Economic development is the presumed solution to absolute poverty and to many of the
world's other most pressing problems. But what is development, and how do we know it when we
see it?
The term, development, has been used in several ways. Traditionally, it was equated with
growth of per capita income. Since the 1970s, other indicators of development have become
widely used by development scholars and development agencies such as the World Bank. The
meeting of basic needs (or, equivalently, reduction in absolute poverty), the creation of modern
employment opportunities, and the achievement of a less unequal distribution of income and
farmland have all become important criteria in determining the level of development.
Traditional measures of growth, especially in developing countries, may be misleading in
that they fail to account for the environmental destruction that often accompanies spurts in
temporary and unsustainable economic growth; and economists are devising measures of the
national capital stock that includes environmental wealth. The United Nations has placed both
educational attainment and health standards on equal footings with per capita income as
development criteria, in the widely followed United Nations Development Program human
development index (HDI). Some leading development scholars, such as Amartya Sen, Denis
Goulet, and Dudley Seers, have gone further. They argue that more intangible goals, such as
expanded ability to choose (including political as well as market freedoms), enhanced self-esteem,
and self-actualization must be considered development criteria in their own right, if not its only
meaningful measures. (For an introduction to Amartya Sen’s influential “capabilities” approach to
measuring development goals, see Chapter 1 of Todaro and Smith).
Thus, development is not necessarily the same as growth, although in poor countries growth
is generally a precondition for meeting important development goals, such as poverty reduction. But
if growth is a necessary condition for development in poor countries, it is not a sufficient condition.
This case study comparing Brazil and Costa Rica brings out some of these contrasts in national
development performance when different aspects of development are stressed.
These two Latin American countries are good cases to examine carefully because while
Brazil is often cited as an example of a country experiencing growth without development and
Costa Rica is often cited as a case of successful development, a close examination of these two
countries reveals the great complexity of these issues.