Journal Issue
Finance … Development September 1979

From growth to basic needs: The evolution of the recent emphasis on basic human needs as a target of economic development strategies

International Monetary Fund. External Relations Dept.
Published Date:
September 1979
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Paul Streeten

How is it that, in spite of growing hostility and misconceptions, the concept of “basic human needs” has been so widely accepted as the principal objective of development policies? Among the advocates of a basic needs approach to development are not only bilateral and multilateral donor agencies, but also thinkers from the Third World whose views are expressed in documents such as The Declaration of Cocoyoc (1974), What Now—Another Development (1975), prepared by the Dag Hammarskjöld Foundation, Catastrophe or New Society? (1976), prepared by the Bariloche Foundation in Argentina, and Reshaping the International Order (1976).

In order to understand the wide appeal of this approach, it is helpful to reflect on how the concept has evolved and on the way in which accumulating experience has called for changes in the approaches adopted by development policymakers. Otherwise we might be tempted to say that the international development community takes up, from time to time, new fads and fashions, or that we are acting out a comedy of errors. Basic needs is not just another fad. (Nor, of course, is it the revelation of ultimate truth.) It is no more, but also no less, than a stage in the thinking and responses to the challenges presented by development over the last 20 to 25 years.

If, in the following pages, the deficiencies of the prebasic needs approaches are stressed and the virtues of the basic needs approach overstressed, this is done in order to bring out sharply its distinctive features. It is not intended to imply either that the previous approaches have not taught us much that is still valuable, or that the basic needs approach is not subject to many of the objections raised to earlier approaches, and some additional ones.

Basic needs is concerned with removing mass deprivation. The approach can be defined briefly as one which is designed to improve, first, the income earning opportunities for the poor; second, the public services that reach the poor; third, the flow of goods and services to meet the needs of all members of the household; and fourth, participation of the poor in the ways in which their needs are met. All four pillars must be built on a sustainable basis. In addition, basic needs must be met in a shorter period and at lower levels of earned income per capita than has generally been true in the past, or than would have been achieved via the income expansion associated with growth alone.

The early discussions of development in the 1950s had the same concern with deprivation. But, strongly influenced by Sir Arthur Lewis and others, these discussions concentrated on economic growth as the most effective way of eradicating poverty. It was on the growth of incomes, especially in modern, organized, large-scale industrial activity, that the hope for improvement in basic welfare was built. At this early stage, it was quite clear (in spite of what is now often said in a caricature of past thinking) that growth was not an end in itself but merely a performance test or an indicator of development.

There were three types of justification for the emphasis on a country’s economic growth as the principal performance test. One was the belief that the gains from economic growth would automatically “trickle down” to the poor and their benefits would spread through market forces, raising demand for labor, raising its productivity, and raising wages, or lowering prices. There were, of course, even in the early days, some skeptics who said that the process of growth tends to give to those who already have, not to spread its fruits widely.

Alternatively, the assumption was made that governments are democratic, or at any rate concerned with the fate of the poor, and will extend the benefits of growth by policies such as progressive taxation or social services. If, in fact, market forces did concentrate benefits, governments would correct them.

The third justification was the more hardheaded belief that in the early stages of development the fate of the poor must not be a major concern. The best way to help them, it was argued, was first to build up the capital, infrastructure, and productive capacity of an economy. For a period of time—and it can be quite a long period—the poor might even have to go through a process of belt tightening, while the benefits from development would go mainly to the rich. But if the rewards of the rich are used to provide incentives to innovate, to adapt, to save, and to invest, the accumulated wealth will eventually benefit the poor.

This view was supported by analysis based on the U-shaped so-called Kuznets curve, which has strongly influenced thinking about development. According to this model, the early stages of growth are accompanied by growing inequality. Only at an income of about $600 per capita (in 1973 dollars) is further growth associated with reduced inequality (measured by the share of the lowest 20 per cent of the population).

Dualism and unemployment

Each of these three assumptions turned out to be wrong, or at least not to be universally confirmed, as we gathered more experience. Income did not automatically trickle down to the poor, except possibly in a few countries, with special initial conditions and policies; nor did governments (not surprisingly) always take corrective action to reduce poverty; and it certainly was not true that a period of increasing poverty or inequality was needed in order to accumulate capital and stimulate entrepreneurship. It was found that small farmers saved at least as high a proportion of their income as big landlords, and were actually more productive in terms of yield per acre, and that entrepreneurial talent was widespread and not confined to large or foreign firms.

Judging by economic growth, the development process of the last 25 years was a spectacular, unprecedented, and unexpected success. But judged by poverty reduction, it was much less successful. Growth was often accompanied by increasing dualism—the expansion of the modern, urban, large-scale manufacturing sector alongside slow growth or stagnation in the rest of the economy. Despite high rates of growth of industrial production and continued general economic growth, not much employment was created. Nor were the benefits spreading to the poor. In 1954, Sir Arthur Lewis had predicted that subsistence farmers and landless laborers would move from the countryside to the higher-income, urban, modern industries. This would increase inequality in the early stages of growth (as long as rural inequalities were not substantially greater than urban inequalities), but when all the rural poor were absorbed in modern industry, the golden age would be ushered in, when growth would be married to equality.

The Lewis predictions, which dominated not only academic thought but also political action in the early days of development, did not turn out to be true for three reasons. (1) The differences between rural and urban incomes were much greater than Lewis had assumed, owing partly to trade union action on wages, partly to minimum wage legislation, and partly to income differentials inherited from colonial days. (2) The rates of growth of the population and of the labor force were much larger than expected. (3) The technology transferred from the rich countries to the urban industrial sector was labor saving and did better at raising labor productivity than at creating jobs.

The reaction to the growing dualism that had resulted from modern, industrial growth was to turn to the need to create employment. Since 1969, work by the International Labor Organization’s missions to seven countries has shown that “employment” and “unemployment,” as these are defined in the industrial world, are not illuminating concepts for a strategy to reach the poor in the developing world. Experience in many countries showed that “unemployment” can coexist with considerable labor shortages and capital underutilization. (Gunnar Myrdal had criticized the employment approach in Asian Drama earlier.)

“Employment” and “unemployment” only make sense in an industrialized society where there are employment exchanges, organized and informed labor markets, and social security benefits for the unemployed who are trained workers, willing and able to work, but temporarily without a job.

There are none of these institutions in many developing countries. The root problem of poverty in the developing countries is not unemployment. It is very hard work and long hours of work at unremunerative, unproductive forms of activity. This discovery has drawn attention to the informal sector in the towns: the blacksmiths, the carpenters, the sandal makers, the builders, and the lamp makers—all those who often work extremely hard, are self-employed, or are employed by their family, and are very poor. And it has drawn attention to the women who, in some cultures, perform hard tasks and work long hours without even being counted as members of the labor force. The problem then was redefined as that of the “working poor.” Not only labor but also capital are grossly underutilized in many developing countries, which suggests that causes other than surplus labor in relation to scarce capital are at work. There are three types of causes of low labor utilization in developing countries, none of which is captured by the conventional employment concept, but all of which are important if development is to mobilize fully the abundant factor—labor. These can be classified under (1) consumption and levels of living; (2) attitudes; and (3) institutions.

Nutrition, health, and education—aspects of the level of living—are important for fuller labor utilization. But they have been neglected because in rich societies they count as consumption, which (except for some forms of education) has no effect on human productivity (or possibly a negative one, like four-martini lunches). In poor countries, better nutrition, health, and education can increase production. They constitute forms of investment in human resources. (This is one thread that goes into the fabric of the basic needs approach.)

Attitudes also make a difference to what jobs people will accept. In Sri Lanka, for example, a large part of unemployment is the result of the aspirations of the educated, who, as a result of their education, are not prepared to accept manual, “dirty” jobs.

The third dimension is the absence or weakness of such institutions as labor exchanges, credit institutions, and an appropriate system of land ownership or favorable tenancy laws. As a result, labor is underutilized.

For reasons such as these, an approach to poverty which runs in terms of unemployment and underemployment, in which levels of living, attitudes, and institutions are assumed to be adapted to full labor utilization (as they are in industrial countries), or automatically adaptable (as they are in Marxist theory, though not in Marxist practice), has turned out to be largely a dead end.

Moreover, and this brings us closer to basic needs, perhaps 80 per cent of the population of developing countries are members of households, so that one might, by raising the income of the head of the household, presume to benefit them. (Some qualifications are discussed below.) But there are perhaps 20 per cent outside these households. These are not the unemployed but the unemployables: the old, the infirm, the crippled, and orphaned children. If we wish to meet basic needs, we ought to be concerned also with those for whom productive and remunerative work is not an option and who do not benefit from being members of a family.


With the concern for the “working poor,” the attention then switched from dualism and employment to income distribution and equality. The book published in 1974 by the World Bank and the Sussex Institute of Development Studies, entitled Redistribution with Growth, was concerned with redistribution. This concern arose from two sets of questions. (1) How can we make the small-scale, labor-intensive, informal sector more productive? How can we remove discrimination against this sector and improve its access to credit, information, and markets? How does redistribution affect efficiency and growth? Does helping the “working poor” mean sacrificing productivity, or is helping the small firm and the small farm an efficient way of promoting growth? (2) How does economic growth affect income distribution? In Bangladesh, India, Indonesia, Pakistan, the Sahel of Africa, and Sri Lanka growth (of a certain type) is necessary to eradicate poverty. But economic growth in some countries—for example, Brazil and Mexico—reinforced and entrenched existing inequalities in incomes, assets, and power. Therefore, not surprisingly, a certain type of growth, beginning with an unequal land and power distribution, made it more difficult either to redistribute income or to eradicate poverty.

It is an empirical question to ask how economic growth affects inequality and poverty, and how both in turn affect economic growth. The answers to these questions will vary from country to country and will depend in large measure upon the initial distribution of assets, the policies pursued by the government, available technologies, foreign trade opportunities, and the rate of population growth. It is another empirical question to ask how policies aimed at reducing inequality and meeting basic needs affect individual freedom. But we also asked ourselves the question: Which objective is more important—to reduce inequality through redistribution or to meet basic needs?

In societies in which many people’s levels of living are low the goal of meeting basic needs may have a higher priority than reducing inequality—for two main reasons. First, most people would, rightly, regard meeting basic needs as more important than equality. Equality per se is of no great concern to people, other than to utilitarian philosophers and ideologues. Second, implementing basic needs is a more operational goal than equality. Equality is a highly complex, abstract objective, open to many different interpretations, and it is, therefore, difficult to know what are the criteria for achieving it, quite apart from the difficulties of implementation. On the other hand, meeting the basic needs of deprived groups, like removing malnutrition in children, preventing disease, or educating girls, are concrete, specific achievements judged by clear criteria. If we judge policies by the evident reduction of suffering, the criterion of basic needs scores higher than that of reduced inequality.

Basic human needs

The current emphasis on “basic human needs” is a logical step along the path of development thinking. The evolution from a concern with growth, employment, and redistribution to basic needs shows that our concepts have become less abstract and more disaggregated, concrete, and specific.

The basic needs approach is concerned with particular goods and services directed at particular, identified human beings. Another advantage of the basic needs approach is that it is a more positive concept than the double negatives of eliminating or reducing unemployment, alleviating poverty, or reducing inequality. The basic needs approach spells out in considerable detail human needs in terms of health, food, education, water, shelter, transport, simple household goods, as well as nonmaterial needs like participation, cultural identity, and a sense of purpose in life and work, which interact with the material needs.

Moreover, basic needs have a broad appeal, politically and intellectually. Because of the political appeal, they are capable of mobilizing resources, which vaguer objectives, like raising growth rates or contributing 0.7 per cent of GNP or redistributing for greater equality, lack. Intellectually, they provide a key to the solution of a number of apparently separate, but on inspection related, problems. Urbanization, the protection of the environment, equality, inter-national and intra-Third World trade, appropriate technology, the role of the transnational enterprise, the relation between rural development and industrialization, rural-urban migration, domination, and dependence all appear in a new light and are seen to be related, once meeting the basic needs of men and women becomes the center of our concern.

Income approach and basic needs

Does, then, the basic needs approach represent an improvement on the earlier approaches, which advocated raising the productivity, incomes, and purchasing power of the poor? There are several reasons for thinking that it does. An improvement in only the productivity of, say, poor farmers may not raise their earnings. It may be reflected only in lower food prices and benefit urban food consumers. But even when higher productivity is fully registered in higher earnings, the income approach has serious limitations. Personal income which is earned by an employed worker or self-employed farmer or artisan is sometimes an inefficient way of meeting basic needs and may even reduce the amount spent on necessities. The expenditure pattern of subsistence farmers who switch from growing their own food to cash crops, or are employed in dairy farming, often changes from coarser, more nutritious, to finer, less nutritious, cereals or from food to nonfood items. Nutritional and health standards fall, even though income has risen.

Similarly, when women go out to work and cease to breast-feed their children, incomes rise but health standards fall. We have to see how we can achieve appropriate medical, biological, and physiological standards of nutrition because the methods by which higher incomes are generated may interfere with the availability of nutritious food. There is also the neglected question of the intrahousehold distribution of goods and services. In our surveys we often assume that if the head of the household receives adequate income the other, members of the family are also looked after. But the male head of the household often benefits at the expense of the women and children. In these cases simply increasing incomes does not help the deprived “target groups.”

Another criticism of the income approach is that, while it may provide adequate personal income to buy needed goods and services in the market, some basic needs cannot be met at all or cannot be met efficiently by private purchases. Such needs as health, education, safe water, and sewerage can only, or more efficiently, be provided for through public efforts. (A minimum private income is, however, often necessary for gaining access to free goods and services: first, to cover the costs of forgone income—of children sent to school who would otherwise have worked on the farm, for example—and second, to cover out-of-pocket expenses, such as transport, clothes, or books.)

Other limitations of the income approach are that it ignores those who are incapable of earning an income—the unemployables—and that it ignores nonmaterial needs. Participation in the design and implementation of projects affecting the poor, a sense of purpose in life and work, and a sense of national and cultural identity built on indigenous values are essential.

The role of nonmaterial basic needs, both as ends in their own right and as means to meeting material needs that reduce costs and improve impact, is a crucial aspect of the basic needs approach. Nonmaterial needs interact in a complex and underexplored way with material needs, but are quite distinct in that they normally do not require the allocation of scarce resources and, therefore, cannot readily be dispensed by the state. But any proper definition of basic needs must encompass a whole range of needs that cannot be met simply by supplying goods to the needy.

The essence of the case for the basic needs approach is that it enables us to achieve a widely agreed-upon, high-priority objective in a shorter period, and with fewer resources, than if we took the roundabout route of only raising employment and incomes, and waiting for basic needs to be satisfied. This is clearly illustrated by the experience of Sri Lanka and the state of Kerala in India, where, at extremely low income levels, life expectancy, literacy, and infant mortality have reached levels comparable to those in the most advanced countries. The basic needs approach achieves this objective by economizing on the resources required and by increasing the available resources.

The required resources are reduced because the basic needs approach economizes on resources devoted to nonbasic needs. For example, it replaces expensive, urban, curative health services, by low-cost, replicative, preventive, rural health services. It also economizes by using linkages between sector programs, such as improving nutrition, and thereby reducing health expenditure, improving health (by eliminating parasitic diseases, for example) and thus reducing both health and nutritional expenditures. In Sri Lanka, for example, the right kind of education has made possible economies in the provision of safe water, because the people know when to boil unsafe water. Finally, it economizes on required resources by reducing fertility rates. When infant morality is reduced and more children survive, when women are better educated, and when the community takes care of the old and disabled, the need and the desire for large families is reduced. Resources can then be devoted to improving the quality of life of smaller families.

The available resources are increased because a sustained basic needs approach makes for a healthier, more vigorous, better skilled, better educated, better motivated labor force, both now and later when the present generation of children enter the labor force, because it mobilizes previously underutilized labor (and local materials) and because it makes use of capital-saving techniques. Costa Rica, South Korea, Singapore, Taiwan, and Yugoslavia illustrate this.

Basic needs is therefore thrice blessed. It is an end in itself, not in need of any further justification. But it is also a form of human resource mobilization, it harnesses the factor in abundant supply in the poor countries, and, by reducing population growth, it economizes in the use of resources and improves the quality of labor.

If this effective and concerted attack on hunger, malnutrition, ignorance, and ill health also mobilizes more international resources, by making meeting basic needs a first charge on our aid budgets, it would testify to the fact that we have begun to acknowledge our membership of the human family.

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