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close this bookEco-restructuring: Implications for sustainable development (UNU, 1998, 417 pages)
close this folderPart II: Restructuring sectors and the sectoral balance of the economy
close this folder8. Global eco-restructuring and technological change in the twenty-first century
View the document(introductory text...)
View the documentGlobalization
View the documentPopulation growth and economic growth
View the documentEnvironmental pressures for global change
View the documentScenario analysis and the use of materials
View the documentThe challenge for eco-restructuring
View the documentConcluding remarks
View the documentNotes
View the documentReferences

Population growth and economic growth

The basic political and economic objective of the modern liberal state is to achieve increased prosperity through economic growth, which in turn is pursued through improvements in efficiency, new technology, and free trade. This outlook has prevailed in the two centuries since the industrial revolution, a period that has experienced accelerated growth of both population and material well-being. With the fall of communism, economic liberalization is virtually unopposed as a global political and economic philosophy. However, as population growth levels off, at least in the affluent societies, it is timely to consider the prospect for a levelling off of economic growth as well and new global agreements and institutions that govern the operation of more or less self-regulating markets.

Economists distinguish three categories of factor inputs needed for the production of goods and services: capital, labour, and land, where "land" is interpreted as shorthand for all categories of inputs from the natural world. For an economy operating with a given set of technologies, growth in the delivery of goods and services to final users requires more factor inputs. Clearly, population growth can generate economic growth with the simple replication of existing methods and a larger labour force, as well as more land and other inputs. Of course, on a per capita basis, consumption might not increase.

Malthus's concern about running out of land and food was at least temporarily put to rest by the enormous increases in yields resulting from new technology. "Artificial manure" proved remarkably successful in assuring "big and ever increasing harvests lasting eternally" (Liebig 1862, quoted in Krohn and Schafer 1976, p. 31). Such confidence in unlimited increases in prosperity already sound dated, however. There is surely the possibility of continued advances and even dramatic breakthroughs in our ingenuity for wresting a living from nature. But there is also precedent for the collapse of entire ecosystems.

In the analysis of actual activities, economists in the twentieth century have focused their investigation of growth almost exclusively on changing inputs of capital and labour both in theoretical discussion and in the "production functions" chosen for most empirical analysis. This emphasis is largely explained by the fact that the extraction of primary materials in agriculture and mining utilizes a very small portion of the labour force in the rich, industrialized economies that have been taken as the model for development, and air and water were considered free of charge. However, demographic and environmental pressures are already shifting the attention of economists to the third factor of production, natural resources. Its operational definition will require attention to the distinctions among the individual energy raw materials that are neither renewable nor recyclable; the numerous mineral resources that are potentially recyclable; and water and soils of different qualities. The different categories of pollution and environmental degradation that are delivered back to the natural world also need to be accounted for as factors of production; they can be viewed as "negative inputs." Although capital and labour obviously cannot be ignored, the primary materials that increasingly occupy economists are also the inputs at the centre of attention in eco-restructuring.

A major reason for the developing countries taking on a new importance in the world economy is that they will continue to be the locus for virtually all population growth over the twenty-first century and therefore offer the easiest targets for the expansion of both production and consumption. The affluent societies can increase per capita consumption further through employing higher-quality factor inputs; the most practical avenue to exploit this option is through the upgrading of the skills and satisfaction of the labour force. New technologies can promote growth by enhancing the "productivity" of factor inputs; but they invariably involve not only a decrease in factor quantities per unit of output but also a change in the quality or at least the mix of inputs. Some consequences include the generation of novel wastes - such as chlorine containing compounds. However, the opportunities for actually implementing new technologies are limited when they are applied to the upgrading of capacity that is already in place (in the industrialized countries) rather than the construction of entirely new facilities to expand capacity (in the developing countries). individuals or firms in the rich countries may be able to generate more profit, if they are free to do so, by supplying the requirements of other countries with faster-growing populations rather than by investing in incremental improvements in production for domestic markets.

The size of the population may level off in the developing countries too in the course of the twenty-first century. With less political pressure continually to "create jobs" for increasing numbers of labour force entrants, concerns about depleting resources or degrading the physical environment could lead to a shift in emphasis from growth to improvements in the quality of life. For the medium term, however, the asymmetry in population dynamics between the rich and poor countries will strongly influence the nature of their interactions.