Development is a complex process which is affected by both economic and non-economic factors. The importance of non-economic factors in development was duly recognised by the Classical school. John Stuart Mill thought that non-economic factors, like beliefs, habits of thought, customs and institutions, play an important role in economic develop- ment, and he attributed the backwardness of underdeveloped countries to the despotic and anti-progressive character of their customs, institutions and beliefs.
Boeke (1953) attempted to explain underdevelopment in terms of socio logical dualism, which he defi nes as ‘the clashing of an imported social system with an indigenous social system of another style.’ On the basis of his analysis, largely based on the Indonesian experience, he concludes that the kindest thing the Western world can do for developing countries is to leave them alone; any effort to develop them along Western lines can only hasten their retrogression and decay. The acceptance of the dualism leads to two policy conclusions: (a) as a rule, one policy for the whole country is not possible; and (b) what is benefi cial for one section of the society may be harmful for another. An appraisal of Boeke’s theory would reveal that whereas there can be no question about the existence of dualism, its explanation lies not in the nature of society as Boeke perceives it, but in economic and technological terms. This is proved by the fact that not all efforts to promote development in the developing countries through technical and capital assistance from the West have been in vain.
For example, in India, a large part of the credit for bringing about the Green Revolution goes to the United States Agency for International Development (USAID) that helped India, both fi nancially and techni cally, in setting up modern land-grant type state agri- cultural universities in the 1960s, and trained its agricultural scientists in American land-grant agricultural universities. Similarly, the OF programme that is credited with modernising India’s dairy industry, also benefi ted a lot from food aid in the form of skimmed milk powder and butter oil, fi rst from the World Food Programme of the Food and Agriculture Organisation (FAO), and then from the European Economic Community (EEC).
One may reject the theory of sociological dualism advanced by Boeke, and still consider sociological, cultural and psychological factors impor tant in economic development.
Indeed, one may say that all economists who have specialised in economic development recognise the importance of the interplay of these factors with economic factors. In the words of Meier and Baldwin (1957: 355), ‘The psychological and sociological requirements for development are as important as the economic require ments. They deserve full consideration in their own right.’ Relatively few economists, however, have had the courage to attempt a systematic theory of development which would incorporate strategic sociological, cultural and psychological factors. Outstanding among these few are David McClelland and Everett Hagen (Higgins 1966: Chapter 13).
McClelland’s ‘Need-for-Achievement Motivation’ (N-Ach) theory seeks to establish a relationship between N-Ach and economic devel opment. His theory rests on two propositions: (a) that group differences in the average level of certain motives, such as N-Ach, predict differences in the rate of economic growth; and (b) that certain motive
combinations predispose individuals to act like successful business entrepreneurs, who have played key roles in all previous economic development. On the basis of his studies and analyses, he concludes that if we are to promote economic growth, it is necessary to fi rst change the values and motives of individuals. This, in his opinion, can be done by: (a) persuasion or educa tion; (b) introducing changes in the social system; and (c) early character training. Of the three, the third is by all odds the one most likely to succeed. For, in this way, values can be in-built from the very beginning. Early character training can he imparted by a corps of specially qualifi ed nursery and primary school teachers carefully selected for the purpose.
Thus, McClelland’s analysis leads to the conclusion that a take-off into economic de- velopment requires a large number of individuals with the entrepreneurial motivation complex and particularly with high N-Ach, and for this a long period of time is required to establish psychological preconditions.
MAIN POINTS
1. There is no universally acceptable theory of rural development which can explain the existing phenomenon of rural development and predict its future course.
What we have is a set of hypotheses and propositions that constitute higher level generalisations in the fi eld of development. To the extent that rural development is a subset of development, hypotheses of development apply to rural development as well.
2. The classical economists did not focus their attention on development or rural development per se; they perhaps assumed that economic growth would naturally lead to development. An interesting element of the arguments of the Classical economists was the concept of circularity that characterised the interrelationship among technology, investment and profi t. The circularity was inherent in their assertion that the level of technology depends on the level of investment, investment depends on profi ts, and profi ts depend partly on the level of technology.
3. The essence of the Modernisation Theory was the transfer of Western technology and rationality to less developed countries without changing their class structure as a means of development and removal of all social and ideological obstacles to such a process.
4. In a nutshell, the Modernisation Theory presented the ‘American way of life’ as the epitome of modernity. It envisaged that development can be achieved only through industrialisation and urbanisation along with technological transformation of agriculture. It offers quite a few useful insights, such as the inevitability of the use of modern technology for increasing agricultural production, and the need for replac ing traditional feudal institutions by new democratic ones, for a shift towards greater scientifi c temper, and secular values and norms.
5. The intellectual foundation of the Dependency Theory of the Marxist School was rooted in the ideas of Karl Marx and Friedrich Engels, who believed that
the process of social change was not gradual and evolutionary as assumed by the Modernisation Theory. Instead, it was characterised by confl ict of interests between classes in the society, or in other words, class struggle. The Marxists saw class struggle as the engine of social change and development.
6. The Dependency Theory was very popular in the 1970s, as it provided a plausible explanation to the perpetuation of the problems of poverty and stagnation in developing countries despite concerted efforts at solving them. The theory provides a useful caveat that while identifying the determinants of rural development, we should critically examine which international economic and political relationships are benefi cial and which are harmful to economic development in general, and rural development in particular, and initiate policy measures to minimise the adverse ones.
7. Rosenstein-Rodan’s Theory of the ‘Big Push’ maintained that there is a minimum level of resources that must be devoted to a development programme if it is to have any chance of success. Launching a country into self-sustaining growth is a little like getting an aeroplane off the ground. There is a critical ground speed which must be passed before the craft can become airborne. A major criticism of this theory is that the resources required to give the ‘Big Push’ are of such a high order, that a developing country like India cannot afford them.
8. The central idea of Harvey Leibenstein’s ‘Critical Minimum Effort Thesis’ is that in order to attain sustained secular growth, it is essential that the initial stimulant to development is of a certain critical minimum size. Leibenstein’s thesis is more realistic than Rosenstein-Rodan’s Big Push theory in the sense that the critical minimum effort can be properly timed and broken up into a series of smaller efforts to put the economy on the path of sustained develop ment. This theory is also consistent with the concept of decentralised democratic planning as practised in India.
9. W. Arthur Lewis’ model of economic development with unlimited supplies of labour is based on the fact that in many developing countries, there exist large reservoirs of labour whose marginal productivity is negligible, zero or even negative. Since the marginal productivity of labour in the capitalist sector is higher than the ruling wage rate, there results a capitalist surplus, which can be used for capital formation which makes possible employment of more people from the subsistence sector and initiates the process of development. The model provides a good framework to understand the process of economic development in labour- surplus developing countries like India.
10. Gunnar Myrdal in his thesis of ‘Spread and Backwash Effects’ asserts that the clustering of labour, capital, goods and services in certain localities and regions leave the remaining areas, mostly rural, more or less in backwaters and accentuates regional inequality. Concentration of fi rms, capital and talented individuals in certain localities (growth points) at the expense of surrounding areas (backwash) lowers the level of economic development below what it would have been if growth points had never emerged. Against the backwash effects, there are, however, certain centrifugal ‘spread effects’ of expansionary momentum from the centres
of economic expansion to other regions. Empirical evidence shows that backwash effects are neutralised by spread effects only at a high level of development.
11. The Human Capital Model of Development emphasises the importance of human capital investment in the process of economic and social development. The human capital includes acquired mental and physical ability through education, training, health care and pursuit of some spiritual methods like yoga or meditation. The acquisition of human capital is largely through the investment of human effort and money. The simplest and most important of this type of model is a schooling model which relates economic development to schooling. This model is relevant to India and other developing countries.
12. The Gandhian Model is holistic and people-centred. It is rooted in Gandhi’s conviction in the tenets of truth, non-violence and goodness of human beings. It places more emphasis on moral and spiritual values than economic motives as a means of overall development. The proponents of the Gandhian model argue that under the prevail ing socio-cultural and economic conditions in India, the model is still relevant and is the only alternative available for bringing about equitable and sustainable rural development. The critics argue that Gandhiji’s ideals of swadeshi, voluntary curtailment of one’s wants, trusteeship, self-suffi cient villages and use of manual labour in prefer ence to machines are obsolete these days.
13. There are a few other models of development propounded by other social scientists. They include Boeke’s explanation of underdevelopment in terms of sociological dualism which he defi nes as ‘the clashing of an imported social system with an indigenous social system of another style’ and McCIelland’s ‘Need-for- Achievement Motivation’ (N-Ach) theory. McClelland’s analysis leads to the conclusion that a take-off into economic development requires a large number of individuals with the entrepreneurial motivational complex and particularly with a high N-Ach, and for this a long period is required to establish psychological preconditions. These Boeke’s and McCIelland’s models are useful in providing insights into the role of non-economic factors in development.
QUESTIONS FOR DISCUSSION
4.1. Why is it diffi cult, if not impossible, to have a universally acceptable theory of
‘development’?
4.2. Write a critique of the Modernisation Theory of Development in the India’s current context.
4.3. Is the Dependency Theory relevant to India? Yes/No. If yes, why; if no, why not?
4.4. Compare and contrast the Rosenstein-Rodan’s Theory of the ‘Big Push’ and Harvey Leibenstein’s ‘Critical Minimum Effort Thesis’. Which one is more applicable to India and why?
4.5. What are the limitations of Arthur Lewis’ Model of Economic Development in India’s context?
4.6. Illustrate with an example the ‘Spread and Backwash effects’ of development as articulated by Gunnar Myrdal in his thesis.
4.7. What are the common features of the Human Capital Model of Development and Gandhian Model of Development? Examine critically the relevance of Gandhian model in the current context of India.
4.8. What do you understand by the term ‘sociological dualism’? How does its existence affect development?
4.9. Write a critique of the McCIelland’s ‘Need-for-Achievement Motivation’ (N-Ach) theory in the India’s context.
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5 Determinants of Rural Development
L E A R N I N G O U T C O M E S
After having gone through this chapter, students should be able to
z explain why ‘changes in output’ is considered as a proxy variable for ‘development’
and its limitations;
z illustrate the role of land and water resources in India’s development in general and agricultural development in particular;
z identify the major attributes of human resources that significantly affect
‘development’;
z defi ne various forms of capital and their role in ‘development’;
z illustrate the role of new agricultural technologies in agricultural development in India;
z identify various forms of organisations and examine their role in India’s rural development and
z describe various conceptual and methodological problems in measuring and quantifying the relation between rural development and its determinants, and the lessons of a few empirical studies of the relationship.
INTRODUCTION
The factors affecting rural development favourably or adversely are so varied, and have combined over time in so many different ways, that it is very diffi cult to isolate a small number of crucial variables or deter minants. There are many physical, technological, economic, socio-cultural, institutional, organisational and political factors that affect the level and pace of rural development. These factors operate at all levels:
household, village, district, state, nation and the world as a whole. Depending upon how they are managed, these factors can have both favourable and adverse effects on development. For instance, if the human resources of a country are not properly developed by proper nutrition, health care, education and training, and are not productively utilised, these resources become liabilities and obstacles to development. But if they are properly developed and utilised, then they become great assets and major factors contributing to development. Knowledge about the nature and magnitude of the impact of various determinants on rural development is necessary for rural development managers to be able to use these factors to achieve their goals effi ciently and effec tively. This chapter is devoted to identifying the major determinants of rural development, and examining their role in promoting rural development.
Rural development is characterised by multiple goals, and as stated in Chapter 3, there is no single index or indicator which can adequately capture the multifaceted nature of rural development. At the same time, unless we can measure the phenomenon of rural development, we are unlikely to know much about the quantitative impact of the factors that infl uence it.
In the absence of a single index of rural development, we shall use change in output as its proxy measure, and discuss the role of various factors that appear to us, on an a priori basis, as important determinants of this measure. Let us assume that change in output is a function of changes in natural resources, employment, capital, technology and institutions and organisations.
This can be expressed in notational form as follows:
ΔY = f(ΔR, ΔN, ΔK, ΔT, ΔO)
where Y = output, R = natural resources, N = employment, K = capital, T = technology, O = organisational and institutional framework and delta (Δ) means ‘change in’.
This equation states that changes in output is a function of changes in those vari- ables appearing on the right hand side of the equation, that is, natural resources, employment, capital, technology, and organisa tional and institutional framework (Figure 5.1). The variables might be called the ‘instrument variables’ of economic growth or change in output. Of course, it is not easy to determine the causal relationship between Y and these instrument variables. All change simultaneously, and the contribution of a single variable is diffi cult to isolate, but at least some statistical associations are often possible, and have been established by a number of economists.