E/CN.4/2006/43 page 7 14. In the literature on development economics, the idea that the removal of poverty is the basic goal of development policy was itself a value addition to the prevailing notion of development. In the 1950s and 1960s, development was seen basically as a county’s per capita income growth. Although from the early days of development thinking, economists and policy makers considered development as a process of improvement of the well-being of the people of a country, per capita income was seen as a proxy for the different elements of well-being. Its growth was accordingly seen as equivalent to the improvement of well-being. A variable such as income, which was essentially an instrumental variable, promoting different elements of well-being such as being well fed, being healthy, being educated, and having proper housing, was often taken as a substantive variable, being an objective in and of itself. Development policies were formulated with the dominant objective of maximizing the rate of GDP growth, or national income. Population growth was regarded as largely “exogenous”, not dependent on economic policies. 15. It is true that a steady growth in per capita income is a necessary condition for the improvement of all the different constituents of well-being but it is not sufficient, especially if certain elements such as being healthy or being well educated are considered to be more important or more immediate than others. A policy for maximizing income growth does not take into account the problem of income distribution or allocation of resources to areas which may be socially more desirable than their market values. For example, the benefits of primary education, especially in rural areas, may be socially much more valuable than what the people who receive such education would be willing to pay. Therefore, the expansion of primary education or the salaries paid to primary teachers would be much less in a market economy even with a high growth of income than what would be most desirable according to social valuation. It will be necessary to adopt specific policies of market intervention to reallocate resources or to redistribute incomes, even in a rapidly growing economy. A policy of maximizing income growth alone will not be the policy to maximize the well-being of the people. 16. For several years, especially in the 1960s and 1970s, this concern with elements of well-being, which could not be secured by increased GDP growth, was accommodated by targeted expenditure of resources and provision of goods and services in an attempt to adjust the structure of economic activities of aggregate demand and supply to supplement the policy for maximizing economic growth. The World Bank’s Minimum Needs Programme or the IMF’s Structural Adjustment Facility were examples of policies in which economic development was still regarded as GDP growth, with complementary targeted policies built on it, without detracting from the long-term potential of growth. 17. It was only with the emergence of the human development literature that income growth was displaced from its role as an objective characterizing development and was relegated to its role as an instrument of promoting development. The improvement of well-being was seen as human development, measured in terms of achievements regarding the access and availability of certain basic facilities and services for all people, such as food, health, education and the welfare of women and children, as well as social security. Indicators were constructed to represent the different elements of human development and the UNDP’s Human Development Report published the data regarding these indicators in all countries of the world, ranking them according to the stage of human development as an average of the different indicators. In carrying out these exercises, the UNDP, and later other national and international agencies,