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.

SDI

Education Consumption Health

Primary Male Cars Per Million Physicians Per

Enrollment Rate Population Million Population

Primary Female Telephone Per Hospital Beds Per

Enrollment Rate Million Population Million Population

Infant Survival
Secondary Male Television Sets Per
Rate Per 1000 Live
Enrollment Rate Million Population
Births

Proportion of Non-
Secondary Female
Agriculture Labor
Enrollment Rate
Force

Electricity
Tertiary Male
Generation Per
Enrollment Rate
Million Population

Tertiary Female
Enrollment Rate

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.

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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 96.8 98.3 103.4 100.1 75.1

% (gross) (199) (199) (199)
g

Primary school enrolment 85.7 87.5 91.6 88.8

% (net) (199) (199)

Secondary school enrolment 44.7 49.2 43.3 41.5 21.6

% (gross) (199) (199) (1997)g

Secondary school enrolment 41.9 45.9 40.3 38.5

% (net) (199) (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 77 82 106

live births)

Maternal mortality rate (per 380 c 350d 440 h

100,000 live births)

Children <2 fully

immunised (%)
Births supervised by trained 12 e 12 f
personnel (%)

Infants <1 immunized 95 91 91 i

against TB (%)

Households with access 97 97 74j

improved water source (%)

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
Economic development implies changes
Economic growth refers to an
in income, savings and investment along
Implications increase in the real output of goods
with progressive changes in socio-
and services in the country.
economic structure of country .
Development relates to growth of human Growth relates to a gradual increase
capital indexes, a decrease in inequality in one of the components of Gross
Factors figures, and structural changes that Domestic Product: consumption,
improve the general population's quality government spending, investment,
of life. net exports.
Qualitative.HDI (Human Development
Index), gender- related index (GDI),
Measurement Quantitative. Increases in real GDP.
Human poverty index (HPI), infant
mortality, literacy rate etc.
Brings qualitative and quantitative Brings quantitative changes in the
Effect
changes in the economy 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

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