Managing Macroeconomic Policies for Sustainable Growth

Managing Macroeconomic Policies for Sustainable Growth

John Asafu-Adjaye and Renuka Mahadevan

The authors expertly reveal a model-based analysis of economic development and environmental issues with policy prescriptions for enhancing sustainable development. Within the last four decades, there has been a rapid deterioration in the quality of our environmental and natural resources, raising grave concerns about the sustainability of unbridled economic growth. In light of these concerns, the authors analyse a range of economic and environmental issues, and propose policy recommendations that would enhance sustainable economic growth. The book covers a variety of issues related to economic development, trade, energy and climate change, and focuses on countries in the Asia-Pacific region including Australia, Thailand, Papua New Guinea and Fiji.

Chapter 1: Introduction

John Asafu-Adjaye and Renuka Mahadevan

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics

Extract

2 Managing macroeconomic policies for sustainable growth removal of other protective instruments, as well as the relaxation of crossborder capital flows to encourage foreign investment. 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Growth rate (%) 1971−80 1981−90 1991−00 2001−09 Source: World Bank (2011). Figure 1.1 GDP growth rates in regional groupings, 1971−2009 5000 East Asia & Pacific (all income levels) South Asia Sub-Saharan Africa Latin America & Caribbean Energy use (kt per capita) 4000 3000 2000 1000 1971 1975 1979 1983 1987 1991 1995 1999 2003 Source: World Bank (2011). Figure 1.2 Per capita energy use, 1971−2009 2007 0 Introduction 3 CO2 emissions (Mt per capita) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1971−80 1981−90 1991−00 2001−09 Source: World Bank (2011). Figure 1.3 Per capita CO2 emissions, 1971−2007 The evidence suggests that these policies have achieved their intended purposes to a large extent. For example, for developing countries in the EAP region, exports as a proportion of GDP have doubled from an average of 15% in 1979 to 35% in 2009. The annual growth of exports has averaged 10% over this period. At the same time, net inflows of foreign direct investment (FDI) as a proportion of GDP has grown at an average of 2.5% per annum (World Bank, 2011). The GDP growth rate of these countries has averaged 8% per annum from 1979 to 2009, in spite of the Global Financial Crisis (GFC). For the developing...