Growth, Poverty and Inequalities

Growth is a beseiged deity. An increasing number of economists and policy- makers are becoming convinced that it is imprudent for a country to devote all its efforts toward maximizing the rates of overall growth-and wait for the benefits to trickle down to all sections of the population. Trickle- downism is thus on the wane. Developing countries are now being warned that rapid growth is liable to take too long to alleviate the miseries of the poor, and that for long periods rapid growth may indeed worsen the lot of large numbers-hence they should launch "direct attacks" on poverty.

This new advice rests on two assumptions : first, that developing countries have indeed been preoccupied with growth to the exclusion of distributive questions and that it is this single-minded pursuit of overall growth which has kept the governments from undertaking programs that might have benefited the poor; second, that "direct attacks" on poverty-consisting of special programs to improve health, sanitation and nutrition, and to provide drinking water, low-cost housing and the like to larger numbers along with large-scale rural public works that provide jobs and convert local labor and materials into productive assets-that these will alter the character of growth and ensure that henceforth its nature is such as to benefit the poor. Neither of these premises is valid. I will argue that the reasons why growth has been such as to have primarily benefited the well-to- do are much more fundamental and that direct forays against poverty-even if they consist of large and expensive programs-will not alter the character of growth unless they are accompanied by a thoroughgoing political transformation involving drastic redistribution of income, assets and the control over institutions. Finally, I shall argue that such a transformation would make growth more meaningful and not decelerate the rates of overall expansion.

II

Leading Pakistani economists who were closely associated with the high rates of growth of the Ayub period and Western advisers who were in Pakistan in the early sixties are now saying that their determination to achieve high growth rates was misplaced and that their euphoria over the rates which were achieved misled them into believing that the country was well on the way toward solving its economic problems. The dramatic events of 1971 that broke Pakistan asunder have attracted much attention to these laments.