Unit 1 Conceptualising Development

3.3 A development model

We now conclude this section by offering a simple model of development that draws together development at the macro level with development at the level of individual livelihoods and links in with our discussion of capitals/assets.

Hanging in, stepping up, and stepping out

The livelihood aspirations of poor people can be divided into three broad objectives which (following Dorward 2009) we refer to as 'hanging in', 'stepping up', and 'stepping out'.

• 'Hanging in' takes place when people engage in activities with the objective of clinging onto the assets they currently possess or control. It refers to their effort not to lose assets as a result of unfavourable trends and shocks (see column C in the livelihoods framework in Section 2.1). Examples include smallholders trying to maintain the fertility of their soils, trying to keep hold of their land in the face of competing claims on it, trying to avoid stress-induced sales of livestock and other assets. Can you think of further examples?
• 'Stepping up' occurs when people enhance the productivity of their existing assets and activities through investments in new assets, such as new equipment, better skills and technology, or more land. Examples include smallholders investing in new seeds and improved irrigation technology to enhance the productivity of their land.
• 'Stepping out' takes place when people's livelihoods shift to new, more productive, activities, and is associated with the accumulation of a new set of assets. Examples include smallholders investing in off-farm enterprises or investing in education and skills in order to qualify for urban jobs.

Each of the above can be viewed as both a focus and a potential outcome of livelihood strategies. These three strategies may be pursued in combination with each other or separately depending upon the circumstances of the people concerned. This overlap is illustrated by the diagram in 3.3.1.

In the world's poorest countries, 'hanging in' is typically achieved through livelihoods related to agriculture or natural resources. Productivity is low and consumption is close to subsistence levels. However, once 'stepping up' or 'out' begins to take place on a large scale, the development process will be underway. Rising agricultural yields (stepping up) allow some resources to be released to other sectors of the economy (stepping out). This can lead to increases in both demand for and supply of the products of these other sectors. This leads to economic diversification and a potentially virtuous cycle of capital accumulation as assets are combined to create new assets and new economic sectors.

Economy-wide transformations

We can see, then, that 'stepping up' and 'stepping out' represent economy-wide development transformations as well as those at a household level (as depicted by the diagram in 3.3.2).

In contrast to earlier consideration of livelihoods, this conceptualisation of development expressed in the diagram above explicitly recognises the importance of structural changes in people's livelihood activities as development progresses. It highlights the need to understand interactions between (a) livelihood strategies and transformations at the household level and (b) development at higher levels of social organisation. Understanding these interactions is important because structural transformations in people's livelihoods affect and are affected by

• the different capitals - ie the pillars of development that stretch across different levels or scales of economic activity
• co-ordination in the access to and exchange of assets, goods, and services, both across and within different levels of social and economic organisation/activity (eg co-ordination between the demand and supply of goods and services)

We shall say more about co-ordination in the next section but for now note that in both cases the relationship is a two-way relationship. In the first, livelihood transformations are both driven by and help drive capital accumulation. In the second, structural changes in livelihoods require new types and greater volumes of exchange and thus create a demand for new forms of co-ordination. As the latter develop in response to this demand they further shape the structure of livelihoods and the range of goods and services that are subject to exchange. In a dynamic market economy, this is a constantly evolving process.

So far in this unit we have focused primarily on the goals of development, without saying much about the processes of development or the means by which development goals are achieved. We have talked of income, sustainability, livelihood security, capital/assets etc and hinted that there are forces or rules that influence these variables. However, we have not said much about what these forces or rules are. We have also discussed the importance of co-ordination, but again have not considered how co-ordination may be achieved. In the remainder of this unit we introduce the importance of the different types of institutional mechanisms by which co-ordination may be achieved.