Almost certainly the most striking fact has been the large amount of economic progress accomplished in such a short time. During the 1960s, according to United Nations statistics, the developing countries taken as a whole recorded an average annual increase in total production of 5·5 per cent. For the earlier years figures are incomplete, but it may be surmised that over the period 1947–72 the average annual growth rate exceeded 3 and may have been closer to 4 per cent. In order to appreciate the significance of this achievement it should be compared not with the contemporary growth rates of developed countries but with their performance in the early decades of their industrialisation. None of them sustained a rate of more than 3 per cent over any extended period; indeed, even at a later stage of their development, for instance the period 1900–50, no European country reached a 3 per cent average while the world’s two fastest growers, the United States and Japan, average between 3 and 4 per cent.¹

By this yardstick, for what it is worth, the developing countries have begun brilliantly.

Yet the mood among the leaders of developing countries is more one of disappointment than of satisfaction. Partly this is explained by making comparisons, as they cannot help doing, between living standards in their countries and those prevailing in industrial countries, whereas no possibility of such comparisons existed in the early stages of the industrial countries’ take-off. But apart from this, the process of economic development, even though it be in its beginnings, does not seem to be bringing forth its expected fruits. The poor countries still feel overly dependent on the rich countries: for the supply of capital and know-how, for the purchase of the developing countries’ exports, for the exploitation of local mineral and other resources. The population explosion which has resulted mainly from improved health services eats up a large part of the growth in national product. What is more, much of the increase in national income has gone into the pockets of a rather small section of the population, a prosperous middle and upper class in the cities, leaving a large mass of the population virtually untouched by the economic progress so far achieved. Especially in the rural areas remote from urban influences, life goes on as before – i.e. at or near subsistence level.

These income disparities have become a matter of widespread social concern, particularly the persistence of a hard core of extreme poverty and destitution which can be found not only in the shanty towns of the big cities but also in regions which are predominantly agricultural. Admittedly the concept of poverty is relative and its definition bound to be in some degree arbitrary. In general terms it can be described as a condition which falls below the ‘minimum standard of living consistent with human dignity’, to use the language of the first paragraph of the International Development Strategy. In more precise terms a poverty-line income might be determined in the light of a government’s best estimate of the cost of a minimum ‘basket’ of necessities.² No reliable estimates have been made of the numbers of persons in the developing countries considered to fall into this category, but they are undoubtedly very large. They are the left-over people – some unemployed, some under-employed, some working full-time but earning quite inadequate incomes.

These large blocks of extreme poverty are found not merely in the least developed countries, those having the lowest average income per caput, but equally in the more prosperous among the developing countries; indeed it is in the latter that the problem shows itself more acutely because of the stark contrasts between the local poor and the local rich. When in a national community almost everyone is poor it can be convincingly argued that only short-rum efforts to achieve over-all development will ameliorate poverty, but in the circumstances where a section of the population has rapidly improved its economic position and has become comparatively well-to-do many are inclined to the view that it should be possible in the short-run to initiate poverty-relieving action. In other words, as the national income grows its distribution should also become less unequal. The tree of growth, it is alleged, needs to be pruned and trained if it is to yield good fruit.

Those who look mainly to economic growth to provide, in the course of time, solutions to the poverty problems of the developing countries sometimes appeal to the experience of the now highly industrialised countries. Their progress towards prosperity, full and productive employment and over a long period probably a less unequal distribution of income has been interrupted, it is true, from time to time by recessions and depressions, some of which have caused appalling suffering. We cannot yet be confident that enough is known about the problems of demand management to ensure that there will never be another bad recession. Problems of adaptation to structural change will always be with us. But by and large the industrially developed countries are now labour-shortage and not labour-surplus countries; they still have poor people but they have overcome the extreme poverty of human degradation. Is it reasonable to see the problem of poverty in the developing countries and its associated problem of labour absorption as a transitional malady which may be expected to respond to patience, aided perhaps by some mild and inexpensive therapy?

It would be very rash to come to any such conclusion without giving full weight to a number of major differences between the circumstances in which the Industrial Revolution took place in Western Europe and North America in the nineteenth century and those in which the industrialisation of the developing countries is taking place today. In the first place, in the dev...