According to Todaro and Smith, they view and define Economic Development in two aspects, that is a traditional one and a modern one (New Economic view of development). They look at the traditional one from the wider perspective; they view it at a national level -macro level. This kind of Economic Development views the economy at nation’s gross income and products; it deals with rates of growth of income per capital. This kind of Economic Development works only with the view of only assessing the real goods and services available to the average citizen for consumption and investments (Todaro and Smith, 2009:14).
On new Economic view of Development, Todaro and Smith views the economy at a lower perspective, they view it at microeconomic level. In this view of economic development according to Todaro and Smith, Economic Development can be defined as process of a goal leading to a life of dignity for people in relationship to the overall context of their community and the environment that sustains them as a means of poverty alleviation. The two scholars therefore, view economic development as a means of uplifting or improving the levels of living standards of the masses of people. According to Todaro and Smith in support of their view, they said that “in short, during 1970’s economic development came to be redefined in terms of the reduction or elimination of poverty, inequality and unemployment within the context of a growing economy” (2009:15).
Generally, the overall view of economic development by Michael P. Todaro and Stephen C. Smith is that they conceive it as a “multidimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty” (2009:16). This definition of theirs, deals with both macro and micro-economic development.
1.2. As understood by Amartya Sen.
Amartya Sen is an Indian economist and philosopher who won the Noble Memorial Prize in Economic Science in 1998 for his contribution to the welfare economics (Online). For one to understand Amartya Sen’s views on economic development must first analyse his position on poverty as capability deprivation in his book “DEVELOPMENT AS FREEDOM”. In his concept on poverty, Sen said that poverty is a less human condition. He identifies economic inequality with income inequality, and he sees the two as effective synonymous (1999:108). With Amartya Sen, he views economic development more on micro level. He looks at improving the structure of the society that can bring common good to everyone in the society. Amartya Sen as Todaro and Smith puts it, “economic growth can not sensibly be treated as an end in itself. Development has to be more concerned with enhancing the lives we lead and the freedom we enjoy”(2009:16). Therefore with Sen, what matters in economic development is the freedom one is suppose to have. In other words, once an individual is given that freedom to have access to basic necessities such as shelter, food and other commodities and healthcare as well. So according to Sen, economic development comes as a result of capabilities- which is ” the freedom that a person has in term of the choice of functioning, given his personal features and his command over commodities”(Todaro and Smith, 2009:18).
The complex and multidimensional goals of development are approached in a revolutionary manner by Amartya Sen with his concepts of functionings and capabilities. His Capabilities Approach to development argues that what matters the most for people is their capability to function. The concept of functionings reflects those tangible and intangible things that a person values doing. These valued things vary from simple ones like proper nutrition and avoidance of disease to more complex ones like having self-respect and involvement in the community (Sen,1999:75). Capabilities on the other hand refer to the freedom that a person has in terms of his choice of functionings, given his/her personal features and command over commodities -availability of goods and services.
2. My views on Todaro and Smith understanding of Economic Development.
In strictly economic terms, I agree with Michael P. Todaro and Stephen C. Smith understanding of Economic Development because they both view it at lower and higher levels. Their understanding tells that economic development is just a branch of economics that deals with the study of macroeconomic causes of long terms economic growth such as increased gross national products upon achieving increased number of resources. However, defined critics point out that gross national product is a narrow measure of economic welfare that does not take account of important non-economic aspects such as access to healthcare and education, freedom or social justice.
And because of such defined critics, I agree with Todaro and Smith on their other aspect understanding on economic development as study of microeconomic which is the incentive issues if individuals or households and firms such as healthcare and education.
Therefore, with their understanding of Economic Development I can conclude that economic development can be seen as a complex multi-dimensional concept involving improvements in human well-being both at low and high level.
3. Comparisons and Contrasts between Todaro, Smith and Sen’s views.
Upon viewing Todaro and Smith and Amartya Sen views on Economic Development respectively, view economic development on micro and macroeconomic levels. They look at improving the structures of the society that can bring common good to everyone in the society, they view economic development from the social institutions. They both understand that if individuals are well build up in terms of their livelihood especially on basic necessities such as healthcare, food and shelter, then economic development is defined and justified.
The only distinction is in their concept, Todaro and Smith view economic development from macro to microeconomic level. This means that their belief of economic development begins first with is improving the economy on the national level us as increasing the gross national income and products. And by so doing, the economic development is now extended to individuals, to microeconomic level. But for Amartya Sen, he views it from the opposite side. He views development as an enhancement of the lives of people through individuals, and with Sen, economic development begins with freedom and capabilities. Once an individual is given that freedom to have access to basic necessities such as shelter, food and other commodities and healthcare as well, then the output by person will improve the economy at macro level.
In summary, I can conclude that despite scholars and economist different views on economic development, they in principle and concept mean the same thing. They just view the vice on different angles. According to their understanding, Economic Development can be defined as a phenomenon which occurs over a long period of time with a complex multi-dimensional concept to improve human welfare and that of the nation in a free atmosphere and environment.