According to Sen (1999), development should be defined as a process of enhancing individuals’ freedoms instead of emphasizing economic gains or technological advances. He argues that increasing personal incomes or promoting advanced technologies in a country must be related to improving the standard of living for all citizens. In other words, wealth is important only in so far as it encourages greater well-being. Additionally, the end goal of development is to remove all forms of unfreedom (e.g., poverty, famine, social deprivation, social intolerance) and increase substantive freedoms for all people in the whole society, offering these individuals a meaningful quality of life (Sen, 1999).
In Sen’s approach, development is viewed as a multidimensional concept. By emphasizing non-economic factors rather than economic factors, his focus shifts from “quantity” to “quality” toward a more just and equitable society. He argues that using GDP cannot reflect exactly the development of a country because it merely measures the size of a nation’s economy. GDP itself fails to capture the distribution of income and ignores negative effects of economic growth on the whole society. Therefore, other aspects of life should be mentioned to measure a nation’s quality of life, such as life expectancies, literacy rates, inequality, and environmental indicators. While his approach is quite comprehensive and can be applied for all countries, there are some limitations as he lacks historical or global consideration when analyzing some development issues as well as fails to connect these problems. As his approach was proposed more than twenty years ago, some issues may not be true in the current context. Furthermore, it may be quite difficult to quantify his non-economic concepts, especially in developing countries.
Using other indices is essential to get a more comprehensive view of development and contribute to well-informed policymaking. Therefore, the level of development should be measured by a composite index that it takes into account a country’s quality of life. In this case, some indices, such as Human Capital Index (HCI), Genuine Progress Indicator (GPI), Human Development Index (HDI), Happy Planet Index (HPI), Social Progress Index (SPI) should be proposed to measure the concept of development. By combining different variables, composite indices can assess the development of a country that goes beyond the limitation of a nation’s income. For example, HDI is a composite index of education, life expectancy, and GNI per capita that help policy-makers and people gain a broader perspective a country’s status instead of only looking at GDP, which is purely an economic indicator. However, it is difficult to have one index that can be a one-size-fits-all aspects of development. While economic growth-based measures such as GDP or GNP can be useful to assess countries’ progress and financial well-being overtime, GDP or GNP itself has some limitations when it fails to measure important aspects of well-being. Depending on specific purposes, we can consider which index should we use. Regarding the concept of development, it is recommended to use composite indices instead of GDP or GNP.
Sen, A. (1999). Development as Freedom, Alfred A. Knopf, New York.