Economic Antroplogy,

1. Zerayehu Sime Eshete (PhD)
Chapter 1:
Economic development:
Anthropology, Concepts, approaches and Measures
Development Theory and Policy

2. The Evolution of Development
Thinking: Theory and Policy

3. Period Paradigms Relevant Model Ethiopian Experience
1950s and
early 1960s
Development=
Economic growth by
Modernization, and
industrialization.
Development=
Economic growth and
modernisation through
industralization
In effect, industry
received more attention
while agriculture received
less attention.
Agriculture was simply
considered as a supplier of
raw material to industry
and food to consumer,
caused the failure of the
paradigm.
The dominant one-sector macro
models of the day, from Keynesian
to Harrod-Domar (Harrod 1939
and Domar 1957) to Solow 1956,
seemed to have relatively little
relevance for societies not
primarily concerned with business
(The Linear Stages Model, Rostow
model, and Harrod-Domar Model)
In the 1950s and 1960s, the
previously neglected sub-field of
Development Economics was
rediscovered. Available economic
models seemed to offer only
limited insights into the practical
problems facing the so-called
Third World.
Rosenstein- Rodan 1943,and
Nurkse 1953 Balanced growth
Model with in sector and between
agriculture and industry,
Ethiopia accepted the paradigm moved towards
growth and modernization by developing
infrastructure and industry. For instance,
FFY plan (1957-1962):
mainly focused on industrialization and
infrastructural development. It also specifically
emphasized industries that produce light
consumer goods to satisfy domestic demand.
SFY plan (1963-1968):
gave more priority to the industries that produce
chemical and metal instead of heavily depending
on the consumer goods. However, agriculture
still received less attention compared to industry,
and the result of the plan was disappointing

4. Period Paradigms Relevant Model Ethiopian Experience
1950s and
late 1960s
Secular declining
hypothesis of Terms of
Trade (TOT)
There was a good deal of elasticity
pessimism in the air during those
years, both with respect to
agricultural response mechanisms,
as already noted, and with respect
to the open economy, i.e. export
opportunities. The international
trade scene, dominated by
Prebisch 1962, Singer 1950 and
Myrdal 1957, was painted in
colors unfriendly to development.
The 1949 Raul Prebisch and Hans
Singers Secular Decline TOT
Ethiopia accepted the paradigm moved towards
growth and modernization by developing
infrastructure and industry. For instance,
FFY plan (1957-1962):
mainly focused on industrialization and
infrastructural development. It also specifically
emphasized industries that produce light
consumer goods to satisfy domestic demand.
SFY plan (1963-1968):
gave more priority to the industries that produce
chemical and metal instead of heavily depending
on the consumer goods. However, agriculture
still received less attention compared to industry,
and the result of the plan was disappointing
Industry first Arguments Backward and forward Linkages
Model in industry, Albert
Hirschman model 1958,
Unbalanced Growth Model
Community Development National and Regional community
development p
Program in 1950s and 1960s
Top-down centralised and
structured approach
Sectoral and regional planning

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1-5
Period Paradigms Relevant Model Ethiopian Experience
Late 1960s and
1970s
There were Acute poverty
and inequitable growth in
Third World
Growth with Equity
(contradictory objectives),
It also means that Basic Needs
approach to satisfy basic needs
of society, Focus on rural or
agriculture
At end, this paradigm failed due
to domestic factors like
population pressure and policy
problems, and external factors
like decline TOT, and debt
burden
Arthur Lewis 1954, Two sector
transformation model
Fei and Ranis 1961,1964, Two sector
model with a focus of agriculture
Dependency theory
Neo-colonialism
Leibenstein Critical Minimum
Development Effort
Technological Change
TFY plan (1969-1973):
was assumed that agricultural growth can be
obtained by rapid development of large scale
commercial farms to produce commodities
that can be exportable. Yet, "once again the
distribution of investment within agriculture
itself was heavily weighted in favour of
commercial farms which received 58% of
development allocations and the peasant sector
only 10%"
( Rahmato, 2004: 4).
1980s and Early
1990s
Development= economic
restructuring and reform
policy to adress the above
problems
Policy Reforms, SAP and
Liberalization Program
New policy agenda
The Washington Consensus
Liberalization
Development through new civil society
The fundamental policy in rural areas included
the Land Reform Proclamation that abolished
private ownership of rural land. It also
declared that land would be distributed to the
tillers without compensation to former owners
following the dominant slogan of the time
"land to the tillers".
Liberalization was rejected by Ethiopian
Socialist Regime, but accepted in 1992 by the
reformist government
Late 1990s and
today
Continuation of SAP Poverty Reduction Strategy in 1999
Dominance of NGOs
‘Capacity building’
Ethiopia formulated Poverty Reduction paper
in 2000 in order to get loan from IMF and WB,
and to get debt relief.

6. • The British Scholar Robert Chamber said th
at all strategies by WB and IMF have same
communality and similar approach in origin
ating strategies from top to down.
“They start with economies, not
people; with macro, not the micro;
with the view from the office, not
view from the field. And, in the
consequence, their prescriptions
tend to be uniform, standard and
for universally applicable”
• Joseph Stiglitz also stands against neo liber
alization policy.

7. Concept, Definition and Measures

8. Introduction:
• Development is a multi-dimensional concept in its nature, b
ecause any improvement of complex systems, as indeed act
ual socio-economic systems are, can occur in different parts
or ways, at different speeds and driven by different forces. T
he major components are presented as follows:
It term having various meanings.
This is certainly a notion including
economic growth, which can be
measured quantitatively. But the
meaning of development is distinct
from that of growth because the
former implies not only quantitative
growth, but also qualitative change in
such aspect as organization, institution
and culture in society by political
interventions.

9. Is Development synonymous simply with
Economic Growth?
Different Development Goals of Society
• Equality of opportunity
• Rising income and standard of living
• Equity in the distribution of income and wealth
• wide-spread participation of the public
• Expanded role for women, minorities and all social
classes in public life
• Increased opportunities for education and self-
improvement
• Expanded availability of and improvements in
health care
• Public and private safety nets to protect the
vulnerable
• A clean and healthy environment
• Efficient, competent and fairly administered public
sector
• A reasonable degree of competition in the private
sector

10. Development in all societies must have at least
the following three objectives:
1. To increase the availability and widen the distribution
of basic life-sustaining goods such as food, shelter, healt
h, and protection
2.To raise levels of living, in addition to higher incomes,
through the provision of more jobs, better education, an
d greater attention to cultural and human values . all of
which will serve not only to enhance material wellbein
g but also to generate greater individual and national
self-esteem.
3.To expand the range of economic and social choices av
ailable to individuals and nations by freeing them from s
ervitude and dependence not only in relation to other pe
ople and nation-states . To enable the society to say no t
o the forces of ignorance and human misery

11. Core values of development
• The three basic components or core values that serve as a co
nceptual basis for understanding the inner meaning of develo
pment include:
1. Sustenance: The Ability to Meet Basic Needs: The basic
goods and services, such as food, clothing, and shelter, that
are necessary to sustain an average human being at the bar
e minimum level of living.
2. Self-Esteem: To Be a Person: The feeling of worthiness th
at a society enjoys when its social, political, and economic sy
stems and institutions promote human values such as respec
t, dignity, integrity, and self-determination.
3. Freedom from Servitude: To Be Able to Choose: A situat
ion in which a society has a variety of alternatives at its disp
osal from which to satisfy its wants and individuals enjoy rea
l choices according to their preferences.

12. Traditional definition:

13. 1.1. Definitions and Measures of development
1. Traditional definition:
• Traditionally economic development was defined by looking a
t economic criteria
• Economic development was equated to economic growth
• Development has traditionally meant achieving sustained rat
es of growth of gross national income per capita.
• Levels and rates of growth of “real” per capita gross nation
al income (GNI) are then used to measure the overall econ
omic well-being of a population
• Development strategies have therefore usually focused on ra
pid industrialization, often at the expense of agriculture and r
ural development.

14. • Measures of development
1. GDP per capita
• GDP is defined as the total value of the coutry‘s econo
mic production in a year E.g. Ethiopia (According to WB
, 2012): GDP: $41.61 billion
• Obtain per capita by dividing it by the total population
of 91.73 million approximatly $ 454 per year
2. Energy consumption
• It is a rough guid to the degree of industrialization. Ind
ustrialized countries use 10 times more energy than no
n-industralized countries
3. Work force engaged in Agriculture
• The lower the proportion of the labor force engaged in
agriculture, the higher would be the level of economic
growth & development

15. Modern definition:

16. The new economic view of development
• The experience of the 1950s and 1960s signaled that s
omething was very wrong with the narrow definition of
development.
 Many developing nations did reach their economic grow
th targets but the levels of living of the masses of peop
le remained for the most part unchanged,
 Widespread problem of absolute poverty, income inequ
ality and rising unemployment.
• During the 1970s, economic development came to be r
edefined in terms of the reduction of poverty, inequalit
y, and unemployment within the context of a growing e
conomy.
• “Redistribution from growth” became a common slogan
.

17. • The basic questions to ask:
1. What has been happening to poverty?
2. What has been happening to unemployment?
3. What has been happening to inequality?
• If all three of these have declined from hig
h levels, then beyond doubt this has been a
period of development for the country conc
erned.
• If one or two of these central problems hav
e been growing worse, especially if all thre
e have, it would be strange to call the resul
t “development” even if per capita income
doubled.

18. • A number of developing countries experienced
relatively high rates of growth of per capita inc
ome during the 1960s and 1970s.
• But showed little or no improvement or even a
n actual decline in employment, equality, and t
he real incomes of the bottom 40% of their po
pulations.
• This is what is sometimes called anti-developm
ent economic growth.
• Development must therefore be conceived of a
s a multidimensional process involving major c
hanges in social structures, popular attitudes,
and national institutions, as well as the acceler
ation of economic growth, the reduction of ine
quality, and the eradication of poverty.

19. 2.Modern definition:
• The New Economic View of Development: Leads to improvement in wellbeing,
more broadly understood
• Considers development as the process of changes that allows the basic needs to b
e met: Social justice, health, welbeing, education, freedom etc
• Moving from easily defined quantitative criteria to less easily defined qualitative
critera
• It also considers sustainabilty of the process
• Using resources in a responsible way, without damaging the opportunity for
future generations to satisfy their own needs
• Sustainable development: Preserves the quality of the environment, sustains
traditions and customs, preserves resources and improves levels of health and
education

20. Amartya Sen’s “Capability” Approach

21. 3. Amartya Sen's “Capability” Approach
• Over the last decade Amartya Sen’s Capability Approac
h (CA) has emerged as the leading alternative to stand
ard economic frameworks for thinking about poverty, in
equality and human development generally.
• Professor Sen has developed, refined and defended a fr
amework that is directly concerned with human capabili
ty and freedom (e.g. Sen, 1980; 1984; 1985; 1987; 1
992; 1999).
• He defined development as freedom, being free to avail
, access, own, utilize, administer, sale, transfer, redistri
bute, etc.

22. • The conceptual foundations of the CA can b
e found in Sen s critiques of traditional welf
are economics, which typically conflate well
-being with either opulence (income, comm
odity command) or utility (happiness, desir
e fulfillment).
• Sen distinguishes between commodities, hu
man functioning/ capability and utility as fo
llows:

23. • He begins by considering income or commodity command. S
en (1983) emphasizes that economic growth and the expansi
on of goods are necessary for human development.
• like Aristotle, he reiterates the familiar argument that wealt
h is evidently not the good we are seeking; for it is merely u
seful and for the sake of something else (Sen, 1990, p.44).
• Sen observes that different people and societies typically diff
er in their capacity to convert income and commodities into
valuable achievements.
• For example, a disabled person may require extra resources
(wheel chairs, ramps, lifts, etc) to achieve the same things (
moving around) as an able bodied person.
• In comparing the well-being, not enough information is provi
ded by looking only at the commodities each can successfully
command. We must consider how well people are able to fun
ction with the goods and services at their disposal.

24. • These considerations lead to the conclusion that n
either opulence (income, commodity command) n
or utility (happiness, desire fulfillment) constitute
or adequately represent human well-being and de
privation. Instead what is required is a more direct
approach that focuses on human function(ing)s an
d the capability to achieve valuable function(ing)s.
Sen (1985; 1993) makes the following distinctions
:
• Functioning: A functioning is an achievement o
f a person: what she or he manages to do or be. It
reflects, as it were, a part of the state of that per
son (Sen, 1985, p.10). Achieving a functioning (e.
g. being adequately nourished) with a given bundl
e of commodities A functioning therefore refers to
the use a person makes of the commodities at his
or her command.
• Capability: A capability reflects a person s abilit
y to achieve a given functioning ( doing or bein
g ) (Saith, 2001, p.8).

25. Human Development Index

26. Holistic measure of living levels and
development: Human Development Index
• HDI was appeared in 1990s by UNDP
• The most widely used measure of the comparative status of
socioeconomic development is HDI (presented by the United
Nations Development Program (UNDP)). It is the best known
composite index of social and economic well-being.
• Ethiopia is ranked lowest, 160th out of 169 countries, in term
s of human development index (HDI).

27. How the UNDP Measures
Human Development Index
• It is the process of enlarging basic human
choice.
• To do so, the HDI consists of three equally
weighted components:
1. “A long and healthy life” (Health)
2. “Knowledge” (Education)
3. “A decent standard of living” (Wealth)

28. Each component of the HDI is measured in the
following way:
• Health: Measured by life expectancy at birth. Where 25
years is the minimum from previous generations data and
85 years the maximum expected for the next generation
• Education: Measured as a combination of adult literacy
(with two-thirds weight) and gross enrollment (with one-
third weight).
• Wealth: Measured by GDP per capita. where $40,000 per
capita DDP is the maximum reasonable GDP that any
country enviseges to achieve at the current level of
technology and $100 is the minimum possible that a
country might have (based on previous years experience)

29. • So, HDI would be the simple arithmetic mean of the
three indices.
• The value of the HDI index can vary between 0 and 1,
with an HDI score closer to 0 indicating greater
distance from the maximum to be achieved on the
aggregate of the factors entering the HDI.
• An HDI value closer to 1 indicates greater achievement
relative to the maximum attainable on the variables
that comprise the index and thus a higher level of
human development.
• For example if Country X‘s HDI=0.25, it implies that
the country achieved only 25% of what could be
achieved. Or, the country has an average 75% shortfall
of the maximum value on human development
components.
• High HDI>0.8; medium between 0.5 and 0.799; low
HDI<0.5
• E.g. in 2004 ethiopia HDI=0.314

30. Is the HDI Enough to Measure a
Country’s Level of Development?
• According to the UNDP, the answer is:
• “Not at all.”
• “The concept of human development is much
broader than what can be captured in the HDI,
or any other composite indices…”
• “The HDI and the other composite indices can
only offer a broad proxy on some of the key
the issues of human development…”
• “A fuller picture of a country's level of human
development requires analysis of other human
development indicators and information.”

31. Other Development Indexes
• The Economist’s “Quality of Life” Index
• UNICEF’s “Child-Welfare” Index
• The “Happy Planet” Index
• The UNDP’s “Human Poverty Index”
• The UNDP’s “Gender Empowerment Measure”
• International Living’s “Quality of Life” Index
• The “Global Peace Index”
• Freedom House’s “Freedom Rankings”

32. The Millennium Development Goals

33. Millennium Development Goals and Targets for 2015

35. Individual Assessment Questions:
1. What makes development sustainable in
the long run?
2. Define what development means and
then differentiate it from economic
growth
3. What are your comments on the four
measurements of development in the
context of Ethiopian Economy?

36. Thanks