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The need for a new development model: Structural and conceptual changes are suggested in the national and international approach toward development

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1976
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Enrique Peñalosa

The Habitat conference presents an opportunity of great importance. Beyond the very useful identification of problems and experiential exchange of possible solutions to human settlement problems, this will be the first time ever that the international community will take up the issue of the built environment on a global scale: how well it serves human needs in its present form, and how it will stand the strains of future population growth and distribution.

At issue here, larger of course than the immediate concerns of Habitat, is the basic fabric of human relations. It is this issue for which a series of United Nations conferences is providing a forum—on the environment, on population growth, on food supply, on uses of the sea, on women’s rights, and now on human settlements.

The built environment, in which the great majority of future peoples will live, can best be understood in the context of nationally or regionally organized networks of villages, towns, and cities. Marketing structures and the linkages of transport and communications are among the support systems of these networks. It follows from this that the main thrust of government policies and planning in the years to come should be to harmonize the growth and development of these settlement networks and improve the quality of life for those who live in them. In this sense, Habitat is not only part of a global inquiry into man’s future, but a synthesis of these concerns.

A new approach

I believe that a better understanding of this concept will emerge from the meeting at Vancouver and that this in turn can be the catalyst for a major reorientation of national development policies in rich and poor countries alike. In current development planning, there is a dangerous lag between theory and practice. National leaders and world public opinion must be made to recognize that the systems and methods now in use—the “development model” of the past decades—are not working. For a long time the reasons for this failure were thought to stem from a lack of finances, or political commitment, or expertise. Now it is increasingly understood that none of these go to the heart of the problem. The base cause is conceptual and structural.

The development model now copied in most of the developing world is founded largely on two concepts—one which is almost certainly false and another which is illusory.

The first of these concepts is the so-called linear process of growth, which implies that the road to development is through a series of well-defined stages paralleling the experience of the older industrialized bloc. Although almost universally rejected by development theorists, this notion continues to guide the planning and investment priorities not only of the majority of developing countries but of the international agencies concerned.

The second concept, stemming from the first, is that development can be measured in terms of gross national product and that, by a further extrapolation, the relative well-being of peoples is quantifiable in terms of per capita income. In reality, of course, the great majority of the world’s peoples do not partake of the statistical income ascribed to them and the quality of life of the masses can be deteriorating even as gross national product rises.

This is, on the face of it, a staggering indictment and not entirely fair. Huge efforts have been made in most countries to create the infrastructure of modern societies, and governments have striven within their limited resources to meet the needs of the people in their care. However, before we advance to a new and more useful development system we must accept the harsh fact that we are failing. Owing primarily, but not entirely, to rates of population growth, every effort and every sacrifice is canceled out. No matter what the ratio is of savings and investment or increases in the gross national product, we are faced each year with greater evidence of hunger, poverty, unemployment, and what are rightfully called “subhuman” conditions of life. The focus of these conditions, or where the failure of development is most evident, is in human settlements—in the decay of rural villages, in the overnight shelters along highways, and in the slums and squatter settlements of the great cities.

The Habitat conference will not propose, and I doubt that there could logically be, a universal model for development or for the design and management of human settlements. It is possible to generalize, however, that most developing countries need and are moving toward more comprehensive concepts of planning than they have known in the past. These countries cannot afford economically and cannot survive socially the waste and chaos of the spontaneous growth process which was the pattern, under very different circumstances, of the older industrialized group.

Central role of settlements

At Vancouver, I think the attention of the delegates will be centered on two questions which also will be central to a new model for the development process: the need for national territorial macro-planning, and the role of human settlements in national development strategies.

Territorial planning will not be a revolutionary step, but a natural, logical, and corrective elaboration of the systems already in use. In the past, we have based economic planning on an aggregate of sectoral growth, with priorities given to the most quantitatively productive forces available, but without regard to other considerations—social, environmental, or the need for more regional balance.

We are now coming to understand that true development goes beyond incremental gains in gross product or production for production’s sake. Territorial planning will integrate economic, social, environmental, and regional aspects and will be keyed to the central issues of population growth and distribution and the provision of minimum needs to the masses. It will establish long-term guidelines and program priorities in such areas as population growth and distribution, funding and location of basic industries, designation of priority growth areas, regional land use priorities, and development of national transport and communication systems.

The form of territorial planning will vary according to national need. The central point is that nations which are faced with doubling their populations in a single generation must begin to plan now where those people will live and how they will work, be fed, and be sheltered. We must start now to formulate population policies that can be based on incentives rather than coercion. We must find ways to harmonize sectoral growth with regional balance. We must design and build human settlements that enhance rather than burden human creativity and, both nationally and internationally, we must be made more conscious of the finite character of resources and of the threat to the planetary environment from all kinds of pollution.

The second key factor in the emerging development model must be the recognition of human settlements as the framework of the development strategy. Territorial planning is development within a spatial dimension. Now we must see that human settlement policies can create a new growth dimension. At the very least, the day is past when settlements can be treated as no more than a residual of other activities. Cities are a major resource of each society as creators of wealth and well-being.

Economic development theory recognizes the use of leading sectors as engines for growth. In our lifetimes we have seen examples of this theory in the automotive sector, with its corollary of highway construction, and in armaments. Both of these have proven their capacity to mobilize resources on a broad scale—material, financial, and human—and to create a major multiplier effect on other sectors of national economies.

I believe the engine for growth of the future development model can be centered on construction and modernization of human settlements, including massive efforts in housing, transport, energy supply, and other physical services. It is now recognized that governments and the international agencies in the past have underestimated the importance and potential of the housing and construction sectors because of traditional approaches to the capital-output ratio. This must be changed, and there are signs that it is being changed.

The two main conditions for the introduction of a leading sector of growth are great latent demand and the capacity to mobilize internal resources to meet that demand. An economic development strategy based on the improvement of human settlements will fulfill both these requirements in most developing societies and will combine the necessary multiplier effects with a fairer distribution of goods and services and sound environmental planning.

The construction and housing industries are the only major economic sectors in developing economies for which all basic materials, at least for traditional designs, are available nationally and for which there is no heavy import component. Hence, this strategy lays a healthy emphasis on internal reliance and capabilities.

These industries also have a very high component of unskilled workers which cannot be absorbed in any other way without costly programs of education and training. Thus, very large numbers of otherwise unusable laborers can be turned from a social liability to important economic contributors, as producers and then as consumers.

These industries also have a higher and faster multiplier effect than any other economic activity. In most countries the strength of the housing and construction sectors is the single most important indicator of overall economic vitality. Demand, of course, is virtually limitless, first for housing and then for all human settlement infrastructure. This opens up great opportunities not only for fuller utilization of industrial capacity but also mobilization of savings, innovative forms of credit and mortgage lending, and self-help programs. It also is an area where international financial assistance can be of catalytic importance.

Freed from the physical limitations of sectoral growth, this policy will permit balanced regional development, allocating resources fairly between rural and urban settlements and among various regions. And it will for the first time fully integrate economic, financial, and physical planning in a single national strategy.

It would be ridiculous to suggest that territorial planning and a human settlement development strategy will solve all the economic problems of the Third World. Of course, the first need is to establish a more just economic relationship on a global basis. However, I believe that a new international order must be complemented by a new development model. I believe this is workable in economic terms and is also a political necessity. Development must give, and be seen to give, the first priority to the improvement of the quality of life for the most deprived strata of each population.

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