Is the a tradeoff between growth and basic needs?

Theoretical and empirical arguments maintaining that the provision of the poor and neglected with basic goods and services implies a sacrific of productive investments and economic growth are reviewed. Proponents of a basic needs approach claim that the direct provision of essential goods and services is a more efficient and rapid way of eliminating poverty than an approach based on the hope that the benefits of increased national growth will eventually reach the poor. The argument against direct provision of basic needs is based on 2 contentions: 1) transfers of essential goods and services result in increasing the consumption level of the poor at the cost of eventually reducing the net level of investment and saving in the economy and therefore the welfare of everybody; and 1) the poor would be better provided for in the long run through the higher incomes realized by greater overall investment under a more conventional, growth-oriented development strategy. Evidence from 83 developing countries is used to show that the provision of basic needs can improve growth performance. It appears that economists previously concentrated too narrowly on 1 aspect of human capital -- education. It is possible that other aspects of a basic needs approach to development, which aim to improve the health and living conditions of the poor, should also be considered as building up a country's human capital.