Development: What Does It Actually Mean to Develop?
In 1998, Amartya Sen, an Indian economist who had grown up in Bengal and studied in Cambridge, won the Nobel Prize in Economics. The award was for his contributions to welfare economics — but the work that made him famous was not about equations or models. It was about a question.
The question was deceptively simple: What does it mean to develop?
Sen had been troubled by this question since childhood. He grew up in Santiniketan, the university town founded by Rabindranath Tagore. As a nine-year-old boy, he witnessed the Bengal Famine of 1943. He watched people starve to death — not because there was no food, but because the food was distributed in ways that left millions without access to it. Rice was available in the markets. The poor simply could not afford to buy it. The British colonial government was shipping grain out of Bengal to feed soldiers in other theaters of the war. People died surrounded by food.
This experience shaped Sen's entire career. He came to understand that famine was not a failure of agriculture. It was a failure of entitlements — the system of rights and access that determines who gets what. And he came to understand that development was not about producing more stuff. It was about expanding human freedom.
"Development can be seen as a process of expanding the real freedoms that people enjoy." — Amartya Sen, Development as Freedom (1999)
Freedom from hunger. Freedom from illiteracy. Freedom from preventable disease. Freedom to participate in the life of your community. Freedom to live with dignity.
This is what development means. Or should mean. But for most of the last century, it has meant something very different.
Look Around You
Think about a village you have visited or know about — perhaps your ancestral village, or a village you saw on a trip. Now think about a developed city you know — perhaps Bangalore, or Singapore, or Stockholm. What are the differences? Make a list. How many of the differences are about money, and how many are about things money cannot buy — clean water, functioning schools, safety, dignity, the ability to make choices about your own life?
The Old Definition: Development as GDP Growth
For most of the twentieth century, "development" meant one thing: economic growth. A developing country was one with low GDP per capita. A developed country was one with high GDP per capita. The path from one to the other was clear: grow the economy. Build factories. Attract investment. Increase output. The numbers would rise, and with them, everything else.
This was the orthodoxy of the 1950s and 1960s — the era of decolonization, when dozens of newly independent nations were trying to figure out how to build modern economies. The advice they received from Western economists and international institutions was remarkably uniform: invest in industry, expand infrastructure, promote exports, and GDP growth will follow. Once GDP grows, everything else — education, health, equality, freedom — will follow automatically.
The theory was called "trickle-down" economics, though nobody with a straight face used that term at the time. The idea was that wealth created at the top would gradually percolate downward, lifting everyone. Build the steel mills and the highways, and eventually the villages will benefit.
Some countries followed this advice and succeeded — at least by the narrow measure of GDP growth. But many discovered that growth, by itself, did not deliver what they needed.
Brazil grew spectacularly in the 1960s and 1970s — the "Brazilian Miracle." Its GDP surged. Its cities expanded. Its industries boomed. But inequality widened dramatically. The military government that presided over the miracle crushed unions, suppressed wages, and concentrated wealth among the elite. The economy grew, but most Brazilians did not benefit. The economist Edmar Bacha coined a term for it: "Belindia" — a country that combined the wealth of Belgium for a few with the poverty of India for the many.
Brazil's experience was not unique. Many countries achieved growth without development — growth without health, without education, without freedom, without dignity.
Sen's Revolution: Development as Freedom
Amartya Sen's breakthrough was to ask a different question. Instead of asking "How much does a country produce?" he asked "What can its people do and be?"
This sounds abstract, but it is profoundly practical. Consider two countries with the same GDP per capita — say, $5,000 per person. In Country A, this $5,000 buys access to clean water, basic healthcare, primary education, and enough food to survive. In Country B, the same $5,000 exists in an economy where healthcare is inaccessible, schools are nonfunctional, water is contaminated, and most of the income goes to the top 10 percent while the majority earns far less than $5,000.
By GDP, these countries are identical. By any meaningful measure of human life, they are worlds apart.
Sen called his approach the "capability approach." Development, he argued, should be measured by the capabilities people actually have — their ability to live long and healthy lives, to be educated, to participate in the political life of their community, to live free from violence and oppression, to have choices about how to live.
A person who is literate is more developed than one who is not — regardless of income. A person who can access healthcare is more developed than one who cannot. A woman who can choose whether to work, where to live, and whom to marry is more developed than one who cannot — even if the second woman's household income is higher.
"Poverty is not just a lack of money; it is not having the capability to realize one's full potential as a human being." — Amartya Sen
The Washington Consensus: A Recipe for Everyone
In 1989, the economist John Williamson coined the term "Washington Consensus" to describe the development orthodoxy of the time — a set of policy prescriptions that the IMF, the World Bank, and the U.S. Treasury promoted for developing countries.
The Washington Consensus had ten commandments — though nobody called them that:
- Fiscal discipline (reduce budget deficits)
- Reorder public spending priorities (cut subsidies, increase spending on education and health)
- Tax reform (broaden the tax base, lower marginal rates)
- Financial liberalization (let interest rates be set by the market)
- Competitive exchange rates (do not overvalue your currency)
- Trade liberalization (reduce tariffs and quotas)
- Openness to foreign direct investment
- Privatization of state enterprises
- Deregulation (remove barriers to market entry)
- Secure property rights
On paper, these sounded reasonable. In practice, they often caused immense suffering.
When developing countries followed this recipe — as many were forced to do as a condition for receiving IMF loans — the results were decidedly mixed. Mexico liberalized rapidly in the 1980s and experienced a devastating financial crisis in 1994. Russia followed the Washington Consensus prescription of rapid privatization in the 1990s, and the result was the plundering of state assets by oligarchs, a collapse in life expectancy, and widespread poverty. Argentina followed the playbook faithfully and experienced a catastrophic economic collapse in 2001.
The countries that succeeded most spectacularly — China, South Korea, Taiwan, Singapore — did not follow the Washington Consensus. They used industrial policy, protected infant industries, controlled capital flows, and maintained state involvement in the economy. They grew by doing the opposite of what Washington prescribed.
What Actually Happened
The economist Dani Rodrik studied the actual development paths of successful economies and found a striking pattern. Every country that achieved sustained economic development — Britain, the United States, Germany, Japan, South Korea, Taiwan, China — did so by violating at least some of the Washington Consensus prescriptions. They used tariffs to protect their industries. They subsidized key sectors. They controlled capital flows. They kept state ownership in strategic industries. The Washington Consensus, Rodrik concluded, was the ladder that rich countries kicked away after climbing to the top. They developed using protectionist and interventionist policies, then told developing countries to do the opposite. "Do as I say, not as I did" was the implicit message.
The Structural Transformation: Agriculture to Industry to Services
Regardless of the policy path chosen, a common pattern emerges when countries develop. Economists call it "structural transformation," and it goes roughly like this:
Stage 1: Agricultural economy. Most people work on farms. Most output is food. Incomes are low. Life is precarious, dependent on weather and harvest. India in 1950 was at this stage — over 70 percent of the population was engaged in agriculture.
Stage 2: Industrialization. Factories emerge. People move from farms to cities. Manufacturing increases as a share of output. Incomes rise. A working class and a middle class develop. Britain in the 1800s, the United States in the early 1900s, South Korea in the 1960s-1980s, and China from 1980 onward all went through this stage.
Stage 3: Service economy. As industrialization matures, the economy shifts toward services — finance, technology, healthcare, education, entertainment. The share of manufacturing in GDP and employment declines. Incomes rise further. The United States, Britain, and Japan are at this stage today.
This pattern is not a natural law — it is a tendency, observed in most countries that have developed. But the path through these stages varies enormously.
China followed the classic industrial path — moving hundreds of millions from farms to factories, becoming the "workshop of the world" before gradually shifting toward services and technology.
India did something unusual. It partially skipped the industrial stage, moving from agriculture directly to services. India's globally competitive sectors — information technology, business process outsourcing, pharmaceuticals — are service industries. India never had the massive factory-based industrialization that transformed China, South Korea, or Japan.
This has consequences. Factory jobs can employ millions of relatively unskilled workers, providing a pathway from rural poverty to urban working-class stability. Service-sector jobs, especially in technology, require education and skills that most of India's workforce does not have. The result is an economy with pockets of world-class sophistication surrounded by vast pools of underdevelopment.
STRUCTURAL TRANSFORMATION: THE DEVELOPMENT PATH
AGRICULTURE ──────> INDUSTRY ──────> SERVICES
Britain 1750s ──────────> 1800-1950 ────> 1960-present
(First mover)
Japan 1850s ──────────> 1880-1970 ────> 1980-present
(Rapid catch-up)
South 1950s ──────────> 1960-1995 ────> 2000-present
Korea (Compressed (Chaebols, (Samsung, K-pop,
development) heavy industry) tech)
China 1950-1978 ──────> 1978-2015 ────> 2015-present
(Mao era, (World's (Moving to high-
communes) factory) tech, services)
India 1950-1991 ──────> Partial ────────> 1991-present
(Green Revolution, industrialization (IT, pharma,
agricultural but limited services —
focus) compared to "skipped" heavy
China/Korea) industry?)
Kerala Agriculture ──> Limited industry ──> Remittances +
+ land reform services + human development
NOTE: India's "leap" to services without full industrialization
is both an achievement (IT sector) and a problem (not enough
jobs for unskilled workers).
China vs. India: Two Paths, Two Lessons
China and India are the two great development stories of the modern era, and comparing them is illuminating — not because one is "better" but because each reveals something important about the meaning of development.
China's path: growth first. China chose a development model built on rapid industrialization, massive infrastructure investment, and authoritarian governance. The state directed investment, built cities, laid railways, and created an environment where factories could produce for the world. The results, in terms of GDP growth and poverty reduction, are unmatched in human history.
But China paid a price. Political freedom was sacrificed entirely. Environmental destruction was catastrophic. Cultural traditions were disrupted. Workers in factories endured conditions that, in some cases, constituted modern forms of forced labor. The gap between urban and rural China remains vast. And the authoritarian bargain — growth in exchange for obedience — depends on growth continuing. If it slows, the bargain may unravel.
India's path: democracy first. India chose a messier path. It maintained democracy — a remarkable achievement for a country of its size, diversity, and poverty. It allowed political freedom, press freedom (mostly), and civil liberties (mostly). Its development has been slower, more uneven, and more chaotic than China's.
India's GDP per capita is roughly one-fifth of China's. Its infrastructure is decades behind. Its poverty rates, while declining, remain stubbornly high. Its healthcare and education systems, outside a few islands of excellence, are among the weakest in Asia.
But India has something China does not: the ability to change course through democratic action. Indian citizens can vote out governments, protest policies, organize movements, and hold leaders accountable. This is slow, frustrating, and often inadequate — but it is real. China's citizens cannot do these things without risking imprisonment.
Which model is better? The answer depends on what you value. If development means GDP growth and material improvement above all else, China's model is superior. If development means freedom — including the freedom to choose, to dissent, to participate — India's model, for all its flaws, has something profound to offer.
"Development is not about making people richer. It is about making people freer." — Amartya Sen (paraphrased)
The Kerala Model: Human Development Without High GDP
We have mentioned Kerala several times in this part of the book, and it is time to examine it fully — because Kerala represents the most powerful challenge to GDP-centric development thinking.
Kerala's GDP per capita has historically been below the Indian average. It has no major heavy industries, no IT hub comparable to Bangalore or Hyderabad, no resource wealth. By the standard metrics of economic development, Kerala should be unremarkable.
But look at the human development indicators:
DEVELOPMENT INDICATORS: KERALA vs INDIA vs CHINA vs USA
Indicator │ Kerala │ India │ China │ USA
───────────────────────┼───────────┼───────────┼───────────┼──────────
Life expectancy (yrs) │ 77 │ 70 │ 78 │ 79
Literacy rate (%) │ 96.2 │ 77.7 │ 96.8 │ 99
Infant mortality │ 6 │ 28 │ 5 │ 5.4
(per 1,000 births) │ │ │ │
Sex ratio │ 1,084 │ 943 │ 949 │ ~1,000
(women per 1,000 men) │ │ │ │
GDP per capita (USD) │ ~3,000 │ ~2,500 │ ~12,500 │ ~80,000
HDI rank │ Highest │ Medium │ Medium- │ Very
(within context) │ in India │ Human Dev │ High │ High
Kerala's life expectancy and literacy are comparable to China's —
at roughly one-quarter of China's GDP per capita.
Kerala's infant mortality is comparable to the United States —
at less than 4% of American GDP per capita.
How did Kerala achieve this? Through deliberate policy choices, sustained over decades:
Land reform. In the 1960s and 1970s, Kerala's communist government redistributed land from large landlords to tenant farmers and landless laborers. This was one of the most successful land reforms in India — it created a broad base of small landowners and reduced the feudal power structures that dominated rural Kerala.
Education. Kerala invested massively in public education, starting long before independence. Progressive social reform movements (particularly the work of Sree Narayana Guru, who fought social discrimination) and left-wing political movements all contributed to a culture that valued education for everyone — including women and marginalized communities.
Healthcare. Kerala built an extensive public healthcare system — primary health centers in nearly every village, district hospitals, and a network of medical colleges. Healthcare was treated as a right, not a commodity.
Social movements. Kerala's development was driven not by technocratic planning alone but by vibrant social movements — labor unions, women's organizations, social reform movements, literacy campaigns. These movements created political pressure for redistributive policies and held governments accountable.
Women's empowerment. Kerala has the best sex ratio in India, the highest female literacy, and the highest female labor participation among Indian states. Educated women tend to have fewer children, invest more in each child's health and education, and participate more fully in economic life. This single factor — women's empowerment — may explain more about Kerala's development than any other.
What Does "Developed" Mean?
This is the question that lurks behind everything we have discussed.
When we call a country "developed," what do we mean? And who gets to decide?
The conventional answer is economic: a developed country has a high GDP per capita, advanced industry, modern infrastructure, and a service-oriented economy. By this definition, the United States, Japan, Germany, and South Korea are developed. India, Nigeria, and Bangladesh are developing.
But this definition has problems.
The United States has a GDP per capita of $80,000 — one of the highest in the world. It also has tens of millions of people without health insurance, a life expectancy lower than Cuba's, a maternal mortality rate higher than most developed countries, more than half a million homeless people, and mass incarceration at rates that would be considered a human rights crisis anywhere else.
Is the United States "developed"? By GDP, absolutely. By the quality of life available to its poorest citizens, the answer is less clear.
Costa Rica has a GDP per capita of about $13,000 — one-sixth of America's. But Costa Rica has universal healthcare, a life expectancy of 80 years (higher than the United States), no military (it abolished its army in 1948 and invested the savings in education and healthcare), and consistently ranks among the happiest countries in the world.
Is Costa Rica "developed"? By GDP, no. By human well-being, arguably yes.
The point is not that GDP does not matter. It does. Wealth provides resources for education, healthcare, infrastructure, and opportunity. But wealth is a means, not an end. Development is not about how much a country produces. It is about how well its people live.
Think About It
If you had to choose, would you rather be born in a country with high GDP but poor healthcare, education, and safety — or in a country with moderate GDP but excellent public services and social cohesion? What does your answer tell you about what you think development means?
India's IT sector is world-class. India's primary schools are, in many states, barely functional. Is India "developed"? Can a country be developed in some ways and underdeveloped in others?
The concept of "developing country" implies a destination — that these countries are on their way to becoming like the United States or Europe. But what if the Western model of development is not sustainable or desirable? What would an alternative destination look like?
Beyond the Western Model
For most of the twentieth century, "development" implicitly meant "becoming more like the West." The model was clear: industrialize, urbanize, adopt market economies, build democratic institutions, integrate into the global trading system. The destination was something like the United States or Western Europe.
But this model is increasingly questioned — for several reasons.
Sustainability. If every country in the world consumed resources at American levels, we would need roughly five Earths. The Western model of development is materially intensive and ecologically unsustainable. It cannot be universalized.
Cultural fit. The assumption that Western institutions and values are universally applicable has been challenged by the success of non-Western development models. Japan developed while maintaining distinctly Japanese social structures. China developed under a political system radically different from Western democracy. Bhutan explicitly rejected GDP growth as a goal and pursued Gross National Happiness instead.
Internal contradictions. The "developed" countries themselves exhibit profound failures — homelessness, inequality, mental health crises, environmental degradation, political dysfunction. If these are the hallmarks of development, perhaps the concept needs rethinking.
The alternative is not to reject all of what the West has achieved — advances in science, technology, medicine, and human rights are universal goods. The alternative is to recognize that development is not a single destination with a single path. Different societies may define the good life differently, prioritize different values, and choose different institutional arrangements — and still be "developed" in the ways that matter most.
"It is not enough to be busy. So are the ants. The question is: What are we busy about?" — Henry David Thoreau
Development as a Dashboard, Not a Number
If we reject the idea that development can be captured by a single number — whether GDP, HDI, or any other index — what do we replace it with?
The answer, increasingly, is a dashboard — a set of indicators that together paint a fuller picture of how people actually live. Such a dashboard might include:
Material well-being: Income, consumption, housing quality, access to basic goods.
Health: Life expectancy, infant mortality, maternal mortality, disease burden, access to healthcare, nutrition.
Education: Literacy, years of schooling, quality of education, access to information.
Freedom and agency: Political rights, civil liberties, rule of law, absence of corruption, ability to participate in decisions that affect your life.
Equality: Income and wealth distribution, gender equality, social mobility, absence of discrimination.
Environment: Air quality, water quality, forest cover, biodiversity, carbon emissions, sustainability of resource use.
Social cohesion: Trust, community participation, safety, mental well-being, cultural vitality.
No country scores perfectly on all of these. The Nordic countries do well on most but struggle with immigration integration. China scores well on poverty reduction but poorly on freedom. The United States scores well on economic dynamism but poorly on equality and health access. India scores well on democratic participation but poorly on nutrition and education quality.
The dashboard approach forces us to abandon the comfortable fiction that development is a ladder with the West at the top. It reveals development for what it actually is: a multidimensional challenge with trade-offs, choices, and values embedded in every decision.
THE DEVELOPMENT DASHBOARD
(Selected countries, approximate)
│ Kerala │ China │ USA │ Sweden │ Nigeria
──────────────────────┼─────────┼─────────┼─────────┼─────────┼─────────
Income │ ██ │ ████ │ ████████│ ██████ │ █
Health │ ██████ │ ██████ │ █████ │ ███████ │ ██
Education │ ██████ │ █████ │ ██████ │ ███████ │ ██
Freedom │ █████ │ ██ │ ██████ │ ███████ │ ███
Equality │ █████ │ ████ │ ███ │ ███████ │ ██
Environment │ █████ │ ███ │ ███ │ ██████ │ ███
Social Cohesion │ █████ │ ████ │ ███ │ ███████ │ ███
OBSERVATIONS:
• No country excels on every dimension
• High income ≠ high development (USA vs Sweden on equality)
• Low income ≠ low development (Kerala vs USA on health)
• Freedom and growth can conflict (China)
• Income enables but does not guarantee well-being
The Future of Development
The twenty-first century poses challenges to development that the twentieth century never imagined.
Climate change means that the development path followed by the West — fossil-fuel-intensive industrialization — is no longer available to developing countries without catastrophic environmental consequences. India and Africa cannot industrialize the way Britain and America did. They must find a different path — one that achieves prosperity without destroying the climate system.
Artificial intelligence threatens to automate many of the jobs that historically provided pathways from poverty to middle-class stability. If factories can run with robots and offices with algorithms, what happens to the hundreds of millions of people in India, Africa, and Southeast Asia who are counting on industrial and service-sector jobs for their development?
Demographic shifts create new pressures. Much of the developed world is aging rapidly — Japan, Europe, China — while much of Africa and South Asia is young. The old countries will need workers. The young countries will need jobs. Managing this mismatch is one of the great challenges of the coming decades.
Digital technology creates new possibilities. Mobile banking in Kenya (M-Pesa) has brought financial services to millions who never had a bank account. Telemedicine in India is bringing healthcare to remote villages. Online education is making knowledge accessible to anyone with a phone. Technology cannot replace institutions, but it can leapfrog infrastructure gaps.
The question for the next generation is not whether to develop, but what development means in a world of ecological limits, technological disruption, and persistent inequality. The old answers — grow GDP, build factories, join the global market — are not wrong, but they are no longer sufficient.
The Bigger Picture
We started with Amartya Sen, a boy who watched people starve in Bengal — not because there was no food, but because the systems of access and entitlement failed. That experience taught him that development is not about producing more. It is about enabling people to live lives of freedom, dignity, and choice.
We traced the evolution of development thinking — from GDP obsession, through the Washington Consensus, to Sen's capability approach and beyond. We compared China's authoritarian growth miracle with India's democratic messiness. We examined Kerala — a society that achieved extraordinary human development without extraordinary economic growth.
We asked who gets to define what "developed" means, and we concluded that the Western model — while powerful — is neither universal nor sustainable. We proposed a dashboard approach that captures the multiple dimensions of human well-being.
What have we learned?
First, that development is not a number. It is not GDP per capita, or HDI, or any other index. It is the lived experience of human beings — their health, their education, their freedom, their dignity, their agency, their relationships, their environment.
Second, that there is no single path to development. China's path is not India's path. Kerala's path is not South Korea's path. Each society must find its own way, informed by its own history, culture, values, and circumstances.
Third, that development without freedom is incomplete. Growth without health is hollow. Wealth without equality is unstable. Modernity without sustainability is suicidal.
Fourth, that development is never finished. Even the most "developed" countries face profound challenges — inequality, environmental degradation, mental health crises, social fragmentation. Development is not a destination. It is a continuous process of becoming — of building a society where every person can live a life worthy of human dignity.
And finally, that the question "What does it mean to develop?" is ultimately a question about values. What do we believe a good life looks like? What do we owe each other? What kind of society do we want to build? Economics can inform these questions. But it cannot answer them. The answers come from us — from our choices, our politics, our compassion, and our courage.
"The real wealth of a nation is its people. And the purpose of development is to create an enabling environment for people to enjoy long, healthy, and creative lives." — Mahbub ul Haq, creator of the Human Development Index
That is what development actually means. Not more stuff. More life.