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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'.

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.

3.3.1 Livelihood strategies and transformations

Source: adapted from Dorward (2009) p. 137.

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).

3.3.2 Development as hanging in, stepping up, and stepping out

Source: adapted from Dorward (2009) p. 137.

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

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.