Sustainable Growth: Respecting the Needs of Future Generations

Sustainability involves two issues: satisfying the needs of the present generation without sacrificing future generations, and establishing mechanisms for continuing growth. This chapter reviews and discusses the former, which is now primarily a climate change issue. As economies develop, environmental pollution changes. Since analyses of this relationship were first presented in the 1990s, numerous studies have been conducted, but no consensus has yet emerged on GHG emissions. Since many developing countries are still in the process of increasing their emissions, curbing emissions through policy measures is inevitable, although this will have a negative impact on short-term growth. In the long term, models that integrate the economy and the environment are used, and it is generally suggested that early measures are desirable in avoiding risks, and global cooperation is essential. The depletion of natural resources is another theme of this sustainability perspective. Growth can be maintained by converting the consumption of natural resources into capital with the same rate of investment return. On the other hand, resources pose specific challenges for economic management, including instability in resource prices, impact on currency value, crowding out of manufacturing, and deterioration of governance—often referred to as the “resource curse.”