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Which Priority for Development? Growth vs. Redistribution November 16, 2008

Posted by diegozamuner in Uncategorized.
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by Diego Zamuner

When thinking of poverty and its consequences on the lives of those affected by it, one question appears to be unavoidable: how to tackle this problem? This is one of the major concerns of development economics. Two main groups of answers are widely accepted: some think that priority should be given to economic growth, the others believe that human development should be the central concern. Thus, the former think of the spill-over effects of growth, and argue that sustained growth is the only means of reducing poverty in a definitive manner. On the other hand, the latter focus on what Amartya Sen calls the “capability approach”, which implies that poverty is not only a matter of income, and argue that society’s wealth should be redistributed in order to ensure a minimum level of welfare to everyone. This is the traditional debate between the Income-centred approach promoted by international financial institutions (World Bank, International Monetary Fund) and the Human Development approach championed by the United Nations. So, what can the observation of the real world teach us on this matter? Let us concentrate on one particular case study: India…