High Economic Growth : Sustainability or Bust ?

Wheat yields in developing countries, 1950 to ...

Wheat yields in developing countries, 1950 to 2004, kg/HA baseline 500 (Photo credit: Wikipedia)

English: A world map showing developed countri...

English: A world map showing developed countries, developing and least developed countries. Português: Um mapa mundial indicando países desenvolvidos, em desenvolvimento e subdesenvolvidos. (Photo credit: Wikipedia)

By Dr Faisal Bari 

Can China and India have the per capita incomes that the North American and Western European countries enjoy today? What will the world be like if that were to happen? Do we have the kind of resources, around the world, to even consider the possibility? Can our environment sustain that level of living? And can scientific innovation and technological development achieve this?
Clearly there are things that are not possible, even from simple accounting perspective. Not all countries in the world can run trade surpluses. For some to run trade surpluses, others have to run deficits. If the game is about being one of the countries that has surplus, it is a competition game and the moment you think about the world as a whole the entire issue of recommending, to all developing countries, export oriented growth strategies, becomes a bit strange. We can have more overall trade, but, as mentioned, not all countries can have trade surpluses.

The issue of the developing world having per capita of the countries of the West is not an accounting impossibility, as with all countries running trade surpluses, but there are serious issues here. Does the world have the kind of resources, fossil fuels, metals and so on, as well as food, to allow such high levels of per capita for all? Even if we could produce a lot more food, can we have better fuels, and even if that is possible, can the environment sustain that level of consumption? Even if we do not know the answer to the first few questions, though they look improbable enough, the answer to the last question, about environmental sustainability, does look fairly clear. Unless there are really big and substantial changes in the way we deal with cleaning the environment and maintaining and managing it, the environment will not be able to support the current per capita income levels of West if they were to spread to large populations like India and China.

But this raises very interesting questions for everyone around the world, but especially for countries in the West. Despite the very high per capita income even currently in the West, pursuit of growth seems to be one of the main objectives of economic policy in these countries. It is seen, even post Washington Consensus, as the main means of providing for the poor and for those who are below the average income levels. Versions of trickle down still hold credence. In America, in particular, despite the fact that many researchers have shown clearly that income inequality has increased tremendously and social and economic mobility has decreased in recent times, versions of the American dream still survive and still tickle the imagination of many.

There is such tremendous opposition, in almost all of these countries, about thinking about redistribution as a means of making the fortunes more widely shared and more equal. Again United States is the true outlier here too. Inequality is not only higher in the US than in many European countries, and welfare state weaker and more incomplete (Obama health care reform has been termed socialist by many), there is a stronger sense, that comes through in surveys, that people feel that poverty is more the fault of the poor and they are to be blamed for their plight. And hard work can get people out of poverty and reduce inequality.

In contrast, while the welfare state is stronger in most European countries, and inequalities lower than in US, generally, more people, more realistically, also feel that poverty is not the fault of the poor. There are significant systemic issues that also explain poverty and they also explain, to an extent, that hard work alone might not be enough. But here too, apart from the higher taxation levels and stronger welfare states, there are no explicit discussions of the goals of development and growth and their limits and of sharing the fruits better through more specific redistribution programmes.

The vision, which was given as utopia by many early to mid twentieth century thinkers and writers, of a time when scientific and technological progress would allow humanity to have enough for everyone with the labour of a few hours a week only from each person, and allowing large amount of leisure time for people to cultivate other interests and pursuits, given the per capita of developed countries is today possible, but is not even being discussed. Instead those who have jobs work the full quota or more and a lot of people go without jobs and resources. But the solution that seems to be accepted by most, and as the only solution, is to somehow keep growing so that all can work at full scale. While there is no thinking on the utopia side, even though the utopia seems achievable. Is it the case that human want is really insatiable? And even if it has been culturally constructed this way, should it really be the case?

For the developing countries, the issues are different. Human need is still very large and deprivation is still at a very high level. Even accounting for redistribution issues, growth is needed and given the level of deprivation it is not feasible to even think of not recommending growth, whatever one might recommend on the side of redistribution.

But the issue, for the developing countries, to think about, is that do they have to follow the same route as the developed countries? Do they have to make growth the exclusive focus? Evidence from a lot of social protection programmes, from developing countries and at a very practical level, seems to be suggesting something else. Growth can be a focus but specific programmes that redistribute to the poor and get them out of poverty traps can help with poverty quite well and they can help in getting higher growth too. And more equitably and with a much broader base. Developing counties should explore these angles a lot more.

Environmental sustainability issues are not just the dreams or nightmares of naysayers. There are real issues here and ones that need to be addressed despite what is happening on the scientific and technological fronts. The pursuit of growth as the only goal and even as the main goal, especially by the developed world, but even in the developing world, is making these concerns even graver. But there does not seem to be any thought and/or dialogue about it at the popular level. Should there not be some thinking about these issues too?

The writer is an Associate Professor of Economics at LUMS

The writing first appeared in Pakistan Today on July 10,2012

Views expressed by experts in the Opinion Section are entirely their own and do no necessarily reflect editorial policy of MyGlobalCommunityToday.



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