The Software of Development

Published in The Express Tribune, December 21^st, 2015.

Conventional economic theory focuses on the hardware of development: Industries, Technology, Exports, Infrastructure, etc. Social welfare is regarded as an obstacle to development – to the extent that you have to feed people, you cannot spend this money on building up capital. This tradeoff takes a mathematical form in the Solow growth model, which states that the less we consume, and the more we invest, the faster we will grow. As this model was applied all over the world, many planners became aware of the harsh realities concealed beneath the mathematical beauties: We must deprive our population of basic necessities, in order to accumulate the capital required for growth. Experience with implementing such policies and watching the brutal outcomes led Mahbubul Haq to revolt against this economic orthodoxy. He went on to formulate the Human Development Index (HDI), which includes education and life expectancies as proxies for the human component of economic development. The insights of Mahbubul Haq about the central role of human beings have had a profound impact on development planning everywhere. He expressed this insight pithily as follows:

“…, after many decades of development, we are rediscovering the obvious—that people are both the means and the end of economic development.”

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