New economic view of development

The experience of the 1950s and 1960s when many third world nations did realize their economic growth targets but the level of living of the masses of people remained for the most part unchanged, signaled that something was very wrong with this narrow definition of development. An increasing number of economist and policymakers now clamored for the “dethronement of GNP” and the elevation of direct attack on widespread poverty, increasingly inequitable income distribution, and rising unemployment.

In short during the 1970s, economic development came to be redefined in terms of the reduction or elimination of poverty, inequality, and unemployment within the context of the growing economy. “redistribution of growth” became an common slogan. A number of developing countries experienced relatively high rates of growth of per capita income during the 1960s and 1970s but showed little or no improvement or even an actual decline in employment, equality, and the real incomes of the bottom 40% of their populations. By the earlier definition, these countries were developing, by the newer poverty, equality, and employment criteria they were not.