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Global Development Issues 101: Causes of Growth, Development, and Stagnation

Foreword


International development remains a central topic in academic dialogues, particularly when explored through Public Administration and International Relations lenses. This field delves into the delicate equilibrium between a country’s internal growth objectives and its external diplomatic engagements. The focus is on how nations aim to enhance their economic position and the quality of life for their residents, a reflection of their global stature and internal prosperity.


From an academic perspective, development is defined by the myriad ways nations navigate their economic and societal progress. Even though the importance of development is universally accepted, the outcomes are diverse across countries, and shaped by varying factors. This variance in outcomes underscores the multifaceted nature of the factors that underlie developmental stagnation for certain countries, while others grow and thrive.


To comprehensively apprehend the essence of development, an exhaustive exploration of its historical antecedents is essential. Additionally, a meticulous examination of classical developmental theories holds paramount importance. Furthermore, an acute cognizance of the strategies employed to address global challenges becomes indispensable in the context of mitigating issues such as poverty and inequality.


This 101 series consists of seven articles, each dedicated to exploring the concept of development, its various components, and its potential prospects for the future:

  1. Global Development Issues 101: Understanding the Concept of Development

  2. Global Development Issues 101: Causes of Growth, Development and Stagnation

  3. Global Development Issues 101: Classical Theories on Growth and Development

  4. Global Development Issues 101: The Role of Governments in Economic Development

  5. Global Development Issues 101: The Role of Culture and Institutions in Development

  6. Global Development Issues 101: The Connection Between Gender Equality and Development

  7. Global Development Issues 101: Achieving Sustainable Development and the SDG


Global Development Issues 101: Causes of Growth, Development and Stagnation


The preceding chapter of Global Development Issues 101 delved into the intricate concept of development, shedding light on its inherent controversies and the myriad definitions that abound within the academic realm. Building upon this foundation, the current article takes a closer look at the multifaceted realm of Global Development, offering an insightful exploration into the mechanisms that underpin its emergence and expansion. This narrative also undertakes a nuanced examination of its trajectory, probing not only the markers of progress but also the enigmatic causes behind moments of developmental stagnation. As we embark on this journey through the intricate landscape of Global Development, we are confronted with perplexing questions. How is development made possible, and what factors contribute to its sustained growth? Conversely, why do periods of apparent prosperity sometimes give way to stagnation? These questions loom large, demanding our attention and inviting us to delve deeper into the dynamics of a process that plays a pivotal role in shaping the world we inhabit.


The Significance of Development: Grasping Growth and Stagnation Dynamics through Two Approaches

To truly fathom the complex concept of development, it is imperative to delve deeply into the intricate web of factors that propel its growth or, conversely, usher in periods of stagnation. What often appears as a promising trajectory can lose its effectiveness due to changes in various influencing variables. Simultaneously, altering the state of other pivotal factors can set in motion a shift in this trajectory, ultimately leading to enhancements in the developmental outcomes of diverse nations. In essence, unravelling the subtleties of development necessitates a profound exploration of these underlying causal factors, for it is often the nuanced shifts and interactions among these elements that dictate the undulating currents of progress on a global scale. Understanding how to navigate and influence these dynamics is a paramount endeavour for policymakers, scholars, and individuals dedicated to advancing the well-being of societies worldwide.


Figure 1: Development (Henson, 2022).

Up to this point, we have delved into two primary analytical approaches that offer insights into the dynamics of growth and development. The first approach revolves around the battle against poverty, characterised by immediate actions aimed at alleviating present circumstances. While this approach can effectively enhance the living standards of a population in the short term, it often falls short in addressing long-term structural issues. Nevertheless, it exerts a significant influence on shaping national policies and aid initiatives directed toward developing nations, as underscored by Szirmai (2015). On the other hand, the second approach adopts a more far-reaching perspective, focusing on enduring trends and conditions as it endeavours to unravel the underlying drivers of growth. This method primarily involves a deep dive into a country's productive capacity and income per capita, thereby enabling comprehensive studies that discern the factors underpinning progress and stagnation across different nations. By scrutinising the multifaceted elements that shape a nation's economic and social landscape, this approach offers valuable insights into the intricate interplay of factors that contribute to a nation's development or hinder its advancement.


It is noteworthy that Szirmai (2015) places a special emphasis on the second analytical approach. This preference for prioritizing the long-term perspective in development analysis offers scholars and policymakers a unique opportunity to delve into the intricacies of a nation's development journey. By focusing on enduring patterns and trends, this approach facilitates a deeper and more comprehensive understanding of a nation's performance and the underlying determinants that have propelled it to its present position on the developmental spectrum. This method recognizes that development is not merely a snapshot in time but a dynamic process influenced by a multitude of factors that have evolved over the years. However, it is of paramount importance to acknowledge that a synergistic fusion of both approaches can yield substantial advantages. The integration of immediate, poverty-centric interventions with long-term, trend-focused analysis creates a holistic framework for improving living conditions and igniting transformative change within societies. This blended approach is akin to using both a telescope and a microscope to examine the complexities of development. While the long-term perspective provides the telescope to observe overarching trends and trajectories, the immediate interventions act as the microscope, enabling a detailed examination of the specific challenges and opportunities on the ground.


In practice, this integrated approach relies on quantitative studies and visual representations, such as graphical data, to offer decision-makers a comprehensive and multifaceted view of a nation's developmental landscape. By analyzing empirical evidence, policymakers can make informed decisions, adapting strategies, and adjusting influencing factors to foster more effective and sustainable development outcomes. This dynamic approach to development not only addresses immediate needs but also lays the groundwork for enduring progress, recognizing that the journey toward development is a complex and evolving endeavour that demands multifaceted solutions and a flexible, evidence-based approach.


Figure 2: The Development (Unknown, 2009).

The Framework of the Causes of Growth

In his 2015 book, The Dynamics of Socio-Economic Development, Szirmai introduces an all-encompassing framework designed to unravel the intricate determinants of societal growth. This framework systematically categorises the factors contributing to growth into four distinctive dimensions: proximate causes, ultimate sources, intermediate sources, and socio-economic outcomes (Abramovitz, 1989; Maddison, 1988; Rodrik, 2003; Szirmai, 2008, 2012, 2013) [Figure 3]. Within each of these dimensions, a multitude of factors exert varying degrees of influence on the trajectory of a nation's development. This framework assumes a central role in structuring the analysis and evaluation of economic development across diverse theoretical paradigms, a concept highlighted by Szirmai as early as 2012. In this framework, two primary categories of sources emerge as the most influential in driving economic growth: proximate causes and ultimate sources.


Proximate causes encompass those factors that have an immediate and direct impact on a nation's economic development. In contrast, ultimate sources delve deeper into the foundational underpinnings of growth, revealing the fundamental determinants that shape a nation's developmental potential. Furthermore, Szirmai, in his 2015 work, defines proximate sources as quantifiable factors directly contributing to output growth, while ultimate sources are comprised of fundamental elements that resist easy isolation and measurement. Bridging the gap between these immediate and profound causes are intermediate sources, which serve as intermediaries in the developmental process, connecting the immediate outcomes to the more profound underlying sources. As such, the concept of intermediate sources plays a crucial role in considering the broader societal patterns' impact, effectively bridging the divide between proximate and ultimate causes.


Figure 3: Framework of the sources of growth (Szirmai, 2015).

These intermediate sources are subject to influence from a multitude of factors, including national and international trends, government policies, and shifts in trade dynamics. Szirmai's articulation in 2015 illustrates how these elements collectively contribute to a nuanced understanding of how economic development unfolds within a specific context. Finally, socio-economic outcomes assume a central role in comprehending the extent of growth and development by examining shifts within the societal domain. The presence of economic growth signifies an augmented pool of resources that holds the potential for investment in the holistic betterment of society (Szirmai, 2015). Consequently, any form of growth possesses the capacity to be transformed into successful socio-economic outcomes when the changes are perceptible and contribute back to the immediate sources of economic growth in the form of enhanced human capital.


It is essential to recognize that the relationship between these various sources and economic growth is not unidirectional; instead, it's characterized by complex, circular causality (Szirmai, 2015). Each source within the framework interacts with and influences others, creating a dynamic web of relationships that collectively shape the trajectory of economic growth and its interplay with other factors. In essence, the framework offers a comprehensive lens through which to explore the intricate interplay between institutions, growth, and the multifaceted sources that drive them, shedding light on the complex nature of economic development within theoretical traditions. Furthermore, Szirmai's framework acknowledges that not all sources of growth are amenable to change. Some are deeply rooted in a nation's culture or shaped by environmental factors resistant to alteration. Conversely, other sources of growth are more adaptable, presenting opportunities for intervention and policy adjustments. For example, policies responsive to evolving demand trends or focused on fostering innovation can significantly impact economic growth. In essence, Szirmai's framework provides a structured approach for analyzing and comprehending the multifaceted dynamics of socio-economic development, guiding policymakers and scholars in crafting effective strategies that leverage a wide spectrum of growth-inducing factors.


Figure 4: Meeting (Utopist, 2013).

A Comprehensive Examination of Growth Factors: Exploring Source-Level Contributors in Dept

Ultimate Sources of Growth and Development

The ultimate drivers of growth and development encompass foundational factors that are resistant to easy alteration. Among these, two of the most crucial elements are geographical conditions and demographic characteristics. Geography, being immutable, can be leveraged to gain advantages from a territory, while demographics are influenced by environmental offerings and can be improved with an understanding of population dynamics. Nonetheless, altering demographic characteristics is a slow process that necessitates a considerable amount of time.


Inextricably linked to demographics are the political, economic, and social institutions. As Hodgson (2006) asserts, an institution is defined as a set of rules and norms created by humans to influence and restrict individual conduct. Consequently, institutions represent systems that have evolved over an extended period, influenced both by the population and its prevailing beliefs. In this manner, institutions wield significant influence over the political, economic, and social dimensions of a society. These institutions play a pivotal role in shaping the trajectory of growth and development within a region. They serve as the scaffolding upon which various facets of society are constructed and function. Institutions, as enduring structures, can either facilitate or hinder progress, depending on their design, adaptability, and alignment with the evolving needs and aspirations of the population. As such, they act as gatekeepers to societal advancement, exerting a profound impact on the course of economic, political, and social development.


Figure 5: Large crowd of people (Varavin, 2021).

Indeed, aside from population dynamics, there exists a complex tapestry of factors that are intricately intertwined with a nation's historical narrative and the distinctive characteristics of both the state and its territory, as illuminated by Szirmai (2015). Historical events and the ebb and flow of class and power dynamics, in particular, wield significant influence over a country's developmental trajectory, often acting as catalysts for profound change. Historical events, ranging from wars and revolutions to economic crises and technological breakthroughs, possess the remarkable capacity to alter a nation's course. They can either reinforce existing circumstances, further accumulate advantages for a nation, or, conversely, spark transformative changes that bring about substantial benefits. These events serve as pivotal junctures in a nation's timeline, where decisions made or circumstances thrust upon it can reshape its path for generations to come.


However, it is crucial to recognize that these historical dynamics are deeply entwined with class and power relationships within a society. Those who wield the greatest influence, whether through economic, political, or social means, possess the capability to shape the nation's course during these critical moments. Their actions and decisions can either perpetuate existing power structures or lead to significant shifts in the distribution of power (Szirmai, 2015). Furthermore, they can influence prevailing national attitudes and ideologies, setting the stage for either continuity or transformation in the socio-political landscape. As such, historical events and the intricate dance of class and power dynamics represent powerful forces that can steer a nation's developmental trajectory in diverse directions. Recognizing their role and the potential for both continuity and change they bring is essential for a comprehensive understanding of a nation's path toward development. This underscores the importance of studying the interplay between these factors and other elements within the broader framework of development. It ultimately contributes to a more nuanced and informed approach to policymaking and societal progress.


Furthermore, in contemporary society, technological advancements have assumed increasing importance. They can influence both growth and development by introducing previously unforeseen and unexpected benefits (Szirmai, 2015). Technology can be considered a direct driver of growth owing to its necessity and adaptability to human intervention. However, it's crucial to acknowledge that technological progress can be unpredictable, require significant financial investments, and exhibit variations among countries in terms of resources and development pace. Consequently, some nations find themselves at a distance from the technological forefront, engaging in ongoing competition to secure the most advantageous position. In the long term, advancements in science and technology ultimately determine a territory's standing relative to others.


Figure 6: AI Concept (Metamorworks, 2020).

Intermediate Sources of Growth and Development

Intermediate sources of growth assume a critical role in the intricate web of factors that determine a nation's trajectory toward development. While these sources are relatively resistant to change, they possess a degree of flexibility that distinguishes them from the ultimate sources of growth. Within this category, three key elements are particularly influential, as identified by Szirmai (2015). Firstly, the evolving patterns of domestic and international demand exert significant influence. These trends, shaped by a myriad of factors, compel nations to adapt and enhance their market offerings. Whether it's responding to shifts in consumer preferences or tapping into new global markets, these adjustments often necessitate investments in human and physical capital. This proactive response, in turn, fuels economic growth and bolsters a nation's competitive edge.


Secondly, the formulation of economic, social, and technological policies plays a pivotal role as intermediaries. Policies within these domains are strategic tools that nations employ to harness the potential benefits emerging from shifting demands and trends. Thoughtful policy decisions can significantly impact a nation's market by promoting the welfare of its citizens and fostering industry growth. The synergy between policy-making and evolving market dynamics underscores the importance of adaptable governance structures. Thirdly, changes in terms of trade, as delineated by Williamson (2011), hold immense significance. The fluidity of international trade and market conditions profoundly affects a nation's ability to meet burgeoning demands and adapt to shifting policy dynamics. Trade, as a vital component of economic growth, underscores the interconnectedness of nations on the global stage. The rules and conditions governing international trade have a direct bearing on a nation's economic prosperity.


The interplay between these intermediate sources is complex and multifaceted. The evolution of demand, whether originating from domestic or international factors, prompts corresponding policy adjustments. Furthermore, socio-economic policies are often influenced by underlying economic interests and power structures, which can either steer a nation's trajectory toward growth through enabling policies or constrain it through restrictive measures (Szirmai, 2015). Ultimately, these interconnected changes cascade through the realm of trade, both at the national and international levels. As demands evolve, policies adapt, and trade conditions transform, nations must prioritize productivity and efficiency to remain competitive. These factors, in turn, have a direct and lasting impact on the proximate drivers of growth and development. In summary, intermediate sources serve as the vital link connecting the foundational elements of development to the immediate forces propelling a nation's progress, highlighting the intricate nature of economic growth and societal advancement.


Figure 7: White Water Boat (Silver, 2015).

Proximate Sources of Growth

The proximate sources of economic growth occupy a pivotal role in the intricate machinery of a nation's development. They are the engines that power progress, standing closest to the forefront of influence. These sources represent quantifiable and immediate factors that directly contribute to the expansion of a nation's economic output. Understanding the mechanics of how these proximate sources operate requires delving into the concept of efficiency, a fundamental principle highlighted in the works of scholars like Denison (1967) and Maddison (1987, 1988). Efficiency is the linchpin that links the primary factors of production to the transformation of intermediate inputs into final goods and services, illuminating the path to economic growth. Among the measurable sources of output growth, several pillars emerge as foundational in comprehending how economies advance and achieve prosperity, as articulated by Szirmai (2015).


First and foremost, the discovery and exploitation of natural resources mark the most rudimentary form of economic growth. Nations must leverage their available resources wisely, transforming them into the foundation for burgeoning industries, expanded trade, increased production, and entry into international markets (Szirmai, 2015). However, a key realization here is that the gains reaped from these natural resources should not be squandered. Instead, they must be reinvested judiciously to seek out more sustainable and enduring sources of growth. Efforts to boost labour market participation and commitment become imperative. A committed and skilled workforce enhances efficiency and productivity across industries. This, in turn, necessitates further investments in both physical and human capital to enhance labour productivity. Yet, the allocation of resources solely to industries and labour is insufficient. The vitality of society and education cannot be overstated. Investment in these areas becomes equally crucial, as it ensures that individuals are equipped with the skills and knowledge necessary to navigate an increasingly complex and competitive global landscape.


As the dynamics of growth evolve, the demand for efficiency intensifies. However, other transformative changes are equally significant to keep pace with the journey of growth and development (Szirmai, 2015). Structural change becomes a compelling need. It involves the strategic redirection of resources toward newer, more dynamic sectors of the economy. This reallocation of resources stimulates economic diversification and expansion, leading to positive consequences for the overall economy. Additionally, the cultivation of economies of scale becomes a driving force of growth. As production scales increase, the per-unit costs of production decrease, making it more cost-effective to create goods and services. This enhances a nation's competitive edge and spurs further growth. Finally, technological change looms large on the horizon. It compels nations to continuously amass knowledge and innovation, fostering the development of cutting-edge goods and services. Embracing and advancing technology are central to maintaining competitiveness and promoting sustained economic advancement. In summation, the proximate sources of growth represent the immediate levers that nations can pull to propel their economic progress. These sources encompass not only the exploitation of natural resources but also labour market participation, capital investment, education, structural transformation, economies of scale, and technological innovation. Together, they form a dynamic tapestry that propels nations along the path to growth and development in an ever-evolving global landscape.


Figure 8: Employees at work (Condrea, 2023).

Socio-Economic Outcomes

Within the realm of development, various facets of growth intricately interact with one another, collectively guiding a nation toward its ultimate socio-economic outcomes. These outcomes stand as the zenith of societal efforts, representing domains where investments are channelled to yield transformative change. It is crucial to recognize that these outcomes also reciprocally influence the proximate sources of growth, elevating their quality and effectiveness, as emphasized by Szirmai (2015). As such, these socio-economic outcomes hold immense significance in the context of development, serving both as metrics and catalysts for progress. A fundamental principle emerges: genuine growth materializes only when the well-being of the populace experiences tangible enhancement. The dimensions of socio-economic outcomes encompass a multifaceted spectrum, each playing a pivotal role in shaping the overall welfare of society. These encompass health, education, consumption, welfare, income distribution, changes in poverty, and environmental sustainability.


As such, enhanced healthcare and education systems offer numerous benefits to the overall population, bolstering their prospects for longer and healthier lives. Moreover, they provide individuals with improved access to quality employment opportunities, primarily through enhanced educational avenues. This transformative effect on people's lives contributes significantly to their overall well-being, and it is essential to underscore that it must be accompanied by equitable income distribution to genuinely qualify as development. Elevating the welfare of citizens also triggers substantial shifts in poverty levels, with a noticeable reduction in instances of poverty within a nation-state as opportunities expand and the standard of living rises. However, it is imperative to recognize that these advancements should not occur at the expense of environmental sustainability. This is because environmental sustainability ensures the long-term resilience and durability of the present resources and ecosystems.


In summary, strengthening healthcare and education systems not only extends life expectancy and enhances employment prospects but also raises overall societal well-being. This progress, though, must be closely aligned with fair income distribution. Concurrently, a reduction in poverty levels is a natural consequence of these improvements. Nevertheless, it is vital to harmonize these efforts with a commitment to environmental sustainability to safeguard the longevity of our planet's resources and ecosystems.


Figure 9: Modern skyscrapers in London city (Lioncat, 2021).

Conclusion

In essence, Szirmai's framework provides us with a comprehensive lens through which we can explore the intricate interplay between institutions, growth, and the diverse sources that drive them. It enables us to gain deeper insights into the complex nature of economic development within theoretical traditions. By examining how these sources interact and influence one another, we can better appreciate the nuanced and multifaceted nature of development processes. As such, Szirmai's framework for understanding the determinants of economic growth takes on a central role in comprehending the diverse pathways to development in various countries. This framework endeavours to assess multiple factors, categorized by their degree of malleability. Some factors remain beyond the control of individuals or nations, determined by geographical or historical realities. In contrast, others are subject to change, contingent upon the interests and conditions prevailing within a society. Crucially, Szirmai's framework recognizes the intricate feedback loops that exist among these various elements. It is imperative to grasp how these components are interconnected and how they exert influence upon one another. Particular attention should be directed toward socio-economic outcomes, as they represent the tangible manifestations of all the growth determinants and serve as indicators of genuine development within a society and a nation's economy.


Achieving a harmonious balance among these multifaceted factors is paramount. It is through this equilibrium that societies can evolve and progress toward improved conditions. By acknowledging the interplay between immutable and changeable factors and by closely monitoring socio-economic outcomes, a more comprehensive understanding of the complex dynamics that shape development emerges, enabling more informed policy decisions and societal advancements. Moreover, this holistic perspective underscores the need for policymakers, scholars, and development practitioners to adopt a systems-thinking approach. Recognizing that changes in one area can have far-reaching consequences in others, it becomes evident that interventions and policies must be carefully designed, considering the broader context and potential feedback loops. This nuanced understanding of the circular causality within the development framework empowers us to make more informed decisions and develop strategies that promote sustainable and balanced economic growth, ultimately benefiting societies on a global scale.


Bibliographical References

Abramovitz, M. (1989). Resource and Output Trends in the United States since 1870, American Economic Review, 46 (2), pp. 5–23. Reprinted in: M. ABRAMOVITZ, Thinking about Growth and Other Essays on Economic Growth and Welfare, Cambridge University Press (first published in 1956).


Denison, E. (1967). Why Growth Rates Differ, Washington, DC: Brookings Institution.


Hodgson, G. (2006). What are institutions? Journal of economic issues, 40(1), 1-25.


Maddison, A. (1987). Growth and Slowdown in Advanced Capitalist Economies, Journal of Economic Literature, XXV, pp. 649–98.


Maddison, A. (1988). Ultimate and Proximate Growth Causality: A Critique of Mancur Olson on the Rise and Decline of Nations, Scandinavian Economic History Review, 36 (2), pp. 25–9


Rodrik, D. (2003). In Search of Prosperity: Analytic Narratives on Economic Growth, Princeton, NJ/Oxford: Princeton University Press.


Szirmai, A. (2008). Explaining Success and Failure in Development, UNU–MERIT Working Paper 2008–013, Maastricht


Szirmai, A. (2012). Proximate, Intermediate and Ultimate Causality: Theories and Experiences of Growth and Development, UNU-MERIT Working Paper Series 2012–32 (IPD WP09), May.


Szirmai, A. (2013). Explaining Success and Failure in Economic Development, in: D.S. PRASADA RAO and B. VAN ARK (eds.), World Economic Performance: Past, Present and Future, Cheltenham: Edward Elgar, pp. 227–67.


Szirmai, A. (2015). Socio-economic development. Cambridge University Press.


Williamson, J. (2011). Trade and Poverty: When the Third World Fell Behind, Cambridge, MA: MIT Press.

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