New economic view of development

The New Economic View of Development (NEVD) is a paradigm shift in the way economists and policymakers think about economic development. It emerged in the 1990s and has gained popularity in recent years. The NEVD challenges the traditional views of economic development, which were based on the idea of rapid industrialization and economic growth through investment in physical infrastructure and human capital.

Key features of the New Economic View of Development:

  1. Focus on human well-being: NEVD prioritizes human well-being and happiness over economic growth. It recognizes that economic growth is not an end in itself, but rather a means to achieve human well-being.
  2. Inclusive growth: NEVD emphasizes the importance of inclusive growth, which means that economic growth should benefit all members of society, not just the wealthy few.
  3. Sustainable development: NEVD recognizes that economic development must be sustainable in the long run. This means that economic growth must be achieved in a way that does not harm the environment or deplete natural resources.
  4. Institutional development: NEVD highlights the importance of institutional development, which refers to the creation of institutions that support economic development, such as the rule of law, property rights, and social norms.
  5. Social and environmental factors: NEVD recognizes that social and environmental factors, such as education, health, and environmental degradation, are critical determinants of economic development.
  6. Non-market values: NEVD acknowledges that non-market values, such as social relationships, cultural heritage, and environmental quality, are important components of human well-being and should be taken into account in economic decision-making.

The New Economic View of Development has several implications for economic policy:

  1. Shift from GDP to alternative indicators: NEVD suggests that GDP is not a sufficient measure of economic development. Alternative indicators, such as the Human Development Index (HDI) or the Genuine Progress Indicator (GPI), should be used to measure economic development.
  2. Investment in human capital: NEVD emphasizes the importance of investing in human capital, such as education and healthcare, to promote economic development.
  3. Environmental protection: NEVD recognizes the importance of environmental protection and sustainable natural resource management to ensure long-term economic development.
  4. Social protection: NEVD suggests that social protection programs, such as social insurance and safety nets, are essential to reduce poverty and inequality.
  5. Institutional reform: NEVD highlights the need for institutional reform to create a favorable business environment and promote economic development.

The New Economic View of Development has been influential in shaping economic policy in many countries, particularly in the areas of sustainable development, social protection, and institutional reform.