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How Important Is Social

Development for Economic

Growth?

Composed By

Ehsanul Haque Shipon

Roll: 121307027

7th

Batch 3rd

Semester

Department of Economics

University of Dhaka.

Contact : 644,Surjasen Hall, University of Dhaka.

Cell : +8801733331450

E-mail : ehsanshipon@gmail.com

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Introduction:

The relationship between economic welfare and total welfare has once more

become the subject of debate. The fears of many concerned about the possible

adverse environmental and social effects of economic growth have led to a re-

evaluation of the desirability of pursuing a rapid rate of economic growth. Some

have even implied that economic growth as such is responsible for many of these

ills. So, In order to live in a better globe we are to enrich the condition of our

global economic parity. And for this reason, economic development triggered by

economic growth is a necessity. For attaining economic growth, social

development plays a vital role. So, we are to analyze the social development and

economic growth nexus and find our ways for a better globe with a higher human

development index.

Development

Development depends on both social and economic factors.Accordingly

development indicators are distinguished into social indicators and economic

indicators.Social indicators of development includes health, education, housing,

and employment etc. Of course, these indicators have some economic dimension.

The factors responsible for overall improvement of quality of life are taken as

social indicators. Social indicators are taken as a more wider and integrated area of

social concern than that of economic ones.

Social Development

Social development implies that the basic needs of the human being are met

through the implementation and realization of human rights. Social development

promotes democracy to bring about the participation of the public in determining

policy, as well as creating an environment for accountable governance.

We can define Social development can be defined as, “A process that results in the

transformation of social structures to improve the capacity of a society in order to

fulfill its objectives. It aims specifically in developing power to elevate expansion

of human activity”. Ian Morris says, ”Social development is the bundle of

technological, subsistence, organizational, and cultural accomplishments through

which people feed, clothe, house, and reproduce themselves, explain the world

around them, resolve disputes within their communities, extend their power at the

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expense of other communities, and defend themselves against others’ attempts to

extend power”

Interest in social development as a development policy objective appears to have

been promoted by the observed unevenness in the economic performance of

developing countries. Despite positive and high GDP growth rates, economic

development failed to reach all segments of society. The poorest 40% of people in

majority of the developing countries hardly reaped in the benefits of development.

Indices of Social Development

Up to 94 indicators are reported for each country including: size, growth, and

structure of population; determinants of population growth (including data on

fertility and infant mortality); labor force; education and illiteracy; natural

resources; income and poverty; expenditure on food, housing, fuel and power,

transport and communication; and investment in medical care and education. Each

of these indicators is broken into several subcategories.

Health

The health situation of a population depends primarily upon the health services

available within a country. It is assumed that physicians and hospital beds per

million population provide a general picture of the quantity of health care that is

available in the country. The infant survival rate reflects the degree of existence of

contagious disease. It is obvious that where the infant mortality rate is high there

are many people living in conditions under which basic health needs are not being

met.

Education

The educational structure in Bangladesh comprises five levels; primary, middle,

high, intermediate and degree. Due to the low level of female education as

compared to male education, male and female enrollment ratios are considered

separately. The variables equal to the numbers of levels thus comprised are used in

making the SDI in respective countries.

Consumption

Consumption of durable goods are considered to examine the consumption pattern

of the people. Durables are cars and TV receiver per million population. Energy

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generation (GWH per million population) is also included to explain the nation's

standard of living. Further, two variables, non-agriculture labor force and

telephones connection per million population are included to capture the effect of

change in quality of life due to the access to these indicators.

Social development is about putting people at the centre of development. Since the

1990s there has been growing recognition that social development is critical for

broader development outcomes, including sustainable economic growth.

SDI

Education

Primary Male Enrollment Rate

Primary Female Enrollment Rate

Secondary Male Enrollment Rate

Secondary Female Enrollment Rate

Tertiary Male Enrollment Rate

Tertiary Female Enrollment Rate

Consumption

Cars Per Million Population

Telephone Per Million Population

Television Sets Per Million Population

Proportion of Non-Agriculture Labor

Force

Electricity Generation Per

Million Population

Health

Physicians Per Million Population

Hospital Beds Per Million Population

Infant Survival Rate Per 1000 Live

Births

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The Indices of Social Development (ISD) brings together 200 indicators,

synthesizing them into a usable set of measures to track how different societies

perform along six dimensions of social development:

Civic Activism, measuring use of media and protest behavior

Clubs and Associations, defined as membership in local voluntary

associations

Intergroup Cohesion, which measures ethnic and sectarian tensions and

discrimination

Interpersonal Safety and Trust

Gender Equality, reflecting gender discrimination in home.

Inclusion of Minorities, measures levels of discrimination against vulnerable

groups e.g. indigenous peoples, refugees or lower caste groups.

Global Social Development Scenario

The following data represents condition of social development throughout the

world as well as the other countries-

Population

Population is projected to reach 9.5 by 2050, with 6.4 billion people living in

urban areas—an 81% billion increase from 2010.

Significant issues affecting population, as reported by governments around

the world in 2007, include HIV/AIDS, infant and maternal mortality,

adolescent fertility and life expectancy at birth.

Life expectancy is below 50 years in many developing countries;

Contraceptive use is increasing. However, in more than 60 countries, 20-

48% of women of reproductive age lack access to contraceptives.

Standard of Living

In 2010, 1.2 billion people lived below the world poverty line of $1.25 USD

per day, down from 1.9 billion in 1990.

According to the Gini Index, Sweden, Norway and Slovakia have among the

most equal income distributions in the world.

Food

Average proportion of income spent on food, beverages and tobacco ranges

from 20% in high-income countries to 49% in low-income countries

Globally, 45% of deaths of children under 5 are caused by under-nutrition.

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The Green Revolution led to large increases in agricultural yields and helped

feed the rapidly growing global population in the second half of the 20th

century.

Water and Sanitation

Approximately 2.5 billion people lack access to proper sanitation.

In 2011, 89% of the world population had access to clean drinking water.

Healthcare and Disease

Globally, 34 million people were infected with HIV and 1.7 million died

from AIDS in 2011. The number of new HIV infections decreased 20% from

2001 to 2011.

Diarrheal diseases kill 1.8 million annually; 84% are children under 5.Most

(88%) infections are attributed to unsafe drinking water, improper sanitation

services and hygiene.

In 2010, 655,000 died from malaria, of whom 91% lived in Africa and 86%

were children under 5.

Cardiovascular diseases are the leading causes of death in the world

Globally, about 100 million people fall under the poverty line each year due

to out-of-pocket health care costs.

Education and Employment

Global literacy is significantly improving. For example, youth literacy in

Southern Asia is 81%, up from 60% in 1990.

The gap between female and male literacy rates is also closing; however,

women still account for two-thirds of illiterate adults worldwide.

Progress of Social Development in Bangladesh

Social transformation is a continuous process. The positive trends seen in

Bangladesh over the last 20 years is expected to continue in future.The government

is committed to improving the living conditions of the ethnic and other minorities.

Although the process is still slow, it is expected that positive result will be

achieved soon. [Source: UNDP Bangladesh]

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The decline achieved in infant and child mortality rates since 90s, e.g. is among

the fastest in the developing world. The social development scene in Bangladesh

is characterized by a strong presence of non-governmental organizations

(NGOs).

According to UNDP‟s HDR 2011, Bangladesh ranks 146 amongst a total of 187

countries listed in the Report. The per capita Gross National Income (GNI) of

Bangladesh is US $ 1,529 (constant 2005 PPP). Compared with other countries in

the region, Bangladesh is above Nepal, but below India, Bhutan and Pakistan in

global ranking and GNI. Although Bangladesh has seen considerable

improvements in social indicators over the last two decades, it now faces an

unfinished agenda in the different areas of health, education and employment

creation etc.

Poverty, Malnutrition and Food Insecurity

Bangladesh is close to self sufficiency thus food insecurity is no longer

characterized by shortages in supply and availability, but rather by problems of

access and affordability for the poor. Some 65% of the rural poor are landless. The

poorest must therefore gain their income from other sources, namely wage

employment for basic services. Employment in the mainly agricultural sector does

not ensure food security because of poor wages and seasonality in employment

opportunities.

Health

The health sector is marred by the burden of communicable diseases and

reproductive health problems coupled with the inability of the public health service

to provide the needs of the poor. Malaria continues to be an important health

problem in 13 of the 64 districts, and respiratory infections and diarrhea are

important causes of morbidity and mortality. Due to the combined impact of these

nearly half of Bangladesh‟s children are underweight. The government faces an

agenda in providing underprivileged women and girls with equal access to health

care, lowering maternal mortality, and creating equal chances for girls to survive

childhood and to reach primary school enrolment in good health status.

Education

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On the education front, Bangladesh has achieved remarkable success in

expanding primary education, especially for girls, despite continuing prevalence

of widespread poverty and social repression of women and girls. This success

is a confluence of both demand and supply-side factors in bringing about a

profound social change. They explore the changing structure of economic

opportunities and gender relations affecting parents' perception of the value of

female education.

Employment

Presently Bangladesh suffers from a record number of unemployed, estimated at

30 million people. Some 40% of the 66 million sized work force is under-

employed while 3-4% is fully unemployed. With over one million new entrants to

the job market every year, the bulk of unproductive manpower is on a rising trend

whilst the country‟s formal employment sectors can hardly absorb the new job

seekers. A large majority of the workforce remain in the informal economy,

subject to low wages, bad working conditions and lack of social security.

The agricultural sector is the largest employs 51.7%,while for the services sector

the proportion is 34.6% and for industry it‟s13.7% .

[Source: GoB and UN, Millennium Development Goals: Bangladesh Progress

Report, Dhaka 2005]

Meeting the MDGs

According to the mentioned report, Bangladesh faces serious challenges in meeting

the targets it has set towards attaining the important MDGs in eradicating extreme

hunger and poverty, reducing child mortality and improving maternal health. The

challenging outlook for Bangladesh with regard to meeting the MDG targets is also

strongly emphasized in the ADB report 'MDGs: Progress in Asia and the Pacific

2006', which categorizes Bangladesh as a 'country of greatest concern', by falling

further behind and score negatively on both the progress index and the latest status

index.

[The presented data refer to the most recent year available during the period specified or to a running

average for a series of years surrounding that period 1995-2000. Age group enrolment ratios adjusted.

% of relevant age group. ]

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Indicators 20001/02 1999/2000 1998

M F C M F C M F C

Adult literacy rate over 15s

%

50.3 31.4 52.3 29.9 51.1 28.6

Primary school enrolment

% (gross)

96.8

98.3

103.4

(199)

100.1

(199)

75.1

(199)

g

Primary school enrolment

% (net)

85.7

87.5

91.6

(199)

88.8

(199)

Secondary school enrolment

% (gross)

44.7

49.2

43.3

(199)

41.5

(199)

21.6

(1997)g

Secondary school enrolment

% (net)

41.9

45.9

40.3

(199)

38.5

(1998)

Life expectancy at birth

60.7 61.5 59.4 59.5 58.6 58.7

Underweight children <5

(%)

48 a 48 b 56 h

<5 mortality rate (per 1,000

live births)

77 82

106

Maternal mortality rate (per

100,000 live births)

380 c

350d 440 h

Children <2 fully

immunised (%)

Births supervised by trained

personnel (%)

12 e 12 f

Infants <1 immunized

against TB (%)

95

91

91 i

Households with access

improved water source (%)

97 97 74j

In fact, process of social transformation in Bangladesh is of a much broader scale

and dates back to even earlier decades. It is noteworthy that the changes in the

different socio-economic indicators occurred simultaneously, though at a varying

pace. Recent analyses of poverty dynamics in Bangladesh suggest that, as

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compared to many other developing countries, upward economic mobility in

Bangladesh is less constrained by class, ethnicity or other socio-economic barriers.

So, everyone, even the poorest, see a chance of escaping poverty. This is a unique

aspect of Bangladesh‟s progress in social development.

From social development to human development During the 1990s, the concept of human development was promoted as a

complement to existing income-based approaches to international development.

Rooted in the capabilities literature of Amartya Sen and adopted by the Human

Development Reports of the United Nations Development Program (UNDP), the

primary aim of the human development model was to focus development thinking

more upon the enhancement of people's freedoms, capabilities, and wellbeing.

Specifically, the human development approach sought to achieve three goals: i) to

make people the ends and not the means of development; ii) to refocus attention on

what people can be or do rather than what they can produce; and iii) to ensure that

development policies are aimed at improving people's quality of life, including

their health, security, and overall flourishing (Sen 1989).

Economic Growth

Economic growth is the increase in the market value of the goods and services

produced by an economy over time. It is conventionally measured as the percent

rate of increase in real gross domestic product, or real GDP. Of more importance is

the growth of the ratio of GDP to population (GDP per capita), which is also called

per capita income. An increase in per capita income is referred to as intensive

growth. GDP growth caused only by increases in population or territory is called

extensive growth.

Economic Growth vs Economic Development

Previously, economic growth was associated with development, leading to a race

to achieve greater Gross Domestic Product growth rates and higher per capita

income at any cost. But people have realized that economic growth is only a

necessary condition, not a sufficient condition, for development. In other words,

attention should be paid not only to growth rates but also to the quality of growth,

the way growth is achieved, who are the players, what mechanisms will take shape,

and who will benefit from the growth. Social and economic developments

reinforce and are dependent on one another for full realization.

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Traits Economic Development Economic Growth

Implications

Economic development implies changes

in income, savings and investment along

with progressive changes in socio-

economic structure of country .

Economic growth refers to an

increase in the real output of goods

and services in the country.

Factors

Development relates to growth of human

capital indexes, a decrease in inequality

figures, and structural changes that

improve the general population's quality

of life.

Growth relates to a gradual increase

in one of the components of Gross

Domestic Product: consumption,

government spending, investment,

net exports.

Measurement

Qualitative.HDI (Human Development

Index), gender- related index (GDI),

Human poverty index (HPI), infant

mortality, literacy rate etc.

Quantitative. Increases in real GDP.

Effect Brings qualitative and quantitative

changes in the economy

Brings quantitative changes in the

economy

[The table shows relation between economic growth and economic development]

Unfortunately, the economic growth patterns described above do not mean that the

world is on its way to "convergence"- that is, to the gradual elimination of the

economic gap between rich and poor countries. Much faster population growth in

most developing countries is offsetting comparatively faster GNP growth

Figure 1(worldbank.org)

causing GNP per capita growth rates in these countries to be low or even negative .

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Economic Growth over the Globe

Figure 2(worldbank.org)

The two developing countries with the biggest populations did comparatively well

in 1985-95. In India GNP per capita grew by about 3.2 percent a year, and in China

by an unprecedented 8.3 percent a year. Rapid growth in China and India explains

why more than half of the world's population lives in economies growing faster

than 2 percent a year (fig 2). But when China and India are excluded from the

sample of low-income countries, average annual growth in this group turns

negative (see fig). In 1985-95 more than half of developing countries had negative

growth rates, and four-fifths of those with positive growth rates were growing

slower than high-income countries.

Figure 3(worldbank.org)

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Economic Growth in Bangladesh

The country has posted an average annual GDP growth rate of about 4.8% in the

1990s which improved to over 5% on average during 2000-2008 and to over 6%

during the past few years. In spite of frequent natural disasters Bangladesh is doing

well.

In spite of some of the above successes, the economic growth rate experienced set

back due to disasters like the mega cyclones Sidr and Aila in 2007 and 2009 as a

result of the effects of global climate change. The combined effect of the two

cyclones drove the GDP down by more than 1%. There has been a depreciation of

the Taka against the US Dollar, which inflated the cost of imported goods. The

economy has been facing a double-digit inflation for a year. Yet and despite a

global financial meltdown and recession, the Bangladesh economy performed well

registering a 6.7% growth in GDP and 41% growth in its exports, compared to the

recession in most of the developed world. The future challenge is to sustain the

increasing trend in growth in the face of domestic and external shocks.

Social Development and Economic Growth Nexus

Development should be defined as economic growth combined with progress and

social fairness. The trade-off between economic growth and social welfare has

been a much debated issue. The important issue in the context of the current higher

economic growth route is whether it would enable the country‟s social indicators to

improve. There are some concerns that the path, process and priorities of economic

growth may be neglectful of the social welfare of the country. The expenditure on

education and health, as a percentage of GDP, is declining and woefully

inadequate to sustain the achievements in these areas.

There are some studies in economic development, which express that economic

growth and social development are highly interdependent. But the two opinion is

practically acceptable on the issue „nexus between economic growth and social

development‟. They are as follows

• the social development is a bi-product of economic growth

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• the social development does not result from, but precedes, economic growth

But, as we observe both are result of each other.

Importance of Social Development to Attain Economic Growth

Amartya Sen argues that “the goal of economic growth and increases in per capita

incomes is to achieve human development”. Therefore, if a country which has

achieved social development has achieved that objective, even before attaining

high levels of per capita income e.g. Sri Lanka. Many countries‟ experiences have

shown that dynamic social policies that include appropriate institutions can create

conditions for maintaining political stability, reducing conflicts of interest and

boosting economic growth.

As we observed economic growth need not to specify total welfare of the people. If

there‟s inequality it adversely affects people's quality of life, leading to a higher

incidence of poverty and so impeding progress in health and education and

contributing to crime.

And it‟s found that high inequality threatens a country's political stability because

more people are dissatisfied with their economic status, which makes it harder to

reach political consensus among population groups with higher and lower incomes.

Political instability increases the risks of investing in a country and so significantly

undermines its development potential.

These are among the reasons some international experts recommend decreasing

income inequality in developing countries to help accelerate economic and human

development.

What We Need to Do to For a Better Bangladesh

Bangladesh needs to strengthen its institutions of economic and political

governance. But the impact of governance on development performance is a highly

complex, and as yet poorly understood, subject. How can one explain, for example,

Bangladesh's success in many areas of economic and social development in the

presence of the allegedly poor and deteriorating quality of governance, such as

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manifest in widespread corruption and inefficient administration? Has governance

failure gone beyond the 'tipping point' so as to act as a barrier to further progress.

Conclusion

We can conclude that appropriate social policies are tools for sustainable socio-

economic development. The implementation of social policies is an investment in

human resources. Humans are both the creative subject and object served by

production. Social policies supporting education, health care, insurance, and so on,

which help people increase knowledge, maintain health, and lead a secure life, also

boost creativity, labor productivity, and economic growth. A policy of raising

incomes not only improves the living standards of the most vulnerable, but also

stimulates demand and liquidity, strengthening production. And thus the world

will achieve a better standard of living through all walks of people over the globe.

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Sources of Information

1. Social Development and Economic Growth: A Statistical Exploration in Context of

Pakistan By Haroon Jamal; Social Policy and Development Centre,Karachi.

2. Center Discussion Paper No. 887;Human Development And Economic Growth By Gustav

Ranis ,Economic Growth Center,Yale University

Http://www.econ.yale.edu

3.Bangladesh-European Community Country Strategy Paper for the period 2007-2013

4.Wikipedia

5. Rio + 20:National Report On Sustainable Development (Bangladesh); May 2012

6. Economic Growth and Social Development: A Statistical Investigation by Mervyn A. King ,

St. John's College, Cambridge, England.

7. Economic Growth and Social Development by Paolo Vanin; Dipartimento di Economia

Politica e Metodi Quantitative, Universit`a degli Studi di Pavia. Anno Accademico 2001/2002

8. Sustainable community development: integrating environmental, economic, and social

objectives! By Mark Roseland, Economic Development Centre, Department of Geography,

Simon Fraser University, Burnaby, British Columbia, Canada V5A 1S6.

7.www.worldbank.org

8.www.socialwatch.org

9.www.hrea.org

10. Economic Growth And Social Development :Imperatives For Economic Development By Nimal

Sanderatne

11.www.indsocdev.org

12.www.un.org