Sustainability and Optimality in Economic Development: Theoretical Insights and Policy Prospects
AbstractThis paper takes sustainability to be a matter of intergenerational welfare equality and examines whether an optimal development path can also be sustainable. It argues that the general “zero-net-aggregate-investment” condition for an optimal development path to be sustainable in the sense of the maximin criterion of intergenerational justice is too demanding to be practical, especially in the context of developing countries. The maximin criterion of sustainability may be more appealing to the rich advanced industrial countries, but is too costly and ethically unreasonable for developing nations as it would act as an intergenerational “poverty equalizer”. The paper suggests that a compromise development policy that follows the optimal growth approach but adopts certain measures to mitigate the intergenerational and intragenerational welfare inequalities may better serve these countries. Some of the principal elements of such a policy are highlighted.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.89.
Date of creation: Sep 2007
Date of revision:
Sustainability; Intergenerational Equity; Optimality; Discounting; Development Policy;
Find related papers by JEL classification:
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-DEV-2007-10-20 (Development)
- NEP-ENV-2007-10-20 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Farzin, Y. H., 1999. "Optimal saving policy for exhaustible resource economies," Journal of Development Economics, Elsevier, vol. 58(1), pages 149-184, February.
- Y. Hossein Farzin, 2004. "Is an Exhaustible Resource Economy Sustainable?," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 33-46, 02.
- Tjalling C. Koopmans, 1967. "Intertemporal Distribution and 'Optimal' Aggregate Economic Growth," Cowles Foundation Discussion Papers 228, Cowles Foundation for Research in Economics, Yale University.
- Y. Hossein Farzin, 2006. "Conditions for Sustainable Optimal Economic Development," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 518-534, 08.
- Craig Bond & Y. Farzin, 2008. "Alternative Sustainability Criteria, Externalities, and Welfare in a Simple Agroecosystem Model: A Numerical Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 383-399, July.
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