Earth Economics

Earth Economics

An Introduction to Demand Management, Long-Run Growth and Global Economic Governance

Peter A.G. van Bergeijk

Taking stock of emerging planet data and analysing policies during the global crisis, Earth Economics provides a comprehensive and accessible introduction to basic macroeconomic concepts, methods and principles, and their application to real world data.

Chapter 11: Development and Change

Peter A.G. van Bergeijk

Subjects: economics and finance, environmental economics, environment, environmental economics

Extract

This chapter deals with one of the most challenging eartheconomic issues, namely development. I will take an economic approach to this issue and define development as an increase in per capita income that is sustainable in view of the concomitant improvement of productivity levels (but note that Chapter 12 takes up the issue of environmental sustainability and limits to growth). It should of course be acknowledged that development defined in this manner is narrow and neglects important dimensions of equity, opportunity and genetic inheritance and predestination. The Dutch Nobel Prize laureate in Economics, Jan Tinbergen, often pointed out that the two most grave injustices in the world are, firstly, the place where your crib was erected and, secondly, the IQ that you received. There is much wisdom in Tinbergen’s observation, but considering these issues introduces the need to consider value judgements. I appreciate the wisdom of this statement in full, but in this chapter it is economics and not morality that determines what we will discuss. Without global growth it will be much more difficult to achieve a fair(er) division of income and opportunities. This is why we focus on economic growth in the present chapter and deal with issues of efficiency rather than equity. Basically we will study how structural reforms and other policies could ignite or re-start global growth. This is a somewhat controversial topic given the fact that structural reforms aimed at larger openness, stiffer competition, and smaller government (that means: privatization) form part of the so-called Washington Consensus that is now contested by many.

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