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Avoiding over-development
Nepal must be warned about the dangers of excessively focusing on economic growth.Hridesh Gajurel
The alarming acceleration of global warming caused by carbon emissions from ever-expanding industrial production and mass consumption underscores a fundamental flaw in the economistic interpretation of development that puts no limit on economic growth.
Scientists warn that development based on continually expanding industrialisation and mass consumption is potentially catastrophic to humanity. Yet, most countries, including rich ones in the Global North, continue to shy away from controlling the consumption and production of carbon-intensive goods in the name of economic growth and perpetual development.
Paternalistic discourse about under-development is familiar to us all, with Nepal being labelled a least developed country by the United Nations. It is about time we recognise that there is also such a thing as “over-development”.
Over-developed countries
A country may be called “over-developed” when its economic development starts having more negative than positive impacts on society. For instance, since the 1990s, advanced economies like the United States and the United Kingdom have promoted the growth of the financial sector, including the development of complex financial instruments and markets to ensure the continuation of economic growth in the age of globalisation. However, this financialisation of the economy has only worsened economic inequality, employment insecurity and economic instability in these countries.
Moreover, over-developed countries prioritise economic growth over socio-economic, environmental and health-related concerns despite being comfortably rich.
Over-developed countries also promote consumption growth not to meet people’s needs but for economic growth, even when the environmental dangers and negative health consequences of excessive consumption are clear. In this sense, over-development is pathological.
In her book, The Economics of Arrival, Katherine Trebeck, a political economist, argues that the idea of continuous economic growth is untenable in the age of climate change coupled with growing inequality and that “developed” countries should now recognise that they have arrived at a state of economic sufficiency.
She advises that instead of continuing to focus on economic growth, governments in such countries should now focus on the well-being of their citizens and the health of the planet, even if doing so does not maximise economic growth. In essence, Trebeck argues, very much like economist Kate Raworth in Doughnut Economics, that developed countries should avoid or reverse over-development.
Over-development in the US
The relentless and unwavering prioritisation of economic growth by Republican and Democratic governments alike has delivered little benefit to most Americans since the 1970s while the relative neglect of other pressing issues has resulted in social, political, environmental and health problems.
Real wages have plateaued in the US since the 1970s, meaning that economic growth over four decades has contributed nothing to the standard of living of the average American. None of the rewards of economic growth averaging 3 percent over four decades have gone to workers, either in the form of higher wages or in the form of greater work-life balance.
Both American and German workers worked an average of 1,812 hours per year in 1975; however, by 2015, German workers had much more leisure time, working only 1,368 hours per year on average while being paid no less than before in real terms, whereas American workers continued to toil away working 1,765 hours per year on average without getting a pay rise in real terms. This is despite the US being the richest country and the most advanced economy globally.
Economic inequality has only gotten worse since the 1970s in the US. In terms of the Gini coefficient, where zero indicates complete income equality, and one signifies maximum inequality, the US went from 0.45 in 1975 to 0.58 in 2015—a substantial worsening.
In short, the unwavering focus of the US government on maximising economic growth has been generally bad for the average American, even from a purely economic perspective. The picture becomes significantly more dire if we examine social and political factors.
There has been a shocking decline in life expectancy in the US from 79 years in 2019 to 76 years in 2023. The country is now less than in China (where it is 78 years old), which in terms of per capita GDP only ranks 72 globally. The unexpected decline in life expectancy in the US is not only due to Covid but also due to a drug overdose epidemic that has claimed countless young lives and due to increases in suicides. Experts also blame the lack of universal healthcare for the relatively low life expectancy in the US.
Political violence has risen tenfold since 2015 in the US, with much of it attributable to racial hatred and extreme polarisation in politics. Political polarisation is, in fact, so extreme there that some scholars fear that the country is on the brink of civil war. The fact that most opinion polls are indicating that Donald Trump will be re-elected as the next US president despite a disastrous first term and despite being highly unpopular suggests that the richest country in the world has pursued economic growth at the expense of societal well-being for far too long.
Lesson for Nepal
The US is arguably the epitome of over-development and a warning to aspiring countries like Nepal about the dangers of excessively focusing on economic growth.
There are also examples of rich countries that have avoided over-development. Scandinavian countries, for instance, not only have high GDP per capita but also tend to consistently lead world rankings on happiness, human development, trust in government, economic equality, gender equality, work-life balance and access to quality health and education. Historically, these countries balanced the pursuit of economic growth with highly progressive social welfare and good governance policies.
Even though Nepal would benefit from focusing on economic growth given its current economic state and widespread poverty, the example of the US shows that it also needs to lay a solid foundation for well-being and equality at the outset, like many of the social democratic countries in Europe did.
Nepal has many strengths such as its extensive social capital, high tolerance, rich cultural heritage, low violent crime, incomparable natural treasures and a good political foundation for social justice and equality in the form of the 2015 Constitution. In the throes of economic development, Nepal should be careful to preserve what it has going for it, and it should also tackle new injustices and inequalities that will inevitably arise in the development process to ensure that the progress made is not later lost to over-development.