Economic Growth and Sustainable Development PDF
Preview Economic Growth and Sustainable Development
Economic Growth and Sustainable Development Economic growth, reflected in increases in national output per capita, makes possible an improved material standard of living. Sustainable development, popularly and concisely defined as "meeting the needs of the present generations without compromising the abil ity of future generations to meet their needs/' directly addresses the utilization of natural resources, the state of the environment, and intergenerational equity. Fundamental questions addressed in this textbook include: • What causes economic growth? • Why do some countries grow faster than others? • What accounts for the extraordinary growth in the world's population over the past two centuries? • What are the current trends in population and will these trends continue? • Are there limits to economic growth and population growth due to resource constraints and environmental thresholds? • Is sustainable development compatible with economic growth? • Can sustainable development be attained without addressing the extreme poverty that afflicts over a billion of the world's population? This interdisciplinary textbook uses a blend of formal models, empirical evidence, history and statistics to provide a coherent and comprehensive treatment of economic growth and sustainable development. Peter N. Hess is Gail M. and Ernest G. Doe Professor of Economics at Davidson College, North Carolina, USA. He is the co-author of undergraduate texts on economic principles and economic development and the author of an undergraduate text on mathematical economics. In addition to this, he has published journal articles on the fertility transition, military spending in developing economies, and sustainable development. He also serves as president of Nepal Orphans Home, an international nonprofit with operations in Nepal. ROUTLEDGE TEXTBOOKS IN ENVIRONMENTAL AND AGRICULTURAL ECONOMICS 1. The Economics of Agricultural Development, second edition George W. Norton, Jeffrey Alwang and William A. Masters 2. Agricultural Marketing James Vercammen 3. Forestry Economics John E. Wagner 4. Agribusiness Management, fourth edition Jay Akridge, Freddie Barnard, Frank Dooley and John Foltz 5. Sustainability Economics Peter Bartelmus 6. Food Economics Henning Otto Hansen 7. Economic Growth and Sustainable Development Peter N. Hess Economic Growth and Sustainable Development Peter N. Hess i~ ~~~~~;n~~~up LONDON AND NEW YORK First published 2013 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 if Routledge is an imprint the Taylor &Francis Group, an iriforma business @ 2013 Peter N. Hess The right of Peter N. Hess to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patent Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library if Library Congress Cataloging in Publication Data Hess, Peter N. Economic growth and sustainable development/by Peter N. Hess. p. cm. Includes bibliographical references and index. 1. Economic development. 2. Sustainable development. 1. Title. HD75.H45832013 338.9-dc23 2012030672 ISBN: 978-0-415-67948-0 (hbk) ISBN: 978-0-415-67949-7 (pbk) ISBN: 978-0-203-07051-2 (ebk) Typeset in Perpetua by Sunrise Setting Ltd, Paignton, UK Dedication To my wife, Boo, our grandchildren, my brother, Michael, and the children of Nepal Orphans Home I dedicate this book. Peter Hess v. This page intentionally left blank Contents List of illustrations xii Preface xvi Acknowledgments xxii PART I INTRODUCTION 1 1 INTRODUCTION TO ECONOMIC GROWTH 3 BRIEF HISTORY OF ECONOMIC GROWTH 4 MEASURING ECONOMIC GROWTH 6 ECONOMIC GROWTH AND POVERTY 6 PRIMARY SOURCES OF OUTPUT GROWTH 13 OUTPUT GROWTH ACCOUNTING 15 LABOR PRODUCTIVITIES AND PER CAPITA INCOMES 23 NEGATIVE OUPUT GROWTH 29 CONCLUSION 32 2 INTRODUCTION TO POPULATION GROWTH 35 COMPONENTS OF POPULATION CHANGE 35 MEASURING POPULATION GROWTH RATES 36 BRIEF OVERVIEW OF WORLD POPULATION GROWTH 38 DEMOGRAPHIC TRANSITION THEORY 43 LOW POPULATION GROWTH 51 POPULATION CHANGE AND ECONOMIC GROWTH 52 CONCLUSION 53 PART II THEORIES OF GROWTH 55 3 CLASSICAL THEORIES OF ECONOMIC GROWTH 57 MERCANTILISM 57 CLASSICAL ECONOMISTS AND ECONOMIC GROWTH 58 vii . CONTENTS ADAM SMITH 58 UTOPIAN SCHOOL 65 THOMAS MALTH US 66 DAVID RICARDO 69 SAY'S LAW 73 JOHN STUART MILL 73 CONCLUSION 74 4 MACROECONOMICS AND THE GREAT DEPRESSION 77 THE GOLD STANDARD ERA 78 POST-WORLD WAR I RECOVERIES 80 THE GREAT DEPRESSION 82 MACROECONOMIC CONCERNS 84 CAPITAL INTENSITY 88 CONCLUSION 96 5 LIMITS TO GROWTH 99 INTERNATIONAL INSTITUTIONS FOR TH E NEW WORLD ORDER 100 INTERNATIONAL FINANCE, TRADE, AND AID 101 STAGFLATION IN THE 1970S 102 ECONOMIC MODELS 103 THE LIMITS TO GROWTH SIMULATION MODEL 103 A STEADY-STATE ECONOMY 108 NO LIMITS TO GROWTH 110 MARI(ET MECHANISM AND PRICE SIGNALS 111 DEBT PROBLEMS OF TH E 1980S 112 UNEVEN GROWTH IN THE 1990S 117 CONCLUSION 121 PART III MACROECONOMIC MODELS 125 6 MACROECONOMIC FLUCTUATIONS 127 ECONOMIC GROWTH 128 BUSINESS CYCLES 132 AGGREGATE SU PPLY 134 AGGREGATE DEMAND 141 A SIMPLE MODEL OF AGGREGATE DEMAND AND AGGREGATE SU PPLY 143 CHANGES IN NATIONAL OUTPUT AND THE AGGREGATE PRICE LEVEL 145 THE GREAT RECESSION 151 CONCLUSION 157 7 GROWTH MODELS 160 SIMPLIFYING ASSUMPTIONS 160 A BASIC SOLOW GROWTH MODEL 161 STEADY-STATE EQUILIBRIUM 163 . viii CONTENTS CONVERGENCE THEORY 167 INCORPORATING NATURAL RESOURCES 174 ENHANCED SOLOW MODEL 175 POLICY IMPLICATIONS FOR ECONOMIC GROWTH 176 CONVERGANCE THEORY REVISITED 180 CONCLUSION 187 8 EMPIRICAL ANALYSIS 190 TH EORY, EVIDENCE, AND POLICY 190 REVIEW OF DESCRIPTIVE STATISTICS 192 SIMPLE REGRESSION ANALYSIS 194 ESTIMATION OF A SIMPLE REGRESSION MODEL 198 MULTIPLE REGRESSION ANALYSIS 204 EMPIRICAL DETERMINANTS OF ECONOMIC GROWTH 210 AN EMPIRICAL MODEL FOR THE DETERMINANTS OF ECONOMIC GROWTH 211 POLICY IMPLICATIONS 216 MARI(ET-FRIENDLY STRATEGY OF DEVELOPMENT 217 COMPREHENSIVE DEVELOPMENT FRAMEWORI( 219 CONCLUSION 220 DATA APPENDIX 222 PART IV DEMOGRAPHY 225 9 POPULATION DYNAMICS 227 MEASURES OF MORTALITY 228 LIFE TABLES 233 STATIONARY POPULATIONS 239 FE RTI LITY 240 MEASURES OF FERTILITY 240 AGE-SEX STRUCTURE OF A POPULATION 248 POPULATION PROJECTION 257 CONCLUSION 263 10 POPULATION TRANSITIONS 268 THE EPIDEMIOLOGICAL TRANSITION 268 TH E FERTILITY TRANSITION 278 THE DEMAND FOR CHILDREN 280 ECONOMIC DEVELOPMENT AND DECLINING FAMILY SIZE 284 DEMAND FOR BIRTH CONTROL 288 POST WORLD-WAR II TRENDS 290 AGING OF THE US POPULATION 294 LESSONS FROM EUROPE 297 CHINA'S POPULATION 300 MIGRATION 303 CONCLUSION 305 ix .
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