Growth vs basic needs: Is there a trade-off?

Abstract

Critics of the basic-needs approach to development have argued that by emphasizing activities which are essentially consumption oriented, the basic-needs approach implies a reduction in the rate of growth. On the other hand, proponents of this approach point to the human capital aspects of basic needs, which could be instrumental in increasing productivity and growth in output. This paper attempts to marshal some further evidence of the growth-basic needs trade-off by undertaking econometric estimates of the variables explaining LDC growth during the 1960–1973 period. The general finding is that countries which had done well on basic needs in 1960 had above average growth rates during the period 1960–1973. Improvement in basic needs during the period are also correlated with higher growth rates of GNP, but it is impossible to ascertain if this improvement is a cause of or an effect of the higher growth in output.