Three foundations of development

Recently I posted in reference to a speech by the Secretary to the Treasurer, Dr Ken Henry. 

Dr Henry states that development is underpinned by three foundations: (1) positive incentives; (2) human capital; and (3) engagement of local people to the design of policy.  These are three seperate but inter-dependent foundations.

My views are over the fold.

I argue that a strategic focus of the IK economy has the potential to fulfill all three foundations, and to do so concurrently.  In basic terms, it offers a positive incentive to engage in labour market activity; matches labour market supply to human capital, and; enables active engagement of local people to not only the ‘design’ of policy, but ‘facilitation’ across the policy spectrum.   

First, consider the nature of positive incentives. 

Broadly speaking, positive incentives relates to the signal-and-response mechanism of both individuals and groups.  What motivates a person to positively engage in the labour market? or civic society? or to retain positive health? or to maintain resilience against social determinants that would otherwise lead to negative health?     

Images of self and identity serve an influential role in shaping incentives.  In situations of accelerated acculturation the pivotel use of identity is more fragile, and its value more potent.  Positively valuing the IK economy is a step towards recognising this influence.  It is a micro-policy measure aimed at countering the perverse incentives arising from an accelerated form of acculturation.   

This brings us to the second foundation: human capital.

In broad terms human capital refers to the resources of a person that enables employment and navigation through society and its mores.  I view human capital in two principal forms:

  1. The first refers to ‘capabilities’ identified by Dr Henry, promoted by Pearson and originating in the context of the welfare economy from the work of Amartya Sen.  
  2. The second refers to vocations, or knowledge attained by a further and specified training (such as a trade) or tertiary education. 

The lack of engagement in education means that many Indigenous peoples are deprived of the first form (capabilities).  In our market economy this disables the second form (vocation), leading to a significant social exclusion from labour market participation.  I argue that the existing labour market structures accommodate ‘nominal’ human capital, and that Indigenous peoples inherit a different form of human capital described as Indigenous Knowledge (IK). 

If Indigenous peoples are excluded from labour market participation because of a lack of nominal human capital, and if there is an absence of an IK economy, then the result is entrenched reliance on the welfare safety net.  Welfare reform without structural adjustments to this entrenched reliance will not reflect the value of substantial investment required to facilitate reform.

Third, Dr Henry notes engagement of people in the design of policy frameworks.

A vital point to consider in the formation of Indigenous policy is the fragmented and localised structure of bonding social capital frameworks amongst Indigenous peoples.  Participation in the design of policy is an important foundation, but if it does not occur at the micro (local) level, then its impact will be minimal. 

A strong IK economy is important because it necessitates a link across the spectrum of policy.  For example, it is commonly known that health policy is largely redundant if it does not successfully involve Indigenous peoples.  If health policy actively involves IK as a labour market value across the spectrum of health policy (e.g. health delivery, prevention, promotion, et cetera), and it is achieved at the micro level, then this represents a facilitation of policy and not just active engagement.

The IK economy fulfills the third foundation (involvement in the design of policy) because it enables ownership and the faclitation of policy at the micro (local) level.


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