The Pursuit Of Economic Growth In The Age Of Sustainable Development

Generally defined as the increase in the inflation-adjusted market value of the goods and services produced by an economy over time and calculated as the percentage rate of increase in real gross domestic product (GDP), economic growth is probably the most widely used indicator of the economic progress and wellbeing of nations. In theory, the higher the economic growth rate, the higher the employment rate, income per capita and living standard of the population will be, leading to reduced poverty levels and social inequalities.  Since those are universal basic desirables for all countries, the relentless pursuit of economic growth has become nothing less than a cult for governments and multilateral financial institutions.  For the developing countries in particular, economic growth, which is a quantitative measure, is generally synonymous with “economic development” - the qualitative and multi-dimensional process of converting growth into technological, social and institutional improvements necessary to achieve modernization and to climb up the ladder of industrial development already attained by the developed countries. This, in other words, would be “catch-up growth”. For the mature industrialized economies, which already have practically all the modernity endowments which developing countries are struggling to establish (physical infrastructure, scientific and technological capacity, educational institutions, healthcare services, etc), economic growth nonetheless continues to matter, almost religiously, as a fundamental macroeconomic policy, along with full employment and inflation control. Because an industrial base is required to produce the goods and services that account for GDP, economic growth and industrial growth are inseparably intertwined. According to economic historians, developing countries have to pass through a number of stages of economic growth to catch up with the mature industrialized economies. 

The Stages of economic growth is the title of a book published in 1960 by Professor Walt Rostow who sets out a neat linear economic growth model of five stages, as follows: (1) traditional Society dominated by subsistence agriculture and  almost wholly a «primary» sector economy with limited technology; (2) pre-conditions to «take-off» characterized by the development of more productive and commercial agriculture, economic processes and changing social structures induced by external demand for raw materials and increasing spread of technology and investments to expand production; (3) take-off phase whereby urbanization increases, industrialization proceeds, technological breakthroughs occur, industrial (secondary) sector expands and ratio of industrial vs. primary sectors in the economy shifts quickly towards the industrial sector, an example of this take-off phase being the Agriculture (Green) Revolution in the 1960s; (4) drive to maturity exemplified by diversification of the industrial base; multiple industries expand and new ones take root quickly, manufacturing shifts from investment-driven (capital goods) towards consumer durables and domestic consumption, rapid development of transportation infrastructure, large-scale investment in social infrastructure (schools, universities, hospitals, etc.); and (5) age of mass consumption whereby the industrial base dominates the economy, the primary sector is greatly diminished in economy and society, there is widespread and normative dependence on high-value consumer goods (e.g. automobiles), consumers typically (if not universally), have disposable income beyond all basic needs, urban society emerges as a result of movement away from rural areas to the cities. To these five phases of growth prescribed for the developing countries, Rostow adds yet another phase, applicable more to the developed countries, namely the stage “beyond consumption”, which is the age of diminishing relative marginal utility, high economic security and high consumption. It should be noted in particular that Rostow’s liberal economic framework, which uses the U.S. as frame of reference, almost completely abstracts environmental factors of sustainability underpinning economic growth. His focus is on a society’s inevitable linear march towards the age of capitalism, materialism and mass consumption, not on the environmental perils of industry’s voracious consumption of the finite resources of Nature. The environmental consequences of Rostow’s stage 5 of mass consumption, which all countries seek to attain, are depicted in the table below on national per capita carbon emissions. The more a country moves up the growth ladder, the more carbon emissions it produces, so much so that the U.S., today at top of the ladder is by far the biggest world polluter in per capita terms. Another example is China which was at peace with its natural environment for thousands of years but which, in barely 30 years of intense fossil-fuelled industrialization in a race to catch up with the West, has become the biggest source of greenhouse gas emissions in absolute terms, telescoping almost 200 years of Western industrial achievements. Although China’s commitment to building a non-fossil dependent « ecological civilization » in the future cannot be pre-judged at this stage, its extraordinary rise in record time to become a global industrial powerhouse is matched only by its equally extraordinary rise to become the biggest atmospheric polluter and threat to the world climate system. Indeed, when Rostow published his book in 1960, the environmental push back to growth economics had not yet popped up on the radar of the international development community. But much has happened since then to tie the forever- economic growth model to the Earth’s ecological limits.   

Ecological limits to growth: Industrial production feeding economic growth consumes environmental resources (the Earth’s resources), such as fossil fuels (oil, gas and coal), land and raw material inputs all of which are finite – using a linear growth pattern held to be infinite. It then gives back WASTE to the environment through various forms of terrestrial, marine and atmospheric pollution, in addition to depleting natural resources, all resulting in far-reaching threats to humanity and to the Earth itself, such as global warming or climate change, ever more powerful and destructive weather events such as hurricanes, expanding deserts, rising oceans, disappearing water bodies such as Lake Chad. These are just a few of the threats to the Earth’s ecological balance, to the human race and to biodiversity in general arising from the universal frenetic pursuit of economic growth and of an ever growing GDP. As such, the sustainable development debate, which has been raging since the 1992 Earth Summit in Rio de Janeiro, Brazil, has focused on how GDP growth can be transformed from a purely resource-extractive production system to a restorative, regenerative and nurturing production model; on how to pursue economic growth without inflicting irreparable harm on the global commons and future generations; on how fast economic growth can be de-carbonized be deploying renewable sources of energy (wind power, solar, geothermal, hydroelectric or nuclear) and addressing their upfront capital costs; on intensifying the development of more energy-efficient and less polluting engines and production systems; on enthroning circular, recycling production methods which increasingly use waste as raw material inputs; and otherwise stretching the boundaries of science and technology to perform marvels that would save humanity from its self-inflicted environmental accidents. The sustainable development agenda, in other words, is to ensure that the production and consumption patterns now enjoyed mostly in the developed countries and coveted by the rest of humankind can be pursued within the Earth’s ecological limits, or “carrying capacity”. 

The hard question is: what makes our current industrial civilization so exceptional to the point that in barely 300 years of growth it has stacked up such an impressive catalogue of dangers and threats to the human race and to our Biosphere in general to an extent never before recorded for any other civilization in human history? Has our economic growth compulsion become a sort of  hurricane hurtling us to the destination of mass consumption or mass suicide? 

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