Julian Iacovantuono, Enrico Camia Ryan Adams Introduction to Macroeconomics Section 0013 The Pros and Cons of Economic Growth as a Policy Objective It may seem only normal for most people to assume that economic development should be the main objective for most nations. While this may be beneficial in some cases, economic growth as a main objective definitely has negative consequence as well. One of the main dilemma’s associated with economic prosperity is that it does not take the environment into consideration as a way of calculating and accounting for capital depreciation, instead we only apply what we know as manufactured capital when accounting for capital depreciation (Jonathan M. Harris & Anne-Marie Codur, 2004, p.8). One may argue that long term sustainability of the environment goes hand in hand with economic development. If natural resources could be exploited for profit, then protecting those recourses would be in an economist’s best interests, right? Well, GDP and NDP (the most common methods of measuring economic production) do not take the environment into consideration. We must ask ourselves the question “What about natural capital?” (Jonathan M. Harris & Anne-Marie Codur, 2004, p.8). Production uses up nonrenewable natural resources such as oil, coal and minerals as well as renewable natural resources such as forests and fisheries which are also being depleted or damaged through over-use. We can also look at the waste that is released from the process of
Rapid economic growth is one thing we should avoid as this could lead to inflation which could result in recession or even worse situation. Inflation results in an increase in price which will make it difficult to predict future goods and service cost. Investments in the country will be lower causing the country to have even poorer economic growth (EconomicsHelp, n.d.). Unemployment is therefore an important factor as it will affect the economic
Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.
Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.
Not all aspects of economic growth are positive, for example when an economy is at, or near its full capacity of productivity prices can be driven up causing inflation and the devaluing of their currency, where each unit of currency buys fewer goods and services that it previously could have. It can increase the
Economic analysis that weighs all costs and benefits of a particular model must include environmental considerations. That is to say, the potential for short-term economic losses caused by conservation in the present, should be measured against the dividends that conservation will pay in the future (Nordhaus, 2007). If the earth is truly our most valuable commodity, then analysis under these conditions should recognize that if a “dollar value” were placed on environmental sustainability, more often than not it would outweigh any initial monetary loss resultant of the implementation of more sustainable practices.
Wilson asserts, “No one should look to GNPs and corporate annual reports for a competent projection of the world’s long-term economic future.” In other words, the Gross National Product (GNP) and corporations will not accurately depict the long-term economic future, due to the lack of environmental factors that if implemented would surely fluctuate the projections. Furthermore, the more reliable sources are from research reports from the natural-resource specialists and ecological economists that provide an accurate representation of the financial and environmental future. In addition, the environmental experts factor in the imperil that is posed to the environment while expanding the economy. Thus, the idealistic balance between the environment and economy will not be found in the GNP reports, but in the ecological economist reports that can veritably attest to both sides of the political spectrum. On a national scale, converting to renewable energy is not prioritized, due to the fact the fossil fuel industry has an abundant of sizable investments. So, reasonably an annual national report would be in favor of the large corporations, such as the fossil fuel industry. As a result, the projections for the economic-future with fossil fuel as our main energy source is one-sided and
Economic growth is the most important objective for economic management. Economic growth makes it possible to achieve goals and also causes problems. The following are its effects:
Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.
While industrialization has been strongly associated with greenhouse gas emissions, it is premature, however, to conclude that economic growth is the independent factor responsible to climate change. Neumayer (1998) contended that there is no sound scientific evidence documenting consequences of economic development on the environmental degradation in the long term (p. 4). There is also no linear association between economic growth and environmental deterioration, as maintained by Ferguson et al. (1996, p. 28) that the existing evidence “cannot be used to justify a view that economic growth (…) will automatically be good or bad for the environment” (cited in Neumayer 1998, p. 16).
However, when examining environmental sustainability, it does not seem to be the case. When people are faced with knowledge in relation to natural resources that may be sold for personal capital, people are quick to exploit the resource without taking the environment into consideration. For example, it can be presumed that if people did not have knowledge of the abundance of cod in Newfoundland in the 1960’s, the environment would have been thriving in that area to this day. Similarly, a notion that was present in Davis’ article is the tragedy of the commons. This plays a key role when looking at the environment today, in a capitalist world. Furthermore, people are often too caught up in extending their own enterprises to even consider the potential effects that certain acts can have on the environment. On the other hand, there are people who obtain knowledge on something that is harming the environment, yet they do not act on that knowledge or do anything to mitigate the damage. In the modern world and especially western society, people will easily put their needs above the environment from which we live. Therefore, from a sustainability point of view, knowledge is not
In addition, Economic is one of the essential factors for all the countries to develop their country. However, if the country is in several parts of the control, such as noble, church, and king, that means it certainly will lower down the economic development. Because nobles need money to show their affluence, the church needs money to enlarge and decorate their church and king needs money to trade with other counties, establish an army and construct the country. However, if the country is ruled by the absolute monarchy, this will not happen. Elisabeth example can be cited here. During the time that
One positive implication capitalism has to the natural environment is industrial ecology, a system of chain production and consumption, serving to the lowest environmental impacts in a most environmentally sustainable economy as the main goal of operation (Richards & Pearson, 1998). The Companies in a like to operate in such way because of four major reasons. The most important factor is known as the corporate well-being, for it is determined by higher profits and growth provided by innovations in an industry. Profits are increased from recognizing the production ineffiency costs that comes from wasted inputs and energy losses; this allowing cost savings to increase and ineffiency to decrease. compliance with cleaner technology alternatives such as ones that produce less waste and less energy will provide long term savings which are both beneficial to the environment and the business at hand. A real world example freight company changes their salvaged driving equipment to hybrid vehicles. Money is temporarily lost, but the gasoline and maintenances cost savings will compensate in a long run period of time.
Economic growth is a necessary but not sufficient condition of economic development. There is no single definition that encompasses all the aspects of economic development. The most comprehensive definition perhaps of economic development is the one given by Todaro: ‘Development is not purely an economic phenomenon but rather a multi – dimensional process involving reorganization and re orientation of the entire economic and social system. Development is a process of improving the quality of all human lives with three equally important aspects. These are: 1.
Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of
February 10, 2009 The purpose of this note is to define the meaning of the term ‘inclusive’ growth. It is often used interchangeably with a suite of other terms, including ‘broad-based growth’, ‘shared growth’, and ‘pro-poor growth’. The paper clarifies the distinctions between these terms as well as highlights similarities.