Download economic growth (development)

Unit 9 Seminar
1. Is the Earth big enough for all of us? --- our Ecological Footprint
2. What is sustainable development? And – is it possible?
3. How have/why have traditional definitions of “development morphed into
“sustainable development?
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Have we exceeded the Earth’s Carrying Capacity?
HUMANITY'S ECOLOGICAL FOOTPRINT AND BIOCAPACITY
THROUGH TIME
(global hectares per capita)
1961
1965
1970
1975
1980
1985
1990
1995
2000
2005
2007
Global Population
(billion)
3.1
3.3
3.7
4.1
4.4
4.8
5.3
5.7
6.1
6.5
6.7
Total Ecological
Footprint
2.4
2.5
2.8
2.8
2.8
2.6
2.7
2.6
2.5
2.7
2.7
Cropland Footprint
1.1
1.1
1.0
0.9
0.8
0.8
0.7
0.7
0.6
0.6
0.6
Grazing Land
Footprint
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.2
Forest Footprint
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.3
0.3
0.3
Fishing Ground
Footprint
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
Carbon Footprint
0.3
0.5
0.9
1.0
1.1
1.1
1.2
1.2
1.2
1.4
1.4
Built-up Land
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
Total Biocapacity
3.7
3.5
3.1
2.9
2.6
2.4
2.3
2.1
2.0
1.8
1.8
Ecological Footprint to
Biocapacity ratio
0.63
0.73
0.88
0.97
1.06
1.07
1.18
1.24
1.29
1.45
1.51
From Global Footprint Network: http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/
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From Global Footprint Network: http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/
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From Global Footprint Network: http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/
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From the "Living Planet Report 2004." World Wildlife Foundation: http://www.panda.org/downloads/general/lpr2004.pdf
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Calculate your own Ecological Footprint:
http://www.footprintnetwork.org/en/index.php/GFN/page/personal_footprint/
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5 critical factors for Sustainability
• Economic growth
– Can we have sustainability & economic growth?
• Population
– How to control?
• Technology
– Help or hindrance?
• Consumerism
– Can we all have the resources we want?
• Land use
– Is there enough?
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Development & Environment
• Historically, economic growth (development)
involves a change in land use to a more
economically productive activity
– For example, a forest to a farm
• Sustainable development: economic
development strategies that are designed to
reduce environmental impacts and maintain the
resource base while allowing a certain amount
and type of development to take place
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Development & Environment - 2
• Economic productivity
– The amount of revenue a land use generates per acre
or sq. kilometer of land…
• Density
– Amount of surface coverage, number of occupants,
amount of energy produced, amount of waste
produced, more activities
– Greater density usually means more environmental
degradation, more air, and water pollution, and lower
biodiversity
– For wealthier countries, development is advancing
faster than population, because per capita consumption
is rising
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Economic Development - by country
• Developed countries
– Relatively high productivity and income, labor force mostly
in service and industry, even-aged, nearly stable or slowly
growing population that are mostly urban (US, western
Europe, Japan, Australia, Canada, Israel, South Korea,
Poland, Hungary)
• Developing countries
– Lower productivity and income, labor force in industry and
agriculture, population growing, economy changing, starting
to participate in global marketplace
• Deprived countries
– The world’s poorest, political instability, unstable
economies, high population growth, insufficient health care
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Is Economic Growth = Development or Not?
In the 1990s, arguments were advanced to support “structural
adjustment programs,” which involve market reforms and
deregulation to promote economic growth in developing countries
• Amartya Sen (1998 Nobel Laureate in Economics) argues that
growth is a means of development but not in itself an
appropriate goal of society
• The concept of sustainable development is an attempt to
locate economic prosperity in a broader ethical and political
framework
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Can Sustainable Development Save Us?
The concept of sustainable development (SD) can be seen as a response to the
perceived failures of the “growth-as-development” model
• SD broadens the focus on material prosperity to include the following
three objectives:
1. Alleviating poverty + meeting basic human needs
2. Sustaining natural resources + environmental quality
3. An equitable distribution of income and political power
• Amartya Sen (1999) defines development as the extension and
improvement of people’s substantive freedoms
Sustainable Development seeks to create a new relationship:
The three Es’: Equity, Environment, Economics
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EARLY 1970s
Global change emerges on the international agenda on the road to the
U.N. Conference on the Human Environment (Stockholm, 1972)
• “Less developed countries should be given every assistance and
incentive to promote rational environmental management”
• Industrialized nations pledged 0.7% of GDP in development aid to
the South
• The conference stressed that the alleviation of poverty required
economic growth, with limits on resource depletion +
environmental degradation (Environmental Sustainability)
• Transnational pollution (e.g. acid deposition) was identified as a
“global problem” that transcends the borders of nation-states
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Context of Late 1980s…
Environmental problems were once viewed in terms of local pollution
control or nature conservation/preservation
• In the 1980s, however, several new issues were brought into sharp
focus by major media events related to global environmental
change
1. Ozone depletion: The Antarctic ozone hole was discovered in
1984  crash program to phase out ozone-depleting
substances
2. Tropical deforestation: Not a new problem in the 1980s. But
deforestation was popularized by a series of catastrophic fires
and clever marketing by nongovernmental organizations
(NGOs)
3. Looming threat of climate change: Hot summer of 1988 in
Washington + growing scientific consensus
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The Brundtland Report (‘87)
U.N. General Assembly creates: World Commission on
Environment and Development, to investigate the links between
economy & environment; to propose a new “global agenda for
change”
• Our Common Future (1987) –political document, sets stage for
international/interdisciplinary action on environmental issues
--Eight key issues were targeted for study: energy, industry,
population, food security, human settlements, international
cooperation, decision-making systems, and international
economic relations.
• The Commission was chaired by Gro Harlem Brundtland,
then Prime Minister of Norway and future Secretary General of
the World Health Organization (‘98-’03)
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Key Matters from Brundtland
Key principle: Defines Sustainable development =
“development that meets the needs of the present without
compromising the ability of future generations to meet their own
needs”
• “Development” = “progressive transformation of economy and society”
• “Needs” = essential needs for jobs, food, energy, water, and sanitation, with
needs of world’s poor as the “overall priority”
Main areas for policy action:
• Population/human resources
• Food security (agriculture)
• Preserving species and ecosystems (biodiversity)
• Industrial efficiency (pollution and materials)
• Energy
• Redefining urban environments
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Brundtland Report (con’t)…
• The Brundtland Report called for policies to achieve equity
between and within generations
• A “change in attitudes, objectives, and institutional arrangements at
every level”
• Economic growth was still identified as an important component of
development. But how it is managed is seen as even more
important
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Economic Growth: Basic Concepts
The theory of economic development is grounded in macroeconomics:
How economies grow over time due to population growth, capital
investment, technological change
– Macroeconomists also study inflation and unemployment
– This contrasts with microeconomics – the analysis of individual
decision-making and behavior in markets
Starting point for analysis: How to measure aggregate output/economic
activity?
– Gross domestic product (GDP): the total value of goods and
services produced by an economy in a given year, evaluated at
market prices
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Conventional theory: Economic development = fulfillment of consumer
preferences = growth of per capita consumption
– How to promote economic growth in developing countries?
 Free markets work by creating incentives for capital
investment + development of new technologies. “Economic
development” seen as extension of market mechanism to
global economy
o This approached commonly termed “neoliberalism”
 Markets are based on cultural understandings + political/legal
institutions. So “development” requires cultural + political
reform
o Some academics (and NGOs) argue that this can involve
imposing Western culture and values on non-Western
societies
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What’s Wrong with this Model?
Objections to the “neoliberal” model of economic development:
1.
Representing output as a function of labor, capital, and
technology ignores the crucial role played by natural resources
and environmental quality
2.
Defining “development” as increased material consumption
ignores the noneconomic components of human well-being
3.
Defining “development” in terms of GDP growth ignores the
importance of income distribution/economic inequality
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Objection #1: The role of natural resources
– Neomalthusians believe that resource depletion and
environmental degradation undercut the biophysical basis of
economic activity
 This is exemplified by the “Limits to Growth” model of 1972
(e.g., Donella Meadows and others)
 Technological optimists like Bjørn Lomborg believe that free
markets will overcome the limits imposed by nature
 Either of these views is easy to criticize. The truth presumably
lies somewhere in-between
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The techniques of “natural resource accounting” explore the empirical links
between natural resources, economic growth, and human well-being
– Conventional GDP ignores resource depletion
 Although natural resources are valuable forms of wealth, no
subtraction is made when resources are used up
– Repetto et al. (1989) presented a case study of the Indonesian economy
 GDP growth = 7.1 %/yr for 1971-1984
 Indonesia is a major exporter of oil and tropical hardwoods
 Repetto et al. subtracted the economic value of oil, timber, and soil
resource depletion from GDP
 The corrected rate of economic growth = 4.0 %/yr
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Objection #2: Defining “development” as increased material consumption
overlooks the noneconomic components of human well-being
– Richard Easterlin (1974) analyzed the relationship between
income and happiness in industrialized and developing nations
– Happiness was measured using surveys in which people were
asked to rate themselves as “very happy,” “mildly happy,” “mildly
unhappy,” or “very unhappy”
– Easterlin Paradox:
1. In any country at any point in time, wealthy people seem
more satisfied with life than poor people
2. But average happiness has not increased significantly in the
US, Europe, or Japan in the last 60 years despite robust
economic growth
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Objection #3: PRESENT GLOBAL CONTEXT CHARACTERIZED BY
GROWING UNEVEN DEVELOPMENT
Dramatic differences in
annual % change of per
capita GDP (constant
1995$)
By 2005 According to World
Bank:
In dollar terms, the top 5
percent of world population
controls almost one-half of
world income. They make
in 15 hours what the
poorest 5 percent make in
a year.
10%
Annual percent growth in GDP per capita over the given period
•
5%
1970-1980
1980-2000
0%
-5%
-10%
Major industrial countries
Other advanced economies
Developing
Countries in Transition
-15%
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