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G.J.C.M.P.,Vol.3(4):32-35 (July-August, 2014) ISSN: 2319 – 7285
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HUMAN DEVELOPMENT, PREMISE FOR SOCIO-ECONOMIC DEVELOPMENT
Daniela-Mihaela NEAMȚU1, & Oana-Georgiana CIOBANU2
1Faculty of Economics and Public Administration, Ştefan cel Mare University of Suceava, Suceava, ROMANIA
2Faculty of Economics and Public Administration, Ştefan cel Mare University of Suceava, Suceava, ROMANIA
Abstract
Development is a preamble of improvement of the quality of life and includes both materials such as infrastructure,
housing quality and living standards in general, but also spiritual elements such as education, freedom of expression and
cultural manifestation. People are instruments and beneficiaries, as well as victims of all development activities. Their
active involvement in the development process is the key to success. An important feature of human development reveals
that economic and social development is done by humans and, therefore, must be created and perfected human potential
based on investment in humans and also in fields of education and culture, vocational training and health. In this
approach, we will highlight the existence of correlations between human development and economic growth. Using the
documentation and literature review identifies key factors of assessing the present situation of scientific research and
European practice.
Keywords: human development; economic development; education; knowledge.
1. Introduction
Human development is a broad concept, which includes all areas of social-human life. A human development
implies a healthy life as long as possible, access to education which allows attractive and well paid employment, access
to a diverse range of goods and services. Other aspects of human development require political freedom and respect for
human rights, respect towards the man, what A.Smith called 'the ability to communicate with others and to get out in the
streets without feeling a sense of shame'. As a last resort, human development is the development of people, for people
and by people. In this way, a central objective of Human Development Reports of UNDP from the ' 90s and up to now,
was "to underlined the fact that the development is in the first place and fundamentally linked to the people". (Klugman
J, 2010). All these ideas were very good synthesized in the concept of human development introduced by the economist
Amartya Sen, Nobel Prize winner for Economics, in connection with his concept of capability. Mahbub ul Haq, an
Pakistani economist, has developed this concept and build it into the construction of Human Development Index (HDI),
whose parent was. 'Human development, he says, can be so defined as a process of enlargement of the capacity of
people's choices. The choices can be in various fields: political freedom and participation in community life, to be
educated and to have freedom of expression, to survive and to have a healthy life and to enjoy a decent standard of living
'. (Mahbub ul Haq, 1996).
Knowledge becomes the most important factor to create human wealth, but also the most effective means to achieve
compatibility between the environment created by man and the natural environment. 'By putting the knowledge on base
of the creation of the human economy, create real premises for clean economic activities, whose cleanup mechanisms
will work continually within economic processes which, being synthetic integrated, will allow human control, with the
levers of the mind, both upstream and downstream, companies developing this process on the beginning , during
production itself, at the end of production and after the use of product or service.’(Toffler, A., 1993).
In literature, a number of authors (Amartia Sen; Megnad Dessai; Ranis, Stewart and Ramirez, 2000; Schultz, 2005;
Suri et all. 2011; Paul Streeten) as well as the Human Development Reports of the United Nations Development
Programme, have tried to analyze both the effect of human development on economic growth and also feedback on the
economic growth of a higher level of human development, with special emphasis on the role that income it has in getting
a better human development.
2. Theories Concerning Economic Growth
The phenomenon of economic growth is identified as being the most powerful engine that can generate long term
growth of the standard of living. The process of economic growth is considered to be extremely complex, influenced by a
variety of institutional, policies, social and cultural factors. In comparison with the literature which is studying the
concept of human development from the perspective of a positive effect of growth, specific literature presents an
extensive classification of these factors, the contribution of each of them being supported by strong arguments.
G.J.C.M.P.,Vol.3(4):32-35 (July-August, 2014) ISSN: 2319 – 7285
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FIGURE 1. Determinant factors of economic growth
Source: Mihuţ, Ioana Sorina, (2013), Growth and convergence criteria in the emerging economies of Central and Eastern
Europe, doctoral thesis, Cluj-Napoca, p. 19.
In the elaboration of the classical theories of economic growth, Adam Smith had a significant influence, in whom
vision the accumulation of human capital, technological advancement and specialization of labor are considered the main
sources of economic growth. Starting from this consideration, Thomas Malthus, David Ricardo, and John Stuart Mill,
shared some of the ideas contained in the Wealth of Nations, with regard to the role and place of ownership in economic
growth and they confirmed that the private benefit derives from the pursuit of private interests, which guides the
decisions of individuals and their activities, a concept that Adam Smith named it “the invisible hand “.
Theories of 1950s and 1960s regarded the economic growth process as a series of successive phases in the evolution
of social trends. They compress models based on neo-classical assumptions. The best known neo-classical model is
Solow-Swan model, which determines the level of output of an economy using mutual interaction between capital, labour
and technology.
The vision of economic growth in the 1980s does not put great emphasis on the use of internal factors or external
situation, but largely as a component whose efficiency depends on the degree of state intervention and regulation and
standardization of the economy. This approach supports the effectiveness of open economies and privatization of
ineffective public companies. Early 1990s brings a new approach known as the new economic growth theory: Barro
(1991). Barro and Sala-I-Martin (1992) and G. Mankiw, Romer and Weil (1992). This proposes to widen the induced
scope of classical theories and explaining the phenomena which determines that certain economies to grow rapidly and
other to stagnate.
The most important works for this purpose are those belonging to Paul M. Romer's 1986„Increasing Returns and
Long- Run Growth” and Robert E. Lucas „On the mechanism of Economic Development” – 1988. They focused their
research on the possibilities of measuring the capital. Another current of endogenous growth is closely related to the
education analysis and research and development (RD), considered to represent factors of current economic growth due
to propagation of beneficial effects and so their potential to generate future growth. Investment in human capital,
education, research and development etc. give positive externalities. Thus, the successive increase of investment could
have increasing yields, adding growing quantities to the total production.
3. Connection between Economic Growth and Human Development
Research carried out for investigating the link between economic growth and human development, such as that of
Ranis (2004), explained that the extension of the capacity and freedom lead to increased economic performance, and
human development would have a significant effect on development. Similarly, on the extent in which the revenue
increase, increases also the range of options and capabilities that benefit on the same extent households but also the
governments; in this way growth will enhance human development.
Ranis and Steward (2005), confirms the importance of the many empirical connections in both directions along the
time, from economic growth to human development, human development, including investment report. Economic
growth, which make an important contribution to human development, can be simultaneous or priority. Therefore,
traditional political measures, which argue that improving human development should wait until economic growth
permits, seem to be an error.
Ramirez et al. (1998) exploring connections between economic growth and human development, identifying two
directions, one of the economic growth to human development and the other, in the opposite direction, from human
development toward economic growth, they found that there is a strong positive relationship in both directions, and
public spending on social services and education are important connections that determines the relationship between
economic growth and human development, while investment rate and income distribution connections are important to
determine the relationship between human development and economic growth.
Boozer at al. (2003) have developed new empirical strategy to estimate the power double connections between
human development and economic growth. They have come to the conclusion that human development should be given
priority, in order to achieve both economic growth, as well as further human development. Chakraborty and Mukherjee
(2010) confirm that there is a need for further investigation to determine influential factors (other than the income per
capita), which underlie the development of a state.
G.J.C.M.P.,Vol.3(4):32-35 (July-August, 2014) ISSN: 2319 – 7285
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According to Ranis, et al (2000) between economic growth and human development is a relationship in dual-
purpose. Moreover, the first purpose is in economic growth, benefiting from human development through the gross
national income (GNI). In particular, GNI encourages human development through family, governmental and
organizational expenses as well as those of NGOs. With economic growth, will increase also family and personal
income, so will spend more, and this will be known by an increase in human development. Moreover, once with the rise
in consumption, health and education among the population increase, also contributing to the economic growth.
We can argue that human development can be defined as a process of expanding people's opportunities to choose.
According to the new paradigm, human development can be regarded as a process of expanding the real freedoms
enjoyed by the people (Sen, 2004). 'The focus on freedoms people contrasts with the more limited visions about
development, such as identifying the development with the growth of gross national product, with an increase in personal
income or with social modernization . The increase of GNP or individual income can be, of course, important as a means
of extending the freedom for people, in the same way as extensive industrialization, technological progress or social
modernization. But freedoms also depend on other factors, such as social and economic arrangements (for example,
access to education, health and social services, access to the labor market), as well as civil and political rights (for
example, freedom to take part in the discussion and public debate) ".
So people both as a group and look in their individuality, represents both the beneficiaries and the promoters of
human development. So that human development, according to the study Human Development Report (2010) has three
main components:
• Welfare - development of real freedoms of the people, so that people can thrive;
• Accreditation, and action - in order to allow people and groups to act - to monitor outcomes of value;
• Justice - increasing equity, sustainability of results and the respect of human rights and other social goals.
Human development has been lately considered to be "the goal of human activity and economic growth and, at the
same time, a strategic instrument in advancing it". (Stewart, G., Ramirez, F., 2000). According to the remembered
authors there is a double relationship of causality between the human development and economic growth. Economic
growth makes it possible to achieve a high degree of human development, on the one hand, and on the other hand, the
improvement of human development levels lead to increased opportunities for economic growth. The causal relationship
between economic growth and human development is presented in Figure 2.
FIGURE 2. Economic growth and human development
Source: Adaptation of Ranis, G., Stewart, f., Ramirez, (2000), of Economic Growth and Human Development, World
Development, vol. 2, pp. 197-219
4.Conclusions
Undoubtedly the fundamental human development is very wide. We support the fact that human development is not
just a final product, as well as argue studies in this way, but also a means of achieving future economic growth. From the
perspective of human development people's possibilities to choose extend in three important areas: the duration of life,
level of education, access to economic resources needed for a decent living. In our vision, human development represents
a concept linked in a manner that is consistent and complementary to human rights, that is the general concept of
economic development. If human development affects extending possibilities and freedoms enjoyed by members of a
community, human rights is an initiative to improve the social structures that facilitate or provide these possibilities and
freedoms.
Also, we think all these are necessary for the constant improvement of the quality of life, to ensure a high level of
welfare, for that human development is the development of people, for people and by people. 'The people are the real
wealth of the nation.'(Sen a., 2004). Economic growth is focused exclusively on extending a single possibility, to obtain
revenue, but human development requires a consolidation of all opportunities - economic, social, cultural or political, so
that income is a means to human development, but not the only one. Therefore, economic growth is a necessary condition
but not enough for human development. According to the Human Development Report, for human development matters,
in the first place the economic growth. Thus, if human development process is one of success, “people can highlight their
G.J.C.M.P.,Vol.3(4):32-35 (July-August, 2014) ISSN: 2319 – 7285
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creativity and can really enjoy their proactive involvements in activities which they appreciate and which gives a social
status and personal desired."
Acknowledgement
“This paper has been financially supported within the project entitled „SOCERT. Knowledge society, dynamism
through research”, contract number POSDRU/159/1.5/S/132406. This project is co-financed by European Social Fund
through Sectoral Operational Programme for Human Resources Development 2007-2013. Investing in people!”
References
1. Human Development Report, 2010.
2. Klugman J. - lead author, Human Development Report 2010- The Real Health of Nations: Pathways to Human Development,
Published for the UNDP.
3. Mahbub ul Haq, (1996), Reflections on Human Development, Edition I, Oxford University Press.
4. Mihuţ, Ioana Sorina, (2013),Economic growth and the convergence criteria within emerging economies of Central and Eastern
Europe, doctoral thesis,Cluj-Napoca, p.19
5. Ramirez, A., Ranis, G., Stewart F., (1998), Economic Growth and Human Development, Working Paper No. 18. Yale University.
6. Ranis Gustav, (2004), Human Development and Economic Growth, Yale University, Center Discussion Paper No.887.
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Economics and Social Affairs, Working Papers, No.8.
8. Sen, A., (2004), Development as freedom, Bucharest, Economics Publishing House,, p.18.
9. Stewart, G., Ramirez, F., (2000), A Economic Growth and Human Development, World Development, Vol. 2, pp. 197-219.
10. Toffler, A., (1993), The third wave”. Bucharest: Political Publishing House, 1993.
11. UNDP- United Nations Development Programme
