The book is notable for introducing the concept of "capabilities," which refers to the various things that people are able to do and be in their lives.

Sen argues that development should be focused on expanding people's capabilities, and that this requires not just economic growth, but also the removal of various types of unfreedoms, such as poverty, hunger, disease, illiteracy, lack of political freedom, and discrimination on the basis of gender, race, or class.

The book also critiques the traditional approaches to development, such as GDP growth or industrialization as the primary means to measure development. Instead, Sen proposes that the capability approach, which measure development on the basis of the actual functional capabilities of the citizens and their ability to live a life they have reason to value.