What is the real difference between up-down and bottom-up approaches to economic development targeting economic growth, equitable distribution of resources and poverty reduction? The truth is none.
But perceived differences and myths are arising from misinformation spanned to mobilise votes.
Development requires both approaches. The definition of economic development relevant to the debate is to elect a responsible government in power that would design policies to influence the decisions to expand capacity to grow the economy and distribute resources in an equitable manner.
This is meant to realise the potential of individuals, firms or communities who contribute to the advancement of society through sustainable production of goods and services. To do this, nations need to use both top-down and bottom-up approaches to promote interaction and dialogue among all levels.
In its simplified form, the top-down approach focuses on government systems, trade unions and NGOs to intervene through policies formulated from the top to target productive resources with comparative advantages.
This will in turn grow the economy faster, identify sources of funds as incentives for that purpose and distribute resources equitably and in a sustainable manner downwards to realise the potentials of individuals, firms and communities.
Bottom-up approaches prefer expansion of capacity to grow economy and distribute the resources to be initiated by the individuals, firms and communities using their entrepreneurial skills and innovations without government intervention.
According to Md Shahindulla Kaiser, top-down approaches would be required to achieve national consensus, strategic direction, facilitation, coordination, providing framework and tools for local initiatives, mobilising resources and capacity building.
Bottom-up approaches are crucial for specifying poverty, ensuring ownership and commitments, mobilising local assets and knowledge, and promoting local innovation in order to achieve holistic development.
The two approaches on their own are not a panacea for poverty. Both have strengths and shortcomings. Leland Stanford explains that the science of political economy declares that it is the duty of a nation first to encourage the creation of wealth. Its second duty is to direct and control the distribution of that wealth.
Top-down focuses on large institutions with comparative advantages to address the creation of wealth and encourage the use of market incentives to direct and distribute it through government intervention. Bottom-up focused more on directing and controlling the distribution of wealth created by entrepreneurs, individual firms and smaller groups within the societies, with minimum government invention.
According to Bishwapriya Sanya of Massachusetts Institute of Technology, development requires a synergy between efforts made by the top and bottom; collaborative efforts among the government, market institutions and NGOs which utilise the comparative advantage of each and minimises their comparative disadvantages.
Sanya concludes that just as development does not trickle down from the top, neither does it effervesce from the bottom. The approaches therefore are myths, non-issues and should be given zero value during next year's general election.
These were phrases planners coined in the 1950s to support alternative development for poor countries. Implicit in these phrases were assumptions about what was wrong with the then-dominant development paradigm, popularly called the top-down or trickle-down approach.
According to Little, the top-bottom approach failed because the institutions created to foster development from the top, such as state-driven production and market institutions, political parties, trade unions and NGOs had become the greatest hindrance to development.
The situation will not be different if the same political oligarchs and elites are still manipulating voters to vote them into power.
Consultant in finance, governance and devolution
