Human Development Report 2013 - UNDP

A common featureof countries thathave brought abouttransformationaldevelopment is a strong,proactive state—also referred to as a“developmental state”state needs to mobilize society through policiesand institutions that advance economic andsocial development.However, this is not a universal prescription.The way these three elements are translatedinto policies is context-specific, depending oncountry characteristics, government capacitiesand relationships with the rest of the world.Driver 1: a proactivedevelopmental stateDevelopment is about changing a society to enhancepeople’s well-being across generations—enlarging their choices in health, educationand income and expanding their freedoms andopportunities for meaningful participation insociety.A common feature of countries that havebrought about such transformations is astrong, proactive state—also referred to asa “developmental state”. The term refers to astate with an activist government and often anapolitical elite that sees rapid economic developmentas their primary aim. Some countriesgo further and add an additional feature: abureaucracy with the power and authority toplan and implement policies. High growthrates and improved living standards in turnprovide the state apparatus and the rulingelites their legitimacy. 7In some notable cases, development progressis guided by a long-term vision, shared normsand values, and rules and institutions that buildtrust and cohesion. Further, viewing developmentas transformation demands considerationof these intangible factors as well as an understandingof how they affect the organizationof society and interact with individual policiesand reforms.Country ownership of developmentstrategy, strong bureaucratic capacities andappropriate policies are essential elementsthat together shape the transformation process.8 Policies must be aimed at facilitatingtransformation by identifying barriers to andpotential catalysts of changes. In this process,institutions, societies and individuals needto set their own objectives and identify thestrategies and policies that can achieve them.Although not pursued everywhere, broadparticipation of people, in the sense that theyare being listened to, that their views are takeninto account in decisionmaking and that theyare actively involved in setting the agenda, isconducive to sustainable long-term development—asis consistent political leadershipbacked by strong technocratic teams that canensure institutional memory and continuityof policy (box 3.2). 9There is no simple recipe for connectinghuman development and economic growthor for accelerating growth. 10 One study usingcross-country data for 1950–2005 foundthat the vast majority of takeoffs in growthare not generated by substantial economicreforms and that most substantial economicreforms do not yield takeoffs in growth. 11Successful countries have grown fast bygradually removing binding constraints toprogress, not by implementing a long list ofpolicies and reforms. The state has a criticalrole in that. Countries that have succeededin igniting sustained growth, have faceddifferent sets of challenges and adoptedvarying policies on market regulation, exportpromotion, industrial development and technologicaladaptation and progress. 12 When acountry is already growing fast, the challengeis to remove or anticipate future constraintsas they become actually or potentially binding.Positive terms of trade shocks, like therecent commodity boom as a result of therise of the South, can help begin growthacceleration but not sustain it. However,focused economic and institutional reformsappear to have statistically and quantitativelysignificant impacts on how sustained growthaccelerations are. 13In many high-performing developingcountries, the state operates differently fromthe conventional welfare state, which aims tocorrect market failures and build social safetynets while promoting market-led growth.Instead, developmental states have been proactive:initiating and monitoring transformationsin people’s lives. 14 Rather than merelybeing market-friendly, these states have beendevelopment-friendly. Those with strong,innovative social programmes are often alsopeople-friendly —a necessary progression inthe move from a focus on growth to humandevelopment.66 | HUMAN DEVELOPMENT REPORT 2013