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What is development?
Development conveys the ideas of improvement, progress, well
being and aspiration for a better society.
development is defined in narrower terms also like increasing
growth rate or modernising the society. Modernising the society means having
dams, opening industries , having many brands etc.
but development has a broader meaning as well. there needs to be
improvement in the lives of people. Poverty needs to be reduced, health of
people needs to be improved and employment opportunities need to be given.
Jawaharlal
Nehru had said, “these new and
revolutionary changes in China and India, even though they differ in content,
symbolize the new spirit of Asia and new
vitality which is finding expression in the countries in Asia. ”All the three
countries had started planning their development strategies in similar ways.
While India announced its first Five Year Plan for1951-56, Pakistan announced
its first five year plan, called, the Medium Term Plan, in 1956. China
announced its First Five Year Plan in 1953. Till 1998 ,Pakistan had eight five
year plans whereas China’s tenth five year period is 2001-06. The current planning
in India is based on Tenth Five Year Plan(2002-07). India and Pakistan adopted
similar strategies such as creating a large public sector and raising public
expenditure on social development. Till the 1980s, all the three countries had
similar growth rates and per capita incomes. Where do they stand today in
comparison to one another? Before we answer this question let us trace the
historical path of developmental policies in China and Pakistan. After studying
the last three units, we already know what policies India has been adopting
since its independence.
Development Strategies of India,
China and Pakistan
India, China, Pakistan have many similarities in their development
strategies which are as follows
(i) India, Pakistan and China have started towards their developmental
path at the same time. India and Pakistan became independent nations in 1947.
While Peoples Republic of China was established in 1949.
(ii) All the three countries had started planning their development
strategies in similar ways. India announced its Five Year Plan in 1951-56,
while ’ Pakistan announced its first Five Year Plan in 1956, which is called
Medium Term plan. China announced its First Five Year Plan in 1953.
(iii) India and Pakistan adopted similar strategies such as creating a
large public sector and raising public expenditure on social development.
(iv) Till the 1980s, all the three countries had similar growth rates and
per capita incomes.
(v) Economic reforms took place in all the three countries. Reforms
started in India in 1991, in China in 1978 and in Pakistan in 1988.
Development Strategies of India
Some of the prominent strategies of India are discussed below
1. Sound Trade System
India was a country which had the history of closed trade. Because of this historical background; there is a critical challenge for India in order to make a new policy which can support the new open trade system. This new reform in economies of India has been introduced and accelerates the economic growth of India.
2. Reduction in Poverty
India has adopted several poverty alleviation programmes to reduce poverty in India. -This would help in increasing per capita income, rise in nutrition level of poors and there is a subsequent fall in percentage of absolute poor in some states.
3. Rural Development
Under this strategy, India adopted various measures for the development of areas that are lagging behind in the overall development of village economy.
4. Employment Generation
Several economic reforms were initiated to generate employment in the country and their aim is to provide gainful self-employment and skilled wage employment opportunities.
Some of the prominent strategies of India are discussed below
1. Sound Trade System
India was a country which had the history of closed trade. Because of this historical background; there is a critical challenge for India in order to make a new policy which can support the new open trade system. This new reform in economies of India has been introduced and accelerates the economic growth of India.
2. Reduction in Poverty
India has adopted several poverty alleviation programmes to reduce poverty in India. -This would help in increasing per capita income, rise in nutrition level of poors and there is a subsequent fall in percentage of absolute poor in some states.
3. Rural Development
Under this strategy, India adopted various measures for the development of areas that are lagging behind in the overall development of village economy.
4. Employment Generation
Several economic reforms were initiated to generate employment in the country and their aim is to provide gainful self-employment and skilled wage employment opportunities.
Development Strategies of China
After
the establishment of People’s Republic of China under one party rule, all the
critical sectors of the economy, enterprises and lands owned and operated by
individuals were brought under government control.
Certain
development strategies of China are discussed below
1. Great Leap Forward (GLF)
This
campaign initiated in 1958 aimed at industrialising the country on a massive
scale. People were encouraged to set up industries in their backyards. In rural
areas, communes were started. Under the commune system, people collectively
cultivated lands.
2. Great Proletarian Cultural Revolution (1966-76)
In
1965, Mao Tse Tung started a cultural revolution on a large scale. In this
revolution, students and professionals were sent to work and learn from the
country side. Unlike GLF, the cultural revolution did not have an explicit
economic rationale.
3.
1978 Reforms
Since
1978, China began to introduce many reforms in phases. The reforms were
initiated in agriculture, foreign trade and investment sector. In agriculture,
lands were divided into small plots which were allocated to individual
households. They were allowed to keep all income from the land after paying
taxes.
In
later phase, reforms were initiated in industrial sector. All enterprises which
were owned and operated by local collectives in particular, were allowed to
produce goods.
At
this stage, enterprises owned by government (known as State Board Enterprises –
SOEs), in India we call them public sector enterprises were made to face
competition. In reform, prices were fixed in two ways, i.e., farmers and
industrial units were required to buy and sell fixed quantities of inputs and
outputs on the basis of prices fixed by the government and the rest were
purchased and sold at market prices.
Over
the years, as production increased, the proportion of goods or inputs
transacted in the market also increased. The goal of Chinese economic reforms
was to generate sufficient surplus to finance the modernisation of the mainland
Chinese economy. In order to attract foreign investors, Special Economic Zones
(SEZs) were set up.
Development Strategies of Pakistan
The development strategies of Pakistan are summarised below
1- Mixed Economy
Pakistan follows a mixed economy system where both public and private sectors co-existed.
2. Import Substitution
Pakistan adopted a regulatory policy framework in the late 1950s and 1960s for import industrialisation. The -policy combined tariff protection for manufacturing of consumer goods together with direct import controls on competing imports.
3. Green Revolution
This was introduced to increase the productivity and self sufficiency in food. This increased the output* of food grains. This had changed the agrarian structure dramatically. In 1970’s nationalisation of capital goods took place. Pakistan shifted its policy orientation in 1970’s and 1980’s when private sector got encouragement.
During this period, Pakistan received financial support from Western. This helped the country in stimulating economic growth. Government also offered incentives to private sector. This had a created climate for new investments. And in 1988 certain reforms were also initiated in the country.
The development strategies of Pakistan are summarised below
1- Mixed Economy
Pakistan follows a mixed economy system where both public and private sectors co-existed.
2. Import Substitution
Pakistan adopted a regulatory policy framework in the late 1950s and 1960s for import industrialisation. The -policy combined tariff protection for manufacturing of consumer goods together with direct import controls on competing imports.
3. Green Revolution
This was introduced to increase the productivity and self sufficiency in food. This increased the output* of food grains. This had changed the agrarian structure dramatically. In 1970’s nationalisation of capital goods took place. Pakistan shifted its policy orientation in 1970’s and 1980’s when private sector got encouragement.
During this period, Pakistan received financial support from Western. This helped the country in stimulating economic growth. Government also offered incentives to private sector. This had a created climate for new investments. And in 1988 certain reforms were also initiated in the country.
DEVELOPMENT STRATEGIES — ANAPPRAISAL
It
is common to find developmental strategies of a country as a model to others
for lessons and guidance for their own development. It is particularly evident
after the introduction of the reform process indifferent parts of the world. In
order to learn from economic performance of our neighbouring countries, it is
necessary to have an understanding of the roots of their successes and
failures. It is also necessary to distinguish between, and contrast, the
different phases of their strategies. Though different countries go through
their development phases differently, let us take the initiation of reforms as
a point of reference. We know that reforms were initiated in China in1978,
Pakistan in 1988 and India in1991. Let us briefly assess their achievements and
failures in pre and post reform periods.
Why
did China introduce structural reforms in 1978? China did not have any
compulsion to introduce reforms as dictated by the World Bank and International
Monetary Fund to India and Pakistan. The new leadership at
that time in China was not happy with the slow pace of growth and lack
of modernisation in the Chinese economy under the Maoist rule. They felt that
Maoist vision of economic development based on deentralisation, self
sufficiency and shunning of foreign technology, goods and capital had failed.
Despite extensive land reforms,
collectivization, the Great Leap Forward and other initiatives, the per capita
grain out put in 1978 was the same as it was in themid-1950s.
It
was found that establishment of infrastructure in the areas of education and
health, land reforms, long existence of decent ralised planning and existence
of small enterprises had helped positively in improving the social and income indicators
in the post reform period. Before the introduction of reforms, there had
already been massive extension of basic health services in rural areas. Through
the commune system, there was more equitable distribution of food grains.
Experts also point out that each reform measure was first implemented at a smaller
level and then extended on a massive scale. The experimentation under decent ralised
government enabled to assess the
economic, social and political costs of success or failure. For instance, when
reforms were made in agriculture, as pointed out earlier by handing over plots
of land to individuals for cultivation, it brought prosperity to a vast number
of poor people. It created conditions for the subsequent phenomenal growth in rural
industries and built up a strong support base for more reforms.
Scholars
quote many such examples on how reform measures led to rapid growth in China. Scholars
argue that in Pakistan the reform process led to worsening of all the economic
indicators. We have seen in an earlier section that compared to 1980s, the growth
rate of GDP and its sector all constituents have fallen in the 1990s.
Though
the data on international poverty line for Pakistan is quite healthy, scholars
using the official data of Pakistan indicate rising poverty there. The
proportion of poor in 1960s was more than 40 per cent which declined to 25 per
cent in 1980sand started rising again in 1990s. The reasons for the slow-down
of growth and re-emergence of poverty in Pakistan’s economy, as scholars put it,
are
(i)
agricultural growth and foods supply situation were based not on an
institutionalised process of technical change but on good harvest. When there
was a good harvest, the economy was in good condition, when it was not, the
economic indicators showed stagnation or negative trends
(ii)
you will recall that India had to borrow from the IMF and World Bank to set
right its balance of payments crisis; foreign exchange is an essential component
for any country and it is important to know how it can be earned. If a country
is able to build up its foreign exchange earnings by sustainable export of
manufactured goods, it need not worry. In Pakistan most foreign exchange
earnings came from remittances from Pakistani workers in the Middle-east and
the exports of highly volatile agricultural products; there was also growing dependence
on foreign loans on the one hand and increasing difficulty in paying back the
loans on the other.
However,
as stated in the ‘One Year Performance of the (Pakistan)Government’ for the
year August2004–2005, the Pakistan economy has been witnessing GDP growth at
about8 per cent for three consecutive years(2002–2005). All the three sectors, agriculture,
manufacturing and service, have contributed to this trend. Besides facing high
rates of inflate on and rapid private station, the government tis increasing
the expenditure on various areas that can reduce poverty.
CONCLUSION
What are we learning from the developmental experiences of our neighbours
? India, China and Pakistan have travelled more than five decades of developmental
path with varied results. Till the late 1970s, all of them were maintaining the
same level of low development. The last three decades have taken these countries
to different levels. India, with democratic institutions, performed moderately,
but a majority of its people still depend on agriculture. Infrastructure is
lacking in many parts of the country. It is yet to raise the level of living of
more than one-fourth of its population that lives below the poverty line.
Scholars are of the opinion that political instability ,over-dependence on
remittances and foreign aid along with volatile performance of agriculture
sector are the reasons for the slowdown of the Pakistan economy. Yet, in the
recent past, it is hoping to improve the situation by maintaining high rates of
GDP growth. It is also a great challenge for Pakistan to recover from the
devastating earthquake in 2005,which took the lives of nearly 75,000people and
also resulted in enormous loss to property. In China, the lack of political
freedom and its implications for human rights are major concerns; yet, in the
last three decades, it used the ‘market system without losing political
commitment’ and succeeded in raising the level of growth along with alleviation
of poverty. You will also notice that unlike India and Pakistan ,which are
attempting to privatize their public
sector enterprises, China has used the market mechanism to ‘create additional
social and economic opportunities’. By retaining collective ownership of land
and allowing individuals to cultivate lands, China has ensured social security
in rural areas. Public intervention in providing social infrastructure even
prior to reforms has brought about positive results in human development indicators
in China.
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