Unit 4 Macro: Amartya Sen

In a recent assignment, A2 students were asked to write a 500 word profile on each of two development economists of their choice and to capture their key ideas and connect to one or more current issues in development. I will be adding some of their responses to the economics blog. Here Ben Evans focuses on the work of Amartya Sen

Amartya Sen has been one of the key proponents of assessing growth via a broad spectrum of social and economic measures, instead of GDP per capita (or the equivalent). He was essential in the creation of the United Nations HDI measurement (which combines GDP, life expectancy and education into a single index) which was designed to do just that.

Sen believes that development is best classified as the growth of two sorts of freedoms. The first is political freedom, a concept related to that of extractive and inclusive institutions. In a politically developed society individuals will be able to choose their governments through democratic means and the polity will be run on the basis of majority government and the rule of law. The growth of governmental transparency and a just legal system is also incorporated within this aspect of developmental freedom.

The second aspect is that of economic freedom, which manifests itself in three ways. Firstly there is the economic freedom to make choices between products and to buy the goods and services which you need or desire (at higher levels of development). An example he gives concerns famines; most famines occur in countries in which there is more than enough food to supply the whole population (and all occur in a world in which that is the case). Thus the reason why people starve is not directly the lack of food, but instead the lack of economic freedom of the famines victims (expressed in the purchasing power of money). As your income grows, so too does your freedom and as a result economic growth – best delivered by market mechanisms – is vital for development. Free markets also drive the element of economic freedom, namely the freedom to choose between a variety of different goods and services, and to sell your own produce (be it as part of a firm, or as part of the workforce).

The third aspect of economic freedom is one which is not directly provided by the market, that of freedom of opportunity. This freedom is comprised within the provision of goods such as education and healthcare; however it also derives from the social structure of the society in question. Indeed Sen mentions the importance of trust and social capital within “development as freedom”, as this enables people to work collaboratively and helps ensure that success in society is based upon merit (as opposed to corruption or inheritance).

Sen’s work is important in development economics today as it encourages a wider and more holistic approach to growth in countries such as India (which he advised for several years). His work shows that governments should seek market led growth as a long term solution to problems such as famine and disease (enabling people to buy medicine and food) but that they should not hesitate to provide the basic goods necessary to develop freedom of opportunity.