Wrongs and rights in development

The Chinese and Indian economies together encompass two-fifths of the human race. So remarkably high rates of economic growth in China since its reforms of 1979, and the prospect of excellent performance from the Indian economy since its recent reforms, have received a good deal of international acclaim. It is right that they should do so. And yet there are momentous problems on the social and political side of development that seem to be consistently evaded in India and China. The obstacles are not the same in the two countries-indeed the basis of weakness of each is to a considerable extent the source of strength of the other. China has achieved much greater success in expanding basic education and health care for all, and India has been much more protective of civil and political rights than China. Yet leaders in both countries seem strangely smug about their respective shortcomings-sometimes vocally so.

Consider two recent international episodes. The first concerns India, the second China. In late September 1994, at the annual meeting of the "group of 77" (an organisation which represents the governments of developing countries), the official Indian position involved an attack on "the concepts of sustainable human development and of human security." A senior cabinet minister, speaking on behalf of the government of India, described the focus on human development as a "derailment of our basic purpose of development co-operation." Priority would have to be given, in this view, to focusing on economic variables, rather than on "human development," including both health services and basic education.

What made this pronouncement particularly interesting was the fact that it came right in the middle of an epidemic of plague in India, then in the headlines at home and abroad. More generally, with half the people illiterate and many more without secure health care, the official disdain for giving any kind of priority to "human development" (including education and health care) for the population amounted to a hard political message. I shall call this principle the "postponability of social-change and human-development"-or posh for short.



The second episode goes back to the Vienna conference on human rights in the spring of 1993. Several developing countries objected to putting much emphasis on human rights. They made the case for giving priority to "economic rights," concentrating on fulfilling elementary economic needs. Even though China's poor record on human rights made her an unlikely occupier of the moral high ground on this subject, the country was nevertheless able to take a leadership role in presenting this so-called "third world view." The alleged need to postpone the protection of human rights in developing countries until after the accomplishment of economic development, I shall call: "political unreadiness for speedy human-rights"-or push for short. posh and push would be worth studying even if the advocacy of the respective positions were confined to India and China, but they also have a much wider bearing on development doctrines world-wide.

india became independent in 1947, and systematic economic planning began in the early 1950s. If we were to look back at what has happened in India in the first four decades of planned development, two general failures appear particularly glaring. First, in contrast with what was promised by the political leadership which took India to independence, very little has been achieved in "the ending of poverty and ignorance and disease and inequality of opportunity"-the "tasks ahead" that Jawaharlal Nehru identified in his famous speech on the eve of independence, on August 14th 1947. Four decades of allegedly "interventionist" planning did little to make the country literate, provide a wide-based health service, achieve comprehensive land reforms, or end the rampant social inequalities that blight the material prospects of the underprivileged. (These issues are discussed in my forthcoming volume with Jean Dreze, India: Economic Development and Social Opportunity, Oxford: Clarendon Press, 1995.)

Second, while successive Indian governments have been only minimally active in social development, they have been superactive in tying the economy up in knots of bureaucracy, control and regulations-the so-called "license raj." The power of government policy had been unleashed not on behalf of goals such as providing schooling for every villager (an old nationalist objective), but in interference aimed at restricting people's economic initiatives. There is often a case for regulating private economic enterprises: to prevent monopolistic exploitation, or to protect the environment. But the controls were comprehensive and indiscriminate, giving the "controllers"-from petty officers to high-ranking bureaucrats-unusual power to grant favours, sometimes in exchange for financial considerations. Economic initiatives were made overpoweringly contingent on official permission; the competitiveness of Indian industries was persistently sacrificed in favour of protected markets for selected businessmen; a mass of badly run public enterprises made chronic losses; and there was little attempt to facilitate India's participation in the economic expansion occurring across the world.

The economic reforms that were introduced at the end of 1991, under the imaginative and forceful leadership of Manmohan Singh, the newly elected finance minister, have concentrated on removing the second defect, that of the "license raj" and the "ever-proliferating bureaucracy." A serious and persistent problem was at last officially acknowledged and addressed. However, the lack of social development has remained effectively unchallenged.

The liberalisation that has occurred, albeit somewhat more slowly than anticipated, has led to a considerable expansion of exports and an increase in the foreign exchange balance. It has also led to a remarkable international response, involving buoyant interest in investing in India. However, the development performance of the Indian economy has remained relatively moderate. Even in terms of the growth of GNP, GDP and industrial production, the annual rates of expansion during 1991-94 (since the reforms) are all significantly lower than those recorded in the previous decade. Indeed, there was a sharp decline of industrial growth following the reforms, and the economy is just returning to where it was in terms of growth rates.

We should not, however, read too much into the slow-down that followed the economic reforms. They were introduced at a time of-and to a great extent in response to-substantial economic crisis. After the initial fall in 1991-92, the growth rate for Indian industries has sharply picked up. It may not be easy to be as optimistic about overall economic growth as the leaders of the Indian economic reforms are, but there is certainly a more secure basis for economic growth in post-reform India. The integration of the Indian economy in the world market and the dismantling of the "license raj" offer economic opportunities that did not exist earlier.

The central issue is not the occurrence of growth, nor the average rate of expansion that the economy can and will achieve; it is the nature and coverage of the economic development. With nearly half the people-and two thirds of the women-illiterate, the integration of the substantial Indian economy in the world economic system is no easy task. Efficient use of the world market requires production to specification, and quality control; it also depends on an awareness of the economic tasks involved. The success of the east Asian "tigers" (South Korea, Hong Kong, Singapore, and Taiwan), and more recently of China, has been based on a much higher level of literacy and basic education than India has come anywhere near achieving.

The list of "tasks" on which Nehru's speech on the eve of independence had concentrated (such as the elimination of illiteracy, remediable poverty, preventable disease, inequalities in opportunities, and so on) are objects of value in their own right-not just for the contribution they make to economic growth and to other usual measures of "economic performance." The enhancement of basic human capabilities is of great importance in itself: it expands our freedom to lead the lives we have reason to value. It is crucial to avoid the mistake of taking the growth rate of GNP to be the ultimate test of success, and of treating the removal of illiteracy, ill health and social deprivation only as possible means to that hallowed end.

While it is important to assert this, an economic analysis cannot, of course, stop at this elementary point. Something of "intrinsic" importance can, in addition, be "instrumentally" momentous, without compromising its value. Many of the ingredients of a good quality of life-including basic education and secure health care-clearly do have instrumental roles in making people more productive and in generating the capability to respond to economic opportunities. The lessons of economic and social progress across the world (nowhere more so than in east Asia) have forcefully drawn attention to the instrumental importance of education and health care in generating fast and shared economic growth.

While India has a well developed-if overextended-higher educational sector, it remains one of the most backward countries in the world in terms of elementary education. India sends nearly six times as many people (as a proportion of the population) to universities and institutions of higher education as China does, and stands well ahead of other developing countries in this respect. But the bulk of the Indian masses-and even a very large proportion of the young-remain totally unschooled. (Nothing much has changed since I discussed this dichotomy in 1970, in the Lal Bahadur Shastri Memorial Lecture in New Delhi, reproduced in Aspects of Indian Economic Development, Pramit Chaudhuri, ed, Allen & Unwin, 1971.)

the role of widespread basic education has been quite crucial in countries which have successfully grown fast through making good use of world markets-such as the four "tigers," and, more recently, China and Thailand. The modern industries on which the economic expansion of these countries have relied tend to demand many basic skills for which elementary education is essential-and secondary education most helpful (if only for the effectiveness of on-the-job training).

The point is not so much that these countries have a much higher base of elementary education now than India currently has, but that they already had radically higher levels of elementary education in the 1970s (when they started expanding) than India has now. At 52 per cent, India's current level of adult literacy is not only very much lower than the current figures for China, Thailand, Korea or Hong Kong, but it compares very unfavourably with the adult literacy rates (about 70 per cent or higher) at the time these countries respectively launched their fast economic expansion (in the 1960s in Hong Kong, Korea and Thailand; from about 1980 in China). All these countries were also far ahead of where India is now in terms of health care, land reform, and social security.

This is not to imply that until social backwardness is removed, the growth of the Indian economy cannot benefit from economic reforms. Some sectors of the economy, especially those reliant on high skills of the kind India already has in relative abundance (such as basic computer proficiency), have already been growing fast and can expand a lot faster. Given the size of the Indian labour force, a great many others can benefit too, even when a high proportion of the Indian masses are prevented, through illiteracy and other social handicaps, from making good use of the new opportunities.

India is also a heterogeneous country, and there are parts of the country with quite high levels of social development. This is particularly so in the state of Kerala, in south western India, where a rather special history, including the pro-education policies of the "native kingdoms" of Travancore and Cochin outside the Raj, and active left-wing politics, have contributed to widespread literacy and health care. But unlike in China, the left-wing politics have not adapted to the market, and there have been inadequate attempts to remove bureaucratic control and create opportunities for domestic economic initiatives. To get the full benefit of the opportunities of modern industrialisation and greater integration with the world economy, what is needed is a combination of two things: the development of basic human capabilities, and appropriate economic incentives and openness.

Leaving out regions such as Kerala, India's performance in basic education has been dismal. Despite rather high-minded governmental rhetoric, there is little evidence of any priority being given to basic education in India. There was even a decline in the absolute number of primary school teachers between 1991-92 and 1992-93, following economic reform. The seriousness of India's educational backwardness does not seem to have been fully grasped.

by contrast, when economic reforms in China began in 1979, it could draw on its impressive past achievements in the social field. Neither Mao nor anyone else intended these developments to facilitate a market-based economic expansion. (An historian of ideas will no doubt see here an illustration of the importance of the unintended consequences of human action which Adam Smith, Carl Menger and Friedrich Hayek have talked about.)

In 1979 China already had an overall literacy rate close to 70 per cent-particularly good among the Chinese young, especially when compared with India. As late as 1990-91, on the eve of the Indian economic reforms, half the Indian girls aged 15-19 and a quarter of the Indian boys of that age group were still illiterate. By contrast, in 1981-82, when the Chinese economic reforms were just beginning, Chinese literacy rates for girls and boys of the same age group were 85 per cent and 96 per cent respectively. The one notable exception is the province of Tibet, which has the lowest literacy level of any Chinese province or Indian state.

A similar comparison can be made about the spread of health care in pre-reform China-a matter persistently neglected in India. Good health not only helps people work hard; it also helps free them from the morbidity and indisposition which can severely affect work efficiency and labour mobility in search of economic opportunities (in addition to directly blighting their quality of life).

Another area in which the post-reform expansion in China has benefited from pre-reform achievements is land reform. This can be an important factor in economic development, and has evidently been effective in east Asia in general (including South Korea and Taiwan). In China, of course, things went much further than land reforms with the expansion of communal agriculture in the Maoist period. But that process of collectivisation had also, inter alia, abolished landlordism in China, and when the Chinese government opted for the "responsibility system" in the late 1970s, the country had a land-tenure pattern which could be readily converted into individual farming, without the attendant social problems and economic inefficiencies of highly unequal land ownership.

So far we have been talking of China as something of a golden boy. But the time has come to shift our attention from posh to push. Respect for political and civil rights has certainly been much more scarce in China than in India. With all its imperfections, India's multi-party democratic system, with guaranteed political freedoms and a relatively free news media, has given Indian citizens various opportunities and liberties that Chinese citizens have lacked.

It is sometimes claimed that these freedoms are valued only by relatively affluent people, though it is not obvious how the proposition could be tested without giving ordinary citizens the opportunity to express their views democratically. Interestingly, when Indira Gandhi's government tried that argument, to justify the "emergency" she had declared in the middle 1970s, an election was called which divided the political groups precisely on this issue. In the election, fought largely on the acceptability of the "emergency," the suppression of basic political and civil rights was firmly rejected, and the electorate of one of the poorest countries in the world showed itself no less keen on protesting against the denial of basic liberties and rights than it is in complaining about economic poverty.

Those who take the push view often argue that whatever importance these rights might have is outweighed by the conflicting claims of economic development. Underlying this argument is the belief that the acceptance of these political and civil rights would make economic development less likely or less rapid. There is a much-repeated general belief that international comparisons "show" that political and civil rights hamper economic growth. Something approaching a "general theory" of this has been articulated by that unlikely abstract thinker Lee Kuan Yew, the ex-prime minister of Singapore. Certainly, some relatively authoritarian states (such as South Korea, Lee's own Singapore, and, of course, China) have had faster rates of economic growth than many less authoritarian ones (including India, Costa Rica, or Jamaica). How decisive is this evidence in favour of the "Lee hypothesis"?

The Lee hypothesis, in fact, is based on very selective and limited information rather than on any general statistical testing over the wide-ranging data available. We cannot really take the high economic growth of Singapore or China as proof that authoritarianism does better in promoting rapid economic growth-any more than we can draw the opposite conclusion on the basis of the fact that one of the fastest growing countries in the world, Botswana, has been a real oasis of democracy on the African continent.

the overall picture is much more complex. As various writers have shown (Partha Dasgupta: An Inquiry into Well-being and Destitution, Oxford: Clarendon Press, 1993; Robert J. Barro and Jong-Wha Lee: working paper 4341, National Bureau of Economic Research, 1993; John Helliwell: working paper 4066, National Bureau of Economic Research, 1994), systematic statistical studies give no real support to the claim that there is a general conflict between political rights and economic performance. That relationship seems conditional on many other circumstances; while some note a weakly negative relation, others find a strongly positive one. Indeed, it is hard to reject the hypothesis that there is no relation between them in either direction. Because these rights have value of their own, the case for them would appear to stand.

From the point of view of economic analysis, we have to examine not only the statistical connections, but also the causal processes that are involved in economic growth and development. The policies and circumstances which led to the economic success of east Asian economies are by now reasonably well understood. There may be differences in emphasis but there is a generally accepted list. It includes such items as the use of international markets, openness to competition, a high level of literacy, successful land reforms, good macro-economic management, and the provision of development-orientated incentives. But there is nothing whatever to indicate that any of these social policies is inconsistent with greater democracy, or actually require the elements of authoritarianism that happen to be present in Singapore or South Korea or China. The temptation to take the post hoc to be propter hoc, too, serves as a substitute for causal scrutiny. It is also worth noting in this context that while China's social development was, as discussed earlier, helped by the political commitment of the pre-reform regimes, similar commitments and policies have been observed in other-less authoritarian-economies such as Jamaica, Costa Rica, Sri Lanka, and even the state of Kerala. Dictatorship is not a necessary condition to create the political will to achieve social development. Nor, of course, is it sufficient. Indeed, most dictatorial regimes that violate political and civil rights have little interest in furthering social development.

Furthermore, we have to look at the connection between political and civil rights on the one hand, and the prevention of serious social disasters on the other. Civil and political rights give people the opportunity to draw attention forcefully to general needs, and to demand appropriate public action. A government's response to the acute suffering of people can depend on how much pressure is put on it, and this is where the exercise of political and civil rights (such as voting, criticising, protesting, and so on) can make a genuine difference.

In Resources, Values and Development (Blackwell, 1984), I discussed the remarkable fact that in the terrible history of famines around the world, no substantial famine had ever occurred in a democracy. They have occurred in colonial territories run by imperial rulers (pre-independent India, say, or Ireland), in military dictatorships controlled by authoritarian potentates (Ethiopia, Sudan), or in one-party states intolerant of opposition (the Soviet Union in the 1930s or China at the time of the Great Leap Forward). But a substantial famine has never occurred in a country that is independent, has systematic multi-party elections, permits criticism of the government, and allows press freedoms. This applies not only to the affluent countries of Europe and America, but also to countries that happen to be very poor, such as India, Botswana, or Zimbabwe.

In fact, India continued to have famines right up to the time of independence in 1947 (in India, the last famine-the Bengal famine of 1943-killed between 2m and 3m people), and then famines stopped quite abruptly with the installation of a multi-party democratic system. No democratic government can afford to go to the polls after a big social calamity, nor can it, while in office, easily survive criticism from the media and opposition parties. The incentive effects of political and civil rights can be very powerful indeed.

It is important in this context to examine the Chinese famines of 1958-61 in which, it is estimated, between 23m and 30m people died. The Chinese government did not substantially revise its disastrous policies associated with the failed Great Leap Forward through the three famine years. During that terrible famine, the government faced no pressure from newspapers, which were controlled, or from opposition parties, which were absent. In fact, the Chinese government itself was completely misled by the lack of free news reporting, fed as it was by its own propaganda. It was also muddled by the rosy reports of local party officials, competing for credit in Beijing, all claiming to have had grand achievements in their respective localities. Indeed, just as the famine was moving towards its peak, the Chinese authorities mistakenly believed that they had 100m more metric tons of grain than they actually had. Mao later realised the importance of democracy for good planning. In a speech to 7,000 party cadres in 1962, immediately following the famines, he said: "Without democracy, you have no understanding of what is happening down below; the situation will be unclear; you will be unable to collect sufficient opinions from all sides..." This statement is all about the "informational" functions of democracy, rather than about its "incentive" role, or about its "intrinsic" importance, but it is nevertheless significant that Mao saw one important role for democracy.

contrasting economic needs with political and civil rights is often done with the presumption that needs are something solid and given, whereas rights are discretionary and perhaps even a little ad hoc. In fact political and civil rights play an important constructive role in promoting public discussion which permits citizens to form, in an informed way, their values and conceptions of needs.

People suffer from miseries and deprivations of various kinds-some more amenable to alleviation than others. We would prefer quite a few things to be different, without necessarily seeing a "need" in each of them. There are many changes we might have good reason to value if they were feasible, such as immunity from illness-perhaps even immortality. But we do not see them as "needs." The conception of needs relates to analyses of the nature of deprivations, and also to our understanding of what can be done about them. The "constructive" role of rights makes it possible for citizens to interact with each other, to consider feasibilities, and to form values and priorities. This is a field in which the respective ideas of posh and push interact. Constructive discussions of this kind may be prevented by authoritarianism, through the banning of such political interactions (as in China), but they can also be substantially constrained because of illiteracy and ignorance (as in much of India).

In this sense, both political rights and social development have a direct bearing on informed social interaction, and through that on the emergence of norms and values. Take population policy, to which the Chinese government has attached a great deal of importance. Indeed, China's success in cutting the fertility rate has been much admired throughout the world. In China, the move towards smaller families has been programmed through authoritarian governmental policy, involving coercive regulations such as the "one-child family," and the withdrawal of rights, such as housing benefits, when a family has more than the permitted number of children.

By contrast, in the socially progressive Indian state of Kerala, with its population of 29m, the concept of "needs" seems to have changed through the growing conviction that a modern family "needs" to be small. The adverse effects of persistent child bearing on the well-being and freedom of young women have been much discussed. The emergence of this reformulation of needs has been helped both by the high level of education in Kerala (female literacy is substantially higher than in all Chinese provinces) and by free public discussion of this issue. The reduction of family size through such non-coercive means has been more effective in Kerala than coercive measures have been in China. Kerala's birth rate of 18 per thousand is lower than China's 19 per thousand, and this has been achieved without any compulsion by the state. Kerala's total fertility rate, reflecting the number of children born per woman, is 1.8 (much the same as in Britain or France), compared with China's 2.0.

The routes to social change in Kerala have involved widespread education, including female education; a tradition of property rights less biased against women (the influential caste of Nairs has had matrilineal inheritance for many centuries); and widespread public discussion, particularly about the emancipation of women. When the one-child policy was introduced in China in 1979, the fertility rate was 2.8, compared with 3.0 in Kerala. By 1991, China's fertility rate had fallen, with all its coercive measures, from 2.8 to 2.0. In the same period Kerala's rate fell from 3.0 to 1.8. And in somewhat similar circumstances, the Indian state of Tamil Nadu saw fertility rates decline from 3.5 to 2.2. Politicisation of women's rights and the reformulation of the idea of needs drew on high-and rapidly expanding-education and on extensive public discussion of the arguments both for and against humane family planning in the contemporary world.

While the Chinese reduction in fertility has been slower than Kerala's, it has also had negative side effects such as persistently high infant mortality, especially for female infants. Kerala and China had rather similar infant mortality rates in 1979 when the "one child family" and related coercive measures were introduced. By 1991, the infant mortality rate had fallen to 17 per thousand for boys and 16 for girls in Kerala, whereas the corresponding rates continued at 28 per thousand for boys and 33 for girls in China. There is nothing here to indicate that push has helped China achieve its objectives more effectively.

what conclusions can we draw? In addition to its intrinsic value, the expansion of education and health care has an important instrumental part to play in economic progress. Its neglect is a continuing drag on India's public policy. Political and civil rights also have instrumental importance as well as intrinsic value. The use of these rights can help to prevent economic and social disasters, and also play a constructive role in the reassessment of needs and priorities which is a part of the process of development and social change. China has already paid a heavy price for its disregard of human rights. The social barriers that this neglect poses may become more and more constraining.

Neither India nor China has very much to learn from the wisdom that is allegedly encapsulated in the much-championed principles of posh and push. But both countries have quite a lot to learn from studying each other's relative successes and failures, as well as from seeing the constructive complementarity between rejecting posh and rejecting push.

It is particularly important for India to take note of the way social development in pre-reform China has helped its market-orientated economic expansion in the post-reform period. (A similar lesson emerges from the experience of other east Asian economies.) For China, on the other hand, it may be crucial to see how the use of political and civil rights can not only protect against disasters, but also facilitate the process of social change, without the heavy penalties that result from coercive policies. While India gets substantial benefits from these rights in general, their contribution would be much more significant in alliance with social development. That combination could be momentous indeed.