Development Paradigms ~I

India is aiming to become a developed nation, or Viksit Bharat, by 2047, a hundred years after independence. To understand how we should transform ourselves to become a developed country it is necessary to know the gap between us and a developed nation. The idea of a “developed country” is so widely used in public discourses that it often appears as self-evident. But if we probe deeper, we begin to understand the hollowness of its underlying presumptions. Colonial era economists have addressed differences between nations in binary terms: civilised vs uncivilised, advanced vs backward.

Classical economists like Smith, Mill and Marx had treated industrial capitalism as representative of a higher stage of social organisation and a model that all nations should emulate. Colonial administration translated these assumptions into their extractive policies for governing the colonies. The terms “developed” and “underdeveloped” entered the economic lexicon from President Harry Truman’s inaugural address in 1949: “We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas.” From this moment, “developed” became the hallmark of the industrialised West, a benchmark that the “underdeveloped” rest of the world should follow.

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The distinction between “developed” and “underdeveloped” countries that treated non-Western societies as laggards in a universal trajectory defined by the West became one of the most enduring and widely used distinctions institutionalised by the global governance structures like the UN, World Bank, IMF, or WTO. The industrialised West became the implicit universal benchmark against which all progress is to be measured in every aspect of social life ~ polity, economy, culture, education, etc. so that the West, now robbed of colonies, can maintain its supremacy. In this new vocabulary, western-style “development” became a universal aspiration and “underdevelopment” represented a transitional state towards its attainment. The language encoded a clear hierarchy that put the West at a higher civilisational stage implicitly emphasising its superiority.

The Cold War and disintegration of the Soviet Union reinforced this dichotomy, as explicitly expressed in Francis Fukuyama’s Essay on “The End of History” in 1989. The Western model of economic growth was a universal, linear movement through five stages, as proposed by Walt Rostow in his 1960 book “The Stages of Economic Growth: A Non-communist Manifesto”. It was a sequential transition from traditional agriculture through industrial maturity to high mass consumption, driven by capital accumulation, industrialisation, urbanisation, and integration into global markets.

The model was based on American and European history, and on the American norms of high mass consumption as being integral to the economic development process. Even the alternative socialist model of state-led industrialisation and central planning shared the same underlying assumption of development being equated with rapid industrialisation. Both models propagated growth along a single developmental continuum. The post-war Bretton Woods institutions were designed around a world divided between capital-surplus and capital-scarce countries, which over time translated into a functional division between donor and recipient nations, rule-makers, and rule-followers.

Their statistical classifications entrenched this philosophy deeply into the fabric of global governance dictated by the West even as it itself was declining. Metrics were devised to reinforce the distinctions, with a single indicator ~ the per capita income (PCI) becoming the dominant indicator of progress, by which development of a nation could be measured, compared, and ranked. This shaped how aid would flow, concessions given and conditions imposed for bailouts or loans ~ the so-called Washington Consensus ~ to maintain the stranglehold of a declining West, while emergent nations like China, India, Brazil, etc, were fast rising.

It was only from the late 1950s when Dependency Theories started gaining prominence that these linear and universalist assumptions were seriously challenged. These theories focused on the core-periphery dynamics, arguing that industrial core nations exploited raw material-producing peripheral nations, leading to unequal terms of trade. Economists like Raúl Prebisch, Andre Gunder Frank and Samir Amin forcefully argued that underdevelopment was not a stage preceding development but a condition produced by historical forces into an unequal global economic system. Frank argued that underdevelopment is caused by development ~ in the “development of underdevelopment,” core powers actively create and maintain underdevelopment in the periphery.

The prosperity of developed countries was structurally linked to the poverty of underdeveloped nations through trade, capital flows, and technological dependence of the latter on the former. Amin integrated this dependency with Marxist theory, linking underdevelopment to global capitalist structures and geopolitical power play. These theorists argued that the development experience of the West could not be simply replicated elsewhere and that global power relations mattered as much as domestic policies. Thus, the developed~ underdeveloped binary was exposed as a structural feature of the capitalist system, where rich nations had strong vested interests in keeping the poor nations poor, whose poverty was not due to the failures of their internal policies.

In response to these critiques, from the 1970s onwards, the terminology shifted from “underdeveloped” towards “developing”, implying dynamism and progress, but the binary sustained, with the developed countries at the top of a ladder and developing countries climbing upwards. But the fragility of this binary became exposed from the late 20th century onwards, and especially in the present century. Many of the so-called developing countries, like China and India, started exhibiting advanced technological capabilities challenging the superiority of high-income countries which faced economic stagnation, inequality, social stress, and climate vulnerability; further, demographic drawback and institutional fragility were cutting across all income categories.

Development now is treated as a complex, multidimensional process of interaction between economic growth, institutional dynamics, and human capabilities, not capturable by a single metric like per capita income or its proxies like the UNDP’s HDI. The World Bank now avoids using the developed ~ developing terminology, instead using income group classifications in explicit recognition that income cannot be a sole measure of development. The IMF’s distinction between “advanced” and “emerging and developing” economies similarly reflect on a wider approach beyond income. Even these classifications are illogical and analytically fragile as they attempt to retain the old structure under a new name, like old wine in a new bottle.

The World Bank classifies economies by per capita GNI expressed in US$, using the Atlas method based on a 3-year moving average exchange-rate conversion, adjusted for inflation differentials between the country and major economies, updated each July. According to the latest 2025 classification, countries with per capita GNI below $1,135 are labelled low income, then up to $4,465 as lower middle-income, and up to $13,485 as upper middle-income, above which countries are classified as high-income. These income groups are nothing but proxies for the old binary, with high-income economies corresponding to “developed” and the rest “developing”.

In this classification, India is a lower middle-income country with its per capita GNI of around $2800, and needs to grow at a sustained annual rate of around 7.4 per cent for the next 22 years to become a high-income country, a tough but not impossible proposition if technology, especially AI, can be leveraged to boost productivity, along with a strong focus on renewables. The IMF uses a categorization that distinguishes advanced economies from emerging and developing economies without any income thresholds, but based on a combination of factors including income level, market development, integration into the global financial system and other economic characteristics.

According to this classification, there are 41 advanced. economies in the world. It is to be remembered that these institutions are still dominated by the Western countries, and they do not give equal voting rights to each member. Voting rights are linked to the contributions of individual members, with the USA alone having 16.1 per cent of the voting power, compared to China’s 5.8 per cent and India’s 3.6 per cent. Thus, Western countries can easily group together to defeat the collective voices of the developing countries of the global south. They have monopolised power in these institutions ~ the World Bank is always headed by an American while the IMF by a European. Their classifications also reflect a Western mindset unwilling to cede space to others they had ruled once and cannot treat as equal.

(The writer is a commentator, author and academic. Opinions expressed are personal)