8 June 2007
Economic growth and sustainable development are concurrently feasible in a market economy system. This, however, requires that mental capital is invested in and, on the other hand, that emissions loading and physical capital are stabilized on an ecologically sustainable level. A completely liberal market economy is incapable of taking the demands of sustainable development into consideration: rather, it should be guided by social principles. This emerges in the doctoral thesis Sustainable Development and Economic Growth in the Market Economy by Teemu Haukioja, Licentiate of Economic Sciences. This thesis study, respective to the economics field, shall be examined at Turku School of Economics on Friday, 15 June 2007.
Teemu Haukioja approaches the problems between sustainable development and economic growth from three directions: as a theoretical moral/philosophical problem, as the basic model of 'new growth' theory, and as an empirical question. The point of departure for moral/philosophical examination is to study which sorts of prerequisites could apply for a market economy to be in harmony with sustainable development.
“Sustainable development is a natural demand made on the market economy system, in which the principles of individualism are applied," Mr Haukioja says. “However, the condition is that the public authority is involved in ensuring the possibility for future generations to develop and prosper. What’s also important is that the detrimental impacts brought by the market economy, such as pollution, could generate a potential reimbursement obligation.”
Mental capital must be beneficially exploited
It is often suggested that economic growth cannot be positive over the long term and that sustainable development requires a ‘stable’ economic programme. In practice, this would mean zero growth. A growth theory model was employed in the study, in which the physical capital and environmental loading were stabilized on an ecologically sustainable level.
Mr Haukioja states: “The model demonstrated that, regardless of these limits, sustainable development and positive economic growth are feasible. It nevertheless necessitates the utilization of mental capital. In other words, sustainable development does not require zero growth over the long term.”
In the empirical section, Mr Haukioja applied the environmental economics-based hypothesis, the ‘Environmental Kuznets Curve’ (EKC), according to which environmental loading grows during the initial stage of economic development. When consumers have prospered sufficiently, environmental loading decreases, because environmental values obtain more importance. In the study, this hypothesis is tested by reference to material flows and carbon dioxide emissions.
The study analysis suggests that the hypothesis does not obtain support with regard to material flows in the industrial countries. With respect to carbon dioxide emissions, it does not obtain statistical support in the United States, but it does in the central nations of the European Union. It appears that it would be possible to manage global greenhouse gases if the largest producers of greenhouse gases were to commit themselves to a mutual environmental policy.
The doctoral thesis can be read at:
http://info.tse.fi/julkaisut/vk/Ae6_2007.pdf
Additional information:
Teemu Haukioja