Recent literature has contrasted Human Development, described as the ultimate goal of the development process, with economic growth, described as an imperfect proxy for more general welfare, or as a means toward enhanced human development. This debate has broadened the definitions and goals of development but still needs to define the important interrelations between human development (HD) and economic growth (EG). To the extent that greater freedom and capabilities improve economic performance, human development will have an important effect on economic development (ED). Similarly, to the extent that increased incomes will increase the range of choices and capabilities enjoyed by households and governments, economic growth will enhance human development. This paper analyzes the importance of HD in ED.
Human development (HD) as pioneered and popularized by the UNDP global Human Development Reports, explains how human development is now customarily measured through the human development index (HDI), which is based on four indicators covering life expectancy, adult literacy, education enrolment ratios and gross domestic product per capita.
It was realized that the economic development alone cannot promote human development. Despite economic achievements of a country, the living standard of their masses usually remained largely unchanged. They remain in poor living conditions. HD is an integral part of economic development because it deals with the most important elements (HDI measures) of the development process. Economic growth is a necessary but not sufficient condition for development, especially sustainable poverty reduction.
Consequently the concept of human development got expanded beyond economic development. Human development can be simply defined as a process of enlarging choices. Every day human beings make a series of choices ' some economic, some social, some political, some cultural. If people are the proper focus of development efforts, then these efforts should be geared to enhancing the range of choices in all areas of human endeavor for every human being. Human development is both a process and an outcome. It is concerned with the process through which choices are enlarged, but it also focuses on the outcomes of enhanced choices (AHDR, 2002).
The concept of human development was taken into a broader perspective while touching upon social, economic, political and cultural aspects of human life with special emphasis on reduction in poverty and narrowing down the gap of inequality and unemployment.
It embraces all aspects of human life and not just the economic aspect. At this juncture, the utilization effect of income is important and not the income itself.
Another important element to consider is that, evidently social problems that may accompany economic growth cannot be left aside until economic development has taken place because development is a never- ending process and cannot be sustained in the long run while social ills are increasing.
Furthermore, social problems are best and most economically solved when economic development is taking place and not after the fact. For example, solving the problem of crime at its beginning is exceedingly easier than after it has taken root or become organized. Most important, it is often the pursuit of the single goal of maximizing income growth that causes the social problems in question. The geographic location of industry and other economic activities on purely economic principles may result in the concentration of these activities in and around the major city which necessitates labor movements that disrupt family life with attendant social problems. It may increase the marginalization of certain regions and groups of the population that are not directly touched by this concentrated investment thus increasing the gap between rich and poor within the nation. It may also result in a deteriorating physical environment and in a social environment that causes social unrest that ultimately destroys the fruits of economic growth. Conversely, social development, in terms of greater participation of the population in decision-making and in the execution of development activities, that minimizes poverty and promotes equity, that advances the status of women and integrates youth in the development process and that insures, in general, a more humane social environment, itself plays a major positive role in the long-run intensity and sustainability of economic development. It is therefore evident to conclude that Economic development cannot be sustained as long as social ills are in existence.
Boozer at el. (2003) developed new empirical strategies to estimate the strength of the two ways chain connecting human development and economic growth. They concluded that human development must be given priority for the achievement of both higher economic growth as well as human development.
To understand the key determinants of human development or economic growth helps decision makers on setting the proper poverty eradication strategies in the developing countries.
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