Monday, September 13, 2010

Are the so called "developed" countries really more developed?

Today people speak about "developed" countries to designate the industrialized world, mainly North America, Western Europe and Japan. Opposed to developed countries are the "under-developed" countries now called the "developing" countries.
The notion of "under-developed" countries is mainly based on a Western concept of development. Under-development is considered as an objective status based on a series of criteria, the main one being the "Per Capita Income". Examples of other criteria are the alphabetization rate, life expectancy, infant death rate, distribution of population between agriculture, industrial and services sectors.
This approach based on under-development indicators is rejecting any value judgment in favor of facts observation only . These indicators are used for a "precise" measurement of the intensity of under-development. Like a thermometer that is used for the body temperature measuring fever to determine if the person is sick or not, but fever is not the sickness, it could be due to cold, malaria, tuberculosis,...with very different possible outcome.

The most used indicator because it is summarizing all other indicators is the per capita income, the ratio between the gross domestic product (GDP) and the total population, which represents the mean value of the output produced per person.
Indicated in US dollar, here are some GDP per capita from 2009 provided by the World Bank: Monaco = US$ 209,667; USA = US$ 46,436;  Germany = US$40,873; Japan = US$ 39,729; Brazil = US$ 8,114; Angola = US$ 3,734; China = US$ 3,687; India = US$ 1,122; Kenya = US$ 759; Congo (RDC) = US$ 163 (that is 1,280 times less than Monaco).

Today, there is another category of countries between the developed and under-developed countries: we call these the emerging countries like Russia, China, India, Brazil and others. While these countries may have high GDP per capita, they still present indicators of under-development, especially on the social and poverty aspects.

In the Western concept, under-development is perceived as a lag towards technical development, increase of production and standard of living. Under-development is thought of as a development gap that needs to catch up. This vision assumes that the developed country model is ideal, that developing countries need to modernize like Europe or the US by adopting their technology, their management models and at the same by relinquishing their traditional religions, their  "archaic" social structures etc, all of which prevent them from closing the gap. The expectation is that overtime the developing countries will close the gap and become "developed".

So lets look at this more closely. In the ratio between the gross domestic product (GDP) and the total population, the numerator and the denominator do not represent the same number of individuals. The national revenue is created only by those who are working while the denominator also include the children, the old retired people, the jobless. This ratio between active and inactive people is very different between developed and developing countries. And this average is hiding very different situations. Someone once told me that statistics is the science that concludes that a man who has his head in an oven and hist feet in a refrigerator, feels good on average. To understand, 10 could be the average between 9 and 11, but also between 1 and 19. In the first case, the average is close to the reality because it is not too far away from the numbers it represents. Unfortunately, in developing countries the situation looks more like the the second case. While some Brazilians live like Americans, half the population lives in poverty.

In the case of developing countries, some elements are not included in the national revenue. An example are personal services like housework. This would not be a problem if the ratios where the same in developed and under-developed countries. But in the Western society, many women are employed generating revue and in addition personal services are commercialized: hair dresser, dry cleaning, restaurants, entertainment, etc. Therefore the national revenue of developing countries is systematically under evaluated.

In the case of developed countries some revenue are not subtracted from the national revenue. Development has its costs (liabilities) which should be subtracted from revenue (assets) as is required in accounting. In the so called "developed" countries, enormous amounts are disbursed to repair the damage from development: car accidents, too rich and unbalanced  food (excess of sugar, fat, alcohol, tobacco) generating teeth caries, cancers, cardio-vascular problems, diabetes. Technology like television showing violence  impacting criminality, scholar results, social relations and finally the huge cost on the environment.

Using the revenue per capita to measure development implies that happiness is linked to wealth and accumulation of material goods pushed by large corporations for their own interest, persuading customers about their needs with massive advertising.

Using these indicators to define development, industrial countries appear superior to developing countries civilizations. But in many respects they look less advanced. How not to appreciate the under-developed countries values like their social values against the neurosis generating Western hyper-individualism. I will describe some of these values in a future posting.

The Western development often addresses fabricated needs where goods are estimated at their exchange value, not their usage value, but do they address the real needs of the majority? Should developing countries be inspired by that type of development? In developed countries, the system goal is to reduce cost of expansive workforce, while developing countries have an enormous mass of cheap workers. In industrialized countries, the norm is to satisfy luxury needs of rich customers, while in developing countries, most don't even have access to the basics. 

For developing countries, the Western development model is more like a cons-model. In a future posting I will present the developing countries' view of development.

PS: Many concept described here are inspired by Fernand Bezy and have been published in his "Analyse Economique des Pays en Developpement" course in 1990.

No comments: