Bastobota without reality chara

Environment plays a significant role in any economy. The world has become increasingly conscious about environmental issues since the 1970s. The Brundlandt report, “Our Common Future”, published in 1987 by World Commission on Environment and Development was a landmark publication that helped promote consciousness about environment. Another landmark event was the ‘Earth Summit’ convened in Rio de Janeiro in 1992 by the United Nations Conference on Environment and Development (UNCED). In this conference the Heads of States from all over the world adopted ‘Agenda 21’ - a list of concrete actions. Many of these promised actions have not been implemented yet. There is still much controversy about how to proceed. One fundamental controversy surrounds the relationship between economic development (growth) and environment.

Development and Environment: The anti-growth view

One school of thought believes that the quest for rapid economic growth is a fundamental cause for environmental damage and therefore not much can be done to save the environment unless people become less materialistic and learn to be satisfied with less economic growth. There are several types of environmental damage. The two most important are: resource depletion and environmental pollution. Common sense seems to suggest that there is indeed an antagonistic relationship between development and environment, for two reasons:

• More growth means more production, which in turn means more use of resources, and hence resource depletion. Examples: power stations are burning up fossil fuels; consumers and factories are using up forest resources; extension of cultivation into fragile lands is causing soil erosion and desertification; extensive irrigation in modern farming is drying up water reservoirs, etc.

• More production also means more pollution since pollution is usually the by-product of production. Examples: acid rain, hole in the ozone layer, air pollution, water pollution, etc.

Both kinds of environmental damage - depletion and pollution - endanger the prosperity, and even the survival, of future generations. Resources are of two types: renewable (ex. trees) and non-renewable (ex. oil). Depletion of non-renewable resources is seen clearly to endanger future prosperity, because whatever is used up today will not be available in future. Depletion of renewable resources is also thought to endanger future prosperity because it is argued that we are now depleting these resources much faster than they are able to regenerate themselves in the natural process. Thus, ‘environmental capital’ is rapidly depreciating, in respect of both renewable and non-renewable resources. Pollution also obviously endangers the future generations, by threatening to damage their health, their productivity, and in extreme cases, their very survival. So, economic growth is seen to be benefiting the present generation at the cost of future generation.

The new demand is for restraining growth. In some quarters, this demand takes the extreme form of turning the clock back on modernisation and returning to traditional life-styles. In less extreme form, this demand is expressed as a demand for ‘sustainable development’. This phrase was popularised by the Brundlandt report. There is a good deal of controversy on exactly what the phrase means. Roughly speaking, sustainable development means maintaining a kind of inter-generational equity: trying to meet today’s basic needs without seriously jeopardising the basic needs of future generations.

Development and Environment: A False Dichotomy

The other side of the debate argues that it is wrong to blame development or growth for environmental damage. Rather, development is said to be essential for protecting the environment and for protecting the poor from the worst consequences of environmental damage.

The argument proceeds along several lines.

Population pressure, environment and development
According to this line of argument, much of the environmental damage in the developing world is being caused by population pressure; and economic growth is essential to prevent this damage.

Example 1: Shifting cultivation. This form of cultivation uses up lots of land and burns up lots of plants and trees. When population density was low and land was plentiful, this system was justified. But as population growth has intensified, this system is causing unprecedented pressure on land leading to soil degradation and desertification. This is hurting the poor farmers themselves.

The solution lies not in clinging on to the traditional life style, but in adopting modern agricultural practices - intensive agriculture on limited amounts of land using modern technology i.e., to produce more and more food from the same piece of land - in other words, we need growth. Furthermore, growth is needed because only with higher income will come demographic transition, lower fertility and hence lessening of the population pressure that is causing the problem in the first place.

Example 2: Tragedy of the Commons. Traditional societies used to have ‘common property resources’ (CPR) i.e., properties owned by the whole community rather than individual persons or families. Ex. common grazing land, common water resources for fishing, common woodlands for collecting wood and fruits, etc.

The use of CPRs creates negative externality. When I use up these resources, only I gain from their use, but the loss of resources is shared by everybody. In pursuing my own gain, I inflict a loss on others - that is the negative externality. Social cost is thus greater than private cost. So, CPRs tend to be used up more than is socially desirable. In traditional societies, this tendency was curbed by imposing some kind of social sanctions on those who behaved selfishly. But as population pressure increased, competition for resources increased, social discipline broke down. CPRs began to be depleted rapidly - ‘tragedy of the commons’.

The solution lies in part in population control, but that is not possible with economic growth.

The poverty-environment nexus
This line of argument says that just as poor people are suffering the most from environmental damage, their poverty is also acting as a cause of environmental damage. There is a vicious circle here: poverty - environmental degradation - more poverty - more environmental damage, and so on. Growth is needed in order to break this circle. How does poverty cause environmental damage?

Example 1: Resource depletion. Poor people typically do not have enough land to earn a living, nor do they have the resources to invest modern inputs (such as fertilizers) heavily on their land to produce more food from the same plot. So, they look for new land. When the best lands are taken up, they move on to ‘marginal land’ i.e., fragile land which is not suitable for cultivation. The result is soil erosion, desertification, etc.

Also, they begin to exploit forest products, cutting trees, to build houses, to use as fuel and to sell to the market. Result is deforestation, soil erosion, desertification.

Example 2: Pollution. Poorer people have poorer facilities for clean water and sanitation. As a result, environmental hygiene is very bad in the localities where the poorest people live. This is responsible for many diseases, malnutrition and death. People talk of urban pollution from cars, factories etc. But the fact is that more people die of air pollution in rural areas than from air pollution in urban areas. In rural areas, air pollution takes the form of indoor pollution resulting from the burning of wood, dung, crop residue etc. for cooking and heating. These fuels emit toxic matter; cause respiratory diseases - a major cause of death in developing countries.

So, economic growth is needed to avoid these types of poverty-induced environmental degradation.

Environmental Kuznets Curve
This line of argument points to the fact increasing environmental pollution is not a necessary consequence of economic growth. It is true that initially pollution may rise with economic growth; but eventually growth itself will provide the resources required for controlling pollution. In other words, there is an environmental Kuznets’ curve - an inverted U-shaped curve: pollution first rises and then falls with economic growth. That’s why, the streets and the air of rich countries are much cleaner than those of say, China or Brazil.

The fact is that the rich countries can afford to take measures that limit the amount of pollution emitted by a given amount of resource use, while the poorer countries cannot. For example, waste disposal from chemical factories can be processed in such a manner that only a tiny amount of pollutants will be released into air and water, but such processing costs money. Poor countries cannot afford it. So, according to this line argument, the solution of the pollution problem lies not in stopping growth, but in accelerating growth so that the poor countries can move over to the falling side of the Kuznets curve. Modern research has shown that the idea of an environmental Kuznets curve is too simplistic. The relationship between pollution and growth depends on the type of pollution. For some types of pollutants (ex. the amount of sulphur dioxide in the air), there does seem to exist a Kuznets curve.

For other types (ex. urban sanitation), however, the relationship is downward sloping all throughout. For yet other types (ex. carbon dioxide emission), the general relationship is upward sloping. This last type is especially worrisome, for it cannot be reduced automatically with rising income. Conscious policies will be needed to curb it.

The basic lesson is: There is no inherent conflict between economic growth and environment. Nor can it be assumed, however, that economic growth will automatically take care of the environmental problem. Some environmental problems, such as those emanating from population pressure and abject poverty, will indeed be reduced by economic growth, but others will be exacerbated.

Economists and governments will have to think up policies that can strengthen the complementarities that exist between growth and environment and also policies that attenuate the conflicts that exist between the two. This is an active area of current environmental research.

The last two decades have been characterized by a set of changes that have modified the global political, economic, and social context of Latin American countries. In the early 1980s, the implementation of the so-called neoliberal economic model in the countries of the region totally changed the conception of “the rural” without prioritizing the role of rural areas in national economic development processes. The rural economy and small communities have been viewed mainly as the suppliers of labour for urban economic activity, with the consequent permanent migration of rural workers to work in urban areas or seasonal agro-export activities, leading to the gradual disappearance of small-scale rural agriculture.

In rural areas of Latin America and the Caribbean, poverty and extreme poverty are multidimensional phenomena influenced by cultural, social, and economic factors and characterized by:

social and economic exclusion and discrimination linked to ethnicity and gender;
lack of access or limited access to services to meet the basic needs of rural families (health, education, housing, and others); and
income levels below the minimum amount needed to obtain a basic set of goods and services, including food, for the family

Structural poverty (or “hard” poverty) is found mainly among indigenous communities and groups, rural women, and other ethnic minorities living in rural areas of the region. Those affected by this type of poverty generally have little or no schooling, few or no productive resources, limited knowledge about production, few work skills, and lack of access to basic and rural productive services. The term transitory poverty applies to families of small farmers and rural inhabitants without land, of both sexes, who are especially vulnerable to changes resulting from structural reform processes, cyclical internal and external economic crises, and social and political instability. These types of poor people generally own or have access to small plots of land, they have some degree of market involvement, and their incomes hover around the poverty line.

Sudden changes in economic policy or the occurrence of crises affect both farm and non-farm incomes of families in this group, causing periodic declines in their earnings and living conditions. Favorable economic conditions create a climate in which they can improve their incomes and living conditions, but ultimately the transitory poor lack sufficient productive goods and resources to enable them to stabilize their family incomes during periods of economic downturn. In the case of the structural poor, the lack of job skills limits their ability to find stable employment, increasing their dependence on agricultural activities for their income and subsistence. As for the transitory poor, their level of non-farm income is often far greater than their farm income.

More than 90% of the rural poor population of Latin America and the Caribbean is concentrated in four major ecological areas: (i) mountain slopes in subtropical zones (ii) humid and semi humid tropics; (iii) subtropical valleys; and (iv) coastal plains.

Causes of poverty:
A. Historical roots of rural poverty
B. Political instability
Coups d’état, civil wars, and military governments have been a permanent fixture in the political history of most of the countries. This political instability has been exacerbated by poor public administration and the corruption of the dominant political class, which inherited control over the wealth and benefits previously held by the colonial elite. History of limited and imperfect democracy.

C. Macroeconomic models and development policies
The result was the creation in most of the countries of agricultural and industrial sectors that were strongly protected and dependent on government support policies. Because the financial resources needed to apply these policies were beyond the capacity of the countries, the governments negotiated loans with international financial institutions and the international private banking system, thus triggering the spiral of debt in the countries of Latin America and the Caribbean and ushering in what came to be called the “lost decade.” During this period, many of the countries were controlled by military governments which added the cost of arms purchases to current public expenditure.

D. Less access to land
E. Insufficient investment in human and social capital
F. Insufficient development support services
G. gender issues, and ethnic issues in rural areas

Solutions:
 Access to land and property rights
 Eliminating gender inequalities in rural areas
 Developing and strengthening local social capital
 Competitiveness and globalization of markets
 Developing technology for small farmers and small rural businesses
 Supplying effective technical assistance services
 Innovative local financial services
 Supporting small rural businesses
 Development and regulation of rural labour markets
 Market competitiveness for farm and non-farm production
 Management and conservation of natural resource


(2004)

Dependency Theory developed in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. Prebisch and his colleagues were troubled by the fact that economic growth in the advanced industrialized countries did not necessarily lead to growth in the poorer countries. Dependency can be defined as an explanation of the economic development of a state in terms of the external influences--political, economic, and cultural--on national development policies Dependent Development is a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected….when some countries (the dominant ones) can expand and be self-sustaining, while others (the dependent ones) can do this only as a reflection of that expansion, which can have either a positive or negative effect on their immediate development.

There are three common features to these definitions which most dependency theorists share. First, dependency characterizes the international system as comprised of two sets of states, variously described as dominant/dependent, center/periphery or metropolitan/satellite. The dominant states are the advanced industiral nations in the Organization of Economic Co-operation and Development (OECD). The dependent states are those states of Latin America, Asia, and Africa which have low per capita GNPs and which rely heavily on the export of a single commodity for foreign exchange earnings. Second, both definitions have in common the assumption that external forces are of singular importance to the economic activities within the dependent states. These external forces include multinational corporations, international commodity markets, foreign assistance, communications, and any other means by which the advanced industrialized countries can represent their economic interests abroad. Third, the definitions of dependency all indicate that the relations between dominant and dependent states are dynamic because the interactions between the two sets of states tend to not only reinforce but also intensify the unequal patterns. Moreover, dependency is a very deep-seated historical process, rooted in the internationalization of capitalism.

Associated development is a part of dependent development, which came after the dependent development. Former Brazilian president Fernando Henrique Cardoso coined the phrase “associated dependent development” to describe the relationship between national political power and international economic forces in Brazil. Cardoso is a strong critic of the new authoritarian government, and is especially critical of their economic policies. Fernando Cardoso takes a look at all the different effects that development policies have taken on Brazil in the last few decades. Within this analysis Cardoso intends to prove that the regime within Brazil has brought about many changes that help Brazil as a nation, not all of the changes have been economic but some have also been social and political. Thus, the changes help to elevate Brazil to the standards that are set by the rest of the industrialized world.

Cardoso holds three main goals. The first is to take a look at how the new regime emerged and why it is different from other political movements, the second deals with other thinkers views on the regime and the third deals with Brazilian development of the future. Cardoso referred to internal conditions and attention was drawn not only to economic structures but also to social classes, the distribution of power in the society and the role of the state. He regarded that the national bourgeoisies of the dependent societies are capable of shaping development if they are potentially powerful. Cardoso is also very critical of the role of the 1964 dictatorial regime. He feels that the outstanding growth that the country has experienced under that regime is misleading. The despotic regime has allowed for a diffusion of Brazilian culture into an increasingly internationalist arena, both commercial and in the media. Cardoso also points out that the continued growth under the regime has not involved most Brazilians. The gains have been beneficial to the small middle class and elites, while the majority of Brazilians have gotten relatively poorer.

The infant-industry argument is the argument that protection is necessary to enable an infant industry to grow into a mature industry that can compete in world markets. As an example, if Bangladesh wants to produce cars, it will try to prevent importing cars from foreign countries for some times, so that in this time the car manufacturers of Bangladesh becomes efficient enough to compete with the existing car producers of the world market.

This argument of Infant industry claims that protection is warranted for small new firms especially in less developed countries. New firms have little chance of competing head-to-head with the established firms located in the developed countries. Developed country firms have been in business longer and over time have been able to improve their efficiency in production. They have better information and knowledge about the production process, about market characteristics, about their own labor market, etc. As a result they are able to offer their product at a lower price in international markets and still remain profitable. A firm producing a similar product in less a developed country, on the other hand, would not have the same production technology available to it. It's workers and management would lack the experience and knowledge of its developed country rivals and thus would most likely produce the product less efficiently. If forced to compete directly with the firms in the developed countries the LDC firms would be unable to produce profitably and thus could not remain in business.

(2003)

Initially, growth was achieved along with equity for somw countries. Equity itself stimulated further growth and growth further enhanced equity by facilitating broad-based human capital formation which will make human capital further stimulated growth and this way the circle continued. When the economy is growing rapidly, the demand for education rises because people realize that there will be enough opportunity to make use of their education. Supply of education also rises, because rapid growth enables governments as well as private entrepreneurs to find more resources for education. So, growth stimulates further human capital formation, which in turn helps to achieve rapid growth with equity; and thus the circle continues.

Empirical evidence shows that countries which have a more equal distribution of income at the initial stage tend to grow faster (Birdsall and Sabot 1995). As the countries have equality, more people will send their children to school. This will result in better health care and better education. And for these effects, portion of human capital will rise and it will lead to more growth. This will act as a circle.

(2003)

This two theories has come from some extreme free marketers( negative freedom ) who do not approve of any kind of redistribution and from Isaiah Berlin and Amartya Sen (positive freedom) who take the stand that state or government should provide some basic requirments.

Hayek and Nozick are mainly the two thinkers of positive freedom theory. This theory is not on the efficiency grounds, but on the grounds of personal liberty. Hayek gave the theory that Personal liberty is inviolable, but redistribution will violate it. He described, different people have different values; they can never agree on what an equitable distribution is. So, any attempt to deviate from the market outcome through redistribution must conflict with someone’s interests, taking away his property against his will. This will violate his personal liberty. Nozick added the proviso that each person has an inviolable right to personal property so long as that property was acquired in a legitimate manner. For both Hayek and Nozick, liberty means negative freedom - the freedom not to be coerced.

The theory of positive freedom described as “the freedom to live a decent life - freedom from hunger, illiteracy, disease, etc.” If market outcome is very inequitable, then many people will not have the resources to acquire those positive freedoms. Govt may then be right to redistribute.

A trade-off between growth and income equality is often based upon the argument of accumulation, i.e. lower income inequality would lower national savings rates and hence, hamper future growth. Evidence of research in the 1970s has shown rather convincingly that the savings arguments for a trade-off between income equality and growth is often not valid, and were it valid, it is only a weak explanatory variable.
Countries such as Botswana and Chile illustrates that it is perfectly possible to combine high growth with high levels of inequality, albeit with obvious costs for poverty reduction. Two East Asian countries - Malaysia and Thailand - veer towards this group. Others - such as India - demonstrate that it is equally possible to combine relatively high levels of equality with low growth. Most, however, succeed in achieving the worst of all possible worlds: high inequality with low growth. Much of Africa and Latin America fit into this category. The majority of East Asian countries, indicates their success in combining economic dynamism with equity.
So it can not be determined whether there is an trade off between growth and equity. There are other factors involved such an initial inequality, cultural effect, bonds with the developed countries, which play vital role in this matter.

(2003)

Whenever there is a situation in which a person or group is in power over a community, some in the community will seek to obtain special favors at the expense of all others in the community –this behavior in the political/economic world is called rent-seeking. The term rent-seeking is first used in publication in Anne O. Krueger's article "The Political Economy of the Rent-Seeking Society," (1974). Seven years earlier Gordon Tullock (1967) had offered the first systematic discussion of "rent-seeking" activities. The expenditure of resources in order to bring about an uncompensated transfer of goods or services from another person or persons to one's self as the result of a "favorable" decision on some public policy – is known as rent seeking behavior. Examples of rent-seeking behavior would include all of the various ways by which individuals or groups lobby government for taxing, spending and regulatory policies that confer financial benefits or other special advantages upon them at the expense of the taxpayers or of consumers or of other groups or individuals with which the beneficiaries may be in economic competition. Rent-seeking is most likely to occur when states (governments or monarchs) grant monopolies or other privilege through licensing. It may also occur by private collusion. Rent-seeking is not limited to producers or firms. Rent-seeking by individuals or groups can occur wherever there are artificially contrived transfers or the output level is not competitive.