastructure
2) Levels of investment- Foreign direct investment (FDI); local investment; capital financing
towards resource expansion
3) Industrial Investments
4) Modern technology and Mechanisation- machines used for the simplification of work in industry
(mass production responsible for high productivity); infusion of ICT
5) Internet Penetration- the percentage of the population with access to the internet; this can lead
to increased productivity because of more opportunities through globalisation
6) GDP per capita- A measurement of the total output of goods and services produced within a
country by the country itself, given in USD within a given year. This is standardised per person to
allow for comparison between countries
7) GNP per capita- includes the GDP but also any earnings from outside the country including
remittances from overseas and earning form activities outside the country.

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HUMAN DEVELOPMENT

Human development refers more directly to the living conditions of a population, for instance access to
education and medical facilities. Human development is concerned with expanding human choices and
enabling capabilities while economic development is concerned with increased levels of
industrialization, infrastructural growth and the country’s overall fiscal situation. Human life and linked
to human productivity and work ethic. To derive this true potential, human development must have
capabilities to foster it (education, health, food etc.) and democratic freedoms. Human development is
concerned with enriching Sustainable development is the use of the country’s resources in a responsible
way in order to ensure the continuity of this resource in the future. Indicators can assess past
performance and projects future planning. The main characteristics of human development are:

1. Generally qualitative
2. Advancement and improvement of human life – standard of living
3. No fixations of GDP / GNP but greater emphasis on qualitative measures of development
4. Adult literacy rate
5. School enrolment rates (the % of students within a specified age bracket that are expected to
attend primary, secondary and tertiary schools)
6. Health (life expectancy)
7. Good governance – this promotes free and fair elections. It is concerned with equity, especially
gender empowerment and freedom of the press. Good governance is the level of efficient
organization that fulfils the ideas of governance; it is the ability to deliver school services in an
equitable and transparent manner. This is a sound, justified, successful approach to delivering
social services in an equitable and transparent manner.

BRIEF HISTORY OF THE GROWTH OF THE HUMAN DEVELOPMENT PARADIGM

By the end of World War 2, decolonization was rampant. The World Bank was formed based on the
agenda to reconstruct Europe. The view was formed that reconstruction was linked to modernization
and industrialization. By the 1960’s, there was the emergence of newly sovereign states. Economic
theorists felt that development that took place in Europe could easily be applied to the developing
world. W. W. Rostow argued that every society would go through the same stages of advancement,
which would include industrialization and improvements to the GDP. Aid was given to Africa and the
West Indies with the belief that this investment in industry would lead to modernization, a reduction in
poverty and increased economic prosperity. By the 1970’s it was thought that GDP/ Per Capita Income
statistics were useful in identifying the amount of money available for development but were not
sufficient indicators of development by themselves. Social or human indicators must be considered to
reflect how that money was being used towards greater productivity and development.

By the 1980’s, there was an international oil crisis that led to challenges in developed countries. This led
to inflation in both developed and developing countries. At this point, it became clear that the aid given

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to developing countries had brought no fruition. Financial injections were not enough and would not
necessarily translate to development.

Theorists like Amartya Sen and Mahbub Ul Haq made great strides in recognizing the unique patterns of
development experienced by developing countries but the importance of human considerations and
sustainability in an overall understanding of development. Sen and Ul Haw criticized the modernization
theory for being too Eurocentric. Sen stressed the importance of human capabilities. This is linked to
human productivity and work ethic. To derive this true potential, human development must have
capabilities (education, health, food etc.) and democratic freedoms. Human development is concerned
with enriching human life. Indicators assess past performance and projects future planning. Sen and Ul
Haq felt that for too long, Western countries were romantically obsessed with the idea of mechanization
and that they should invest in the development of human capabilities. The key to economic growth
rested in human development. Economic growth cannot be promoted without investing in life choices
e.g. education leads to entrepreneurship etc. Overpopulation is another social ill that could hinder
economic growth. By the 1980’s, economic growth and advancement were clearly related to human
capability.

INDICATORS OF DEVELOPMENT

GROSS DOMESTIC PRODUCT (GDP)

This is the total value of goods and services produced within a country. The GDP is usually calculated in
US dollars and on an annual basis. The DSP for Trinidad and Tobago (2010) was US$20,398 billion,
whereas Barbados’ GDP (2010) was US$3203 billion. We can safely assume that Trinidad and Tobago
produces more goods and services than Barbados.

GROSS NATIONAL PRODUCT (GNP)

The GNP includes the GDP plus earnings from outside the country. This would include remittances, from
overseas (money that is sent back to the country from abroad) and earnings from activities outside of
the country.

PER CAPITA INCOME

This is an indicator of the average income of every person in the country. It is found by dividing both the
GDP and GNP by the total population. This will give an indication of the amount of money available to
each person in a country. This is not the real earning of any individual but it is useful for comparing
countries. Per capita calculations allow for an improved comparison. For example, the GDP per capita

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for Trinidad and Tobago is US $16,167 and that of Barbados is US $14,326. Clearly the number of people
who have to share the GDP will make a big difference in the availability of funds. However, per capita
earnings often neglect great economic disparities within a country.

GINI COEFFICIENT

This is a measurement of income distribution among the members of a population. It is used to compare
distribution of wealth among a population. It is used to investigate disparities within a country by
comparing the proportion of total earnings with the proportion of the population that has access to it. It
ranges from 0-1 and is based on residents overall income. It helps to define the gap between rich and
poor with 0 representing perfect equality and 1 representing perfect inequality. A low Gini coefficient
indicates a more equali distribution of wealth. A measure of income distribution is not a measurement
of wealth. A rich country and a poor country can have the same Gini coefficient if there is an equal
distribution of resources. It is only as accurate as the GDP and income data produced by the country.
The Lorenz Curve is a graph showing income distribution, the straight diagonal line represents perfect
equality of wealth distribution, the Lorenz curve lies beneath it showing real wealth distribution, it
shows what % of a nations residence possess what % of a nation’s wealth eg. The country’s poorest
residents (10% of the population) can possess 2% of the country’s wealth.

Cumulative Line of Equality (45o)

Share of
Lorenz
Income earned Curve

Cumulative share of
people from lowest to highest income

In the Caribbean, Gini coefficients generally range over 0.4, suggesting that there are wide gaps
between rich and poor. The lowest Gini figures in the world are found in Sweden and Denmark and are
approximately 0.2. The USA has one of the highest GDP’s in the world – US $14,657,800 million – but its
overall GDP coefficient is 0.4, which is one of the highest in the developed world.

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HUMAN DEVELOPMENT INDEX (HDI)

This is a composite indicator of wealth, health and education. This measurement is used to rank
countries, with lower ranks meaning greater human development and higher ranks meaning less human
development. The HDI measures the average achievements in a country according to the three basic
dimensions of human development – health, wealth and education. This understanding includes factors
such as life expectancy at birth, literacy rates, school enrolment and the standard of living, reflected by
the GDP and per capita income, measured in US dollars. Starting with the 2010 report, the HDI
combined three dimensions:

1. A long and healthy life; life expectancy at birth

2. Access to education; mean years of schooling; expected years of schooling
3. A decent standard of living - based on GDP / per capita income

This index is used to rank countries on an annual basis. It must be noted that some countries can have a
high HDI rank while having a low GDP – e.g. Cuba. That is because the gross amount of goods and
services produced in a country does not have to translate to human development and a better quality of
life of residents. Having the capital available is important but it needs to be allocated towards human
development in order to improve the HDI rank.

HDI RANK AND GDP FOR SELECTED CARIBBEAN COUNTRIES

HDI RANK (2010) COUNTRY GDP PER CAPITA US $ (2010)
37 BARBADOS 17,956
51 CUBA 6,876
52 BAHAMAS 20,253
62 ST. KITTS 14,481
64 TRINIDAD AND TOBAGO 23,507
73 DOMINICA 7,893
91 ST. VINCENT 7,691
100 JAMAICA 6,079
114 GUYANA 2,782
149 HAITI 1,155

PRODUCTIVITY

This is the balance between input and output. A high output relative to input indicates higher efficiency.
Productivity attempts to assess the efficiency of economic activity. For example, the productivity of the
Caribbean tourism industry is often examined by economists. Tourism requires heavy inputs of foreign
exchange and yields relatively low outputs to the national economy. An estimated 60 cents of every

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dollar earned by tourism goes back out of Caribbean countries. Agriculture also suffers from low
productivity in the Caribbean, especially since it requires high input and is restricted in its ability to
compete globally with more competitive regions.

INTERNET PENETRATION

This is considered to be an indicator of development as it allows for better global communication and
international economic activity. In the Caribbean, many countries have a high level of access to the
internet. For some countries, the access is merely a vehicle for low-end call centre and data entry
industries using Caribbean countries’ cheap educated labour force.

MODERN TECHNOLOGY

This means that the capital-intensive use of machinery is thought to be better than labour-intensive
economic activity, according to the developed countries’ model. Increased technology drives
industrialization by the demand for machines, which are more efficient in their output. However, this
notion has been lessened in favour of the use of ‘appropriate technology” with the recognition that the
Caribbean, like other developing countries in the 21st century, must follow a very different path to
development than that of the developed world in the early 20th century. No longer are there colonial raw
materials to be tapped and ready markets for the manufactured products in the colonized empire. The
stagnation of development that occurred under colonization inhibited industrial development, which
had far reaching implications for the developing world. As such, with the emergence of economic
theories in the 20th century, it became clear that the Eurocentric models of Rostow et al could not be
applied to the developing world as they had to find new ways to industrialize and mechanize in light of
the colonial experience. Modern technology was slow to develop in the Caribbean due to limited
infrastructure and capital for investment. Some societies had to rely on industrialization by invitation to
mechanize and increase infrastructure, which could have detrimental economic and developmental
effects. Not all Caribbean countries have access to modern technology and this can lead to stagnation in
terms of development, both economic and human. As such, the difficulties faced by Caribbean countries
in accessing technology have had a tremendous impact on development.

GOOD GOVERNANCE

This is a level of efficient organization that fulfils the ideas of governance. It refers to the ability to
deliver social services in an equitable and transparent manner. This is a sound, justified, successful
approach to delivering social services in an equitable and transparent manner. This is one of the most
difficult concepts to assess. Free and fair elections are an important component towards good
governance. Democratic elections indicate that every person has a political voice and a say in the
political process. At the same time, even if elections are free, decisions made by politicians may not

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always benefit the entire population. Certain members of the population may be denied access to
resources. This does not reflect good governance. This can erode confidence in the process of
governance, which defeats the purpose of any attempt at collective decision making. Another important
aspect of good governance is the existence of checks and balances to prevent corruption and any abuse
of process. This can include supervisors and committees charged with ensuring that there is no abuse of
position or process. Access to information and a free and independent press are also critical
components of any good governance mechanism. This would allow the people to participate in state
processes and will ensure transparency and accountability of those in public office.

The United Nations defines good governance as containing the following seven aspects:

1. Participatory
2. Accountable
3. Consensus oriented
4. Transparent
5. Responsive
6. Effective and efficient
7. Equitable, inclusive and follows the rule of law

PACTREE

Good governance “assures that corruption is minimised, the views of minorities are taken into account,
and that voices of the most vulnerable in society are heard in decision-making.” It is also responsive to
the present and future needs of society.

RESPONSIBLE ENVIRONMENTAL FACTORS

This implies that countries and individuals need to act in environmentally responsible ways. Government
incentives and public education should allow and promote the ‘reduce, reuse, recycle’ way of thinking as
far as possible. Resources should be efficiently used to control wastage and lessen the environmental
impact of development.

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