 2004 Proutist Universal 1 Proutist Economic Development Balanced Economy Dr. Michael Towsey

Proutist Universal2 The structure of an economy An economy can be divided into three sectors... Agriculture, industry and service. The structure of an economy is determined by the relative importance of these three sectors.

Dr. Michael TowseyProutist Universal3 Structure of USA economy

Dr. Michael TowseyProutist Universal4 Economic structure % share of GDP source – CIA World Factbook USAAustraliaBrazilVenezuela (2001) Agriculture23265 Industry (oil 33%) Services

Dr. Michael TowseyProutist Universal5 Venezuela & Dutch disease Much wealth generated in one sector Encourages demand for local services (because difficult to import) Discourages demand for local commodities (because cheaper to import) Solution: decentralised trickle up development Venezuela (2001) Agriculture5 Industry50 (oil 33%) Services45

Dr. Michael TowseyProutist Universal6 Structural problems in the Venezuelan economy Agricultural sector too small for self-sufficieny in important commodities. Excessive reliance on oil in industrial sector – how long will Venezuelan reserves last at present rate of extraction? Service sector too large – indicates excessive rent taking.

Dr. Michael TowseyProutist Universal7 What kind of development? Prout rejects GDP growth and service sector growth as measures of economic development. Calvert-Henderson measures of economic development. Sarkar - concept of balanced economy.

Dr. Michael TowseyProutist Universal8 New Indicators of Development (Beyond Money-Denominated, Per Capita Averaged Growth of GNP) A reformulated GNP to correct errors and provide more information Purchasing power parity: corrects for currency fluctuation Income distribution: is the poverty gap widening or narrowing? Community-based accounting: to complement current enterprise- based accounting Informal and household sector production: measures productive hours worked (paid and unpaid) Deduction of social and environmental costs Account for depletion of non-renewable resources Energy input/GDP ratio: measure of energy efficiency and recycling Military/civilian budget ratio Capital asset accounts: for built infrastructure and public resources

Dr. Michael TowseyProutist Universal9 Calvert-Henderson Indicators Complementary indicators of progress toward societal goals 1.Education: literacy levels, school dropout and repetition rates 2.Health: infant mortality, low birth weight, weight/height/age ratio 3.Nutrition 4.Basic services: water, sanitation, telephones, electrification, etc 5.Shelter 6.Child development 7.Political participation and democratic process 8.Status of minority and ethnic populations and women 9.Air and water quality and environmental pollution levels 10.Environmental resource depletion: hectares of land, forests lost annually 11.Bio-diversity and species loss 12.Cultural and recreational resources

Dr. Michael TowseyProutist Universal10 A balanced economy Employment share in major sectors

Dr. Michael TowseyProutist Universal11 Under & over development Agricultural Sector (% employment in sector) <10% - dangerous, loss of tradition & technology <20% - unhealthy 20-40% - balanced economy >40% - underdeveloped, rural poverty, land degradation Non-ag Industrial Sector ( % employment in sector) <20% - underdeveloped 20%-30% - balanced economy >30% - over industrialised

Dr. Michael TowseyProutist Universal12 A balanced economy? Specialized economies are more vulnerable to changes in the global economic environment than diversified economies. – Prof. Ravi Batra

Dr. Michael TowseyProutist Universal13 Proper adjustment You know, in a balanced economy there should be proper adjustment among agriculture, industry and commerce. For example, a fixed percentage of people should be engaged in agriculture, another fixed percentage in industry and some percentage in commerce. Otherwise there will be no equipoise or equilibrium in the socio-economic sphere of life. Unfortunately no such adjustment exists in any country of the world today. - P R Sarkar