IDEAS home Printed from https://ideas.repec.org/p/hai/wpaper/200909.html
   My bibliography  Save this paper

Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism

Author

Listed:
  • Majah-Leah Ravago

    (Department of Economics, University of Hawaii at Manoa
    East-West Center)

  • James Roumasset

    (Department of Economics, University of Hawaii at Manoa
    University of Hawaii Economic Research Organization)

Abstract

Sustainability science emerged from the felt need to employ appropriate science and technology in the pursuit of sustainable development. The existing sustainability science agenda emphasizes the importance of using a systems approach, stressing the many interactions between natural and human systems. Despite its inertia and avowed purpose of being practical and feasible, however, sustainability science has yet to embrace the policy sciences. In pursuit of this objective, we first trace the history of thought of sustainable development, including its definition and operationalization. Sustainable development encompasses sustainable growth and dynamically efficient development patterns. Two promising approaches to sustainable growth are contrasted. Negative sustainability counsels policy makers to offset any decrease in natural capital with at least the same value of net investment in produced capital. This sustainability criterion cannot determine how and how much to conserve natural capital nor how much to build up human and productive capital. Indeed, there is ambiguity regarding what prices to use in summing the values of diverse capital assets. To fill the void, we offer positive sustainability, which maximizes intertemporal welfare while incorporating system linkages, dynamic efficiency, and intertemporal equity. This provides a solid and operational framework for sustainable growth. In addition, sustainable development must include the lessons from development theory, including how optimal patterns of production, consumption, and trade change with standards of living. However, like Tolstoy’s unhappy families, there are many pathways to unsustainable development. We describe two broad causes of unsustainable growth – rent-seeking and preservationism. We also illustrate patterns of unsustainable development by drawing on lessons from the Philippines. While specialization is the engine of growth, fragmentation is the anchor. In addition to natural fragmentation from natural trade barriers in an island archipelago, policy and governance, driven by rentseeking, promote economic stagnation. Low economic growth in turn exacerbates population pressure and environmental degradation—the vicious circle of unsustainable development. We give particular attention to how a resource curse can exacerbate policy distortions and rent-seeking, and how the same phenomenon can be promulgated by foreign aid, foreign direct investments, remittances, and tourism. For sustainable development not to be at odds with policy science, positive sustainability must be combined with projects and policies that promote dynamic comparative advantage and poverty reduction. We emphasize the facilitative role of government especially in transforming the vicious circle into a virtuous circle.

Suggested Citation

  • Majah-Leah Ravago & James Roumasset, 2009. "Economic Policy for Sustainable Growth and Development vs. Greedy Growth and Preservationism," Working Papers 200909, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:200909
    as

    Download full text from publisher

    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_09-9.pdf
    File Function: Modified on October 29, 2009
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    2. Pender, John L., 1998. "Population growth, agricultural intensification, induced innovation and natural resource sustainability: An application of neoclassical growth theory," Agricultural Economics, Blackwell, vol. 19(1-2), pages 99-112, September.
    3. Giulio Volpi, 2007. "Climate Mitigation, Deforestation and Human Development in Brazil," Human Development Occasional Papers (1992-2007) HDOCPA-2007-39, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    4. Ayong Le Kama, Alain D., 2001. "Sustainable growth, renewable resources and pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1911-1918, December.
    5. James Roumasset, 1997. "The Political Economy of Corruption," Working Papers 199710-R, University of Hawaii at Manoa, Department of Economics.
    6. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," The World Bank Economic Review, World Bank, vol. 13(2), pages 333-356, May.
    7. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808, Decembrie.
    8. Endress, Lee H. & Roumasset, James A. & Zhou, Ting, 2005. "Sustainable growth with environmental spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 58(4), pages 527-547, December.
    9. Stavins, Robert N. & Wagner, Alexander F. & Wagner, Gernot, 2003. "Interpreting sustainability in economic terms: dynamic efficiency plus intergenerational equity," Economics Letters, Elsevier, vol. 79(3), pages 339-343, June.
    10. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    11. Balisacan, Arsenio M. & Hill, Hal (ed.), 2003. "The Philippine Economy: Development, Policies, and Challenges," OUP Catalogue, Oxford University Press, number 9780195158984, Decembrie.
    12. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    13. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications - Books, The World Bank Group, number 2611, April.
    14. Weitzman, Martin L. & Lofgren, Karl-Gustaf, 1997. "On the Welfare Significance of Green Accounting as Taught by Parable," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 139-153, February.
    15. Kenneth Arrow & Partha Dasgupta & Lawrence Goulder & Gretchen Daily & Paul Ehrlich & Geoffrey Heal & Simon Levin & Karl-Göran Mäler & Stephen Schneider & David Starrett & Brian Walker, 2004. "Are We Consuming Too Much?," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 147-172, Summer.
    16. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-1235, December.
    17. James Roumasset, 1989. "Decentralization and Local Public Goods: Getting the Incentives Right," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 26(1), pages 1-13, June.
    18. Nedelyn Magtibay-Ramos & Gemma Estrada & Jesus Felipe, 2008. "An Input-Output Analysis of the Philippine BPO Industry," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 22(1), pages 41-56, May.
    19. W. M. Corden, 1982. "Exchange Rate Policy and the Resources Boom," The Economic Record, The Economic Society of Australia, vol. 58(1), pages 18-31, March.
    20. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, December.
    21. Arsenio M. Balisacan & Nobuhiko Fuwa, 2007. "Reasserting the Rural Development Agenda: Lessons Learned and Emerging Challenges in Asia," Books on Agricultural Research and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), number 2007:36.
    22. Arsenio M. Balisacan & Hal Hill & Sharon Faye A Piza, 2006. "Regional Development Dynamics and Decentralization in the Philippines: Ten Lessons from a 'Fast Starter'," Departmental Working Papers 2006-14, The Australian National University, Arndt-Corden Department of Economics.
    23. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    24. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    25. James A Roumasset, 2000. "Black-Hole Security," Working Papers 200005, University of Hawaii at Manoa, Department of Economics.
    26. Geoffrey Heal, 2009. "Climate Economics: A Meta-Review and Some Suggestions for Future Research," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 4-21, Winter.
    27. Jones, Ronald W & Scheinkman, Jose A, 1977. "The Relevance of the Two-Sector Production Model in Trade Theory," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 909-935, October.
    28. Geir B. Asheim, 1999. "Economic Analysis of Sustainability," Palgrave Macmillan Books, in: William M. Lafferty & Oluf Langhelle (ed.), Towards Sustainable Development, chapter 9, pages 156-172, Palgrave Macmillan.
    29. Syrquin, M. & Chenery, H.B., 1989. "Patterns Of Development, 1950 To 1983," World Bank - Discussion Papers 41, World Bank.
    30. David, Cristina C. & Intal, Ponciano & Balisacan, Arsenio M., 2007. "Distortions to Agricultural Incentives in the Philippines," Agricultural Distortions Working Paper Series 48477, World Bank.
    31. Paldam, Martin, 1997. "Dutch disease and rent seeking: The Greenland model," European Journal of Political Economy, Elsevier, vol. 13(3), pages 591-614, September.
    32. James Roumasset & Lee Endress, 1996. "The yin and yang of sustainable development: A case for win‐win environmentalism," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 1(2), pages 185-194.
    33. W. M. Corden, 1992. "International Trade Theory And Policy," Books, Edward Elgar Publishing, number 104, March.
    34. Arsenio M. Balisacan & Hal Hill (ed.), 2007. "The Dynamics of Regional Development," Books, Edward Elgar Publishing, number 4178, March.
    35. Barbier,Edward B., 2007. "Natural Resources and Economic Development," Cambridge Books, Cambridge University Press, number 9780521706513.
    36. repec:bla:ecorec:v:58:y:1982:i:160:p:18-31 is not listed on IDEAS
    37. Arsenio M. Balisacan, 1997. "Growth and Equity in the Philippines," UP School of Economics Discussion Papers 199705, University of the Philippines School of Economics.
    38. Timothy Besley, 2007. "The New Political Economy," Economic Journal, Royal Economic Society, vol. 117(524), pages 570-587, November.
    39. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    40. Sudhir Anand and Amartya Sen, 1994. "Sustainable Human Development: Concepts and Priorities," Human Development Occasional Papers (1992-2007) HDOCPA-1994-03, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    41. Krautkraemer, Jeffrey A., 1994. "Population growth, soil fertility, and agricultural intensification," Journal of Development Economics, Elsevier, vol. 44(2), pages 403-428, August.
    42. Clarete, Ramon L. & Roumasset, James A., 1987. "A Shoven-Whalley model of a small open economy : An illustration with Philippine tariffs," Journal of Public Economics, Elsevier, vol. 32(2), pages 247-261, March.
    43. Dasgupta, Partha & Maler, Karl-Goran, 1995. "Poverty, institutions, and the environmental resource-base," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 39, pages 2371-2463, Elsevier.
    44. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    2. Kimberly Burnett & Lee Endress & Majah-Leah Ravago & James Roumasset & Christopher Wada, 2011. "Islands of Sustainability in Time and Space," Working Papers 201112, University of Hawaii at Manoa, Department of Economics.
    3. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    4. Roumasset, James & Ravago, Majah-Leah & Jandoc, Karl & Arellano, Clarissa, 2016. "Environmental Resources, Shocks, and National Well-Being," MPRA Paper 87715, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Majah-Leah Ravago & James Roumasset & Kimberly Burnett, 2008. "Resource management for Sustainable Development of Island Economies," Working Papers 200804, University of Hawaii at Manoa, Department of Economics.
    2. Endress, Lee H. & Pongkijvorasin, Sittidaj & Roumasset, James & Wada, Christopher A., 2014. "Intergenerational equity with individual impatience in a model of optimal and sustainable growth," Resource and Energy Economics, Elsevier, vol. 36(2), pages 620-635.
    3. Lee H. Endress & Sittidaj Pongkijvorasin & James Roumasset & Christopher Wada, 2013. "Intergenerational Equity with Individual Impatience in an OLG Model of Optimal and Sustainable Growth," Working Papers 2013-9, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    4. James Roumasset, 2010. "Wither the Economics of Agricultural Development?," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 7(1), pages 1-22, June.
    5. Adrian Boos & Karin Holm‐Müller, 2012. "A theoretical overview of the relationship between the resource curse and genuine savings as an indicator for “weak” sustainability," Natural Resources Forum, Blackwell Publishing, vol. 36(3), pages 145-159, August.
    6. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    7. Steinberg, Daniel, 2017. "Resource shocks and human capital stocks – Brain drain or brain gain?," Journal of Development Economics, Elsevier, vol. 127(C), pages 250-268.
    8. Davis, Graham A., 2010. "Trade in mineral resources," WTO Staff Working Papers ERSD-2010-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Lee H. Endress & James A. Roumasset & Christopher A. Wada, 2020. "Do Natural Disasters Make Sustainable Growth Impossible?," Economics of Disasters and Climate Change, Springer, vol. 4(2), pages 319-345, July.
    10. Majah-Leah Ravago & James Roumasset, 2016. "The Public Economics of Electricity Policy with Philippine Applications," Working Papers 201613, University of Hawaii at Manoa, Department of Economics.
    11. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - Leibniz Information Centre for Economics.
    12. Thorvaldur Gylfason & Gylfi Zoega, 2014. "The Dutch Disease in Reverse: Iceland’s Natural Experiment," OxCarre Working Papers 138, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    13. Edouard Mien & Michaël Goujon, 2022. "40 Years of Dutch Disease Literature: Lessons for Developing Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(3), pages 351-383, September.
    14. Frederick Ploeg, 2011. "Fiscal policy and Dutch disease," International Economics and Economic Policy, Springer, vol. 8(2), pages 121-138, June.
    15. Pérez, Claudia & Claveria, Oscar, 2020. "Natural resources and human development: Evidence from mineral-dependent African countries using exploratory graphical analysis," Resources Policy, Elsevier, vol. 65(C).
    16. Giovanni Covi, 2014. "Dutch disease and sustainability of the Russian political economy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2014(2), pages 75-110.
    17. Osiris Jorge Parcero & Elissaios Papyrakis, 2024. "Income inequality and the oil resource curse," Papers 2401.04046, arXiv.org.
    18. Gerelmaa, Lkhagva & Kotani, Koji, 2016. "Further investigation of natural resources and economic growth: Do natural resources depress economic growth?," Resources Policy, Elsevier, vol. 50(C), pages 312-321.
    19. Ze, Fu & Yu, Wence & Ali, Anis & Hishan, Sanil S. & Muda, Iskandar & Khudoykulov, Khurshid, 2023. "Influence of natural resources, ICT, and financial globalization on economic growth: Evidence from G10 countries," Resources Policy, Elsevier, vol. 81(C).
    20. Ramez Abubakr Badeeb & Jeremy Clark & Abey P. Philip, 2021. "The Nonlinear Effects of Oil Rent Dependence on Malaysian Manufacturing: Implications from Structural Change using a Markov-Regime Switching Model," Working Papers in Economics 21/11, University of Canterbury, Department of Economics and Finance.

    More about this item

    Keywords

    Sustainable development and patterns; positive sustainability; specialization; the Philippines;
    All these keywords.

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:200909. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Web Technician (email available below). General contact details of provider: https://edirc.repec.org/data/deuhius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.