Sen argues that development should be understood as a process of expanding freedoms, rather than simply increasing income or wealth. He identifies five instrumental freedoms as crucial: political freedoms, economic facilities, social opportunities, transparency guarantees, and protective security. These freedoms are interconnected and mutually reinforcing, creating an environment where individuals can flourish.

Sen introduces the concept of 'capabilities' to emphasize the importance of individual agency and choice in development. Capabilities refer to the real opportunities a person has to achieve the things they value in life, taking into account their individual circumstances and characteristics. Development should focus on enhancing individuals' capabilities to live the lives they choose, rather than simply providing them with resources.

While acknowledging the importance of markets and individual initiative, Sen argues that public action plays a crucial role in promoting development as freedom. He highlights the importance of public policies that promote education, healthcare, social safety nets, and democratic participation. By investing in human development and creating a more equitable society, public action can empower individuals and expand their capabilities.