Pukar Bhatta

El-Alawa Yasmin

Adeoyo Adeyinka Lawrence

Victoria Berci

SUSTAINABLE ECONOMY

Assignment

Spring 2011

Business School

International Business

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Contents:1 SUSTAINABLE DEVELOPMENT AND HAPPINESS.........................2

2 SUSTAINABLE ECONOMICS IN BUSINESS.....................................9

2.1 Introduction...................................................................................................9

2.2 The business Response: Challenges of sustainable economics in business..........10

2.3 Positive effects of Sustainable economics in business......................................12

2.4 Case study...................................................................................................14

2.5 How sustainable development can be achieved in business...............................16

3 TRADE............................................................................................21

3.1 International trade theory and development strategy........................................21

3.2 Trade liberalization......................................................................................22

3.3 Objectives...................................................................................................24

3.4 Activities....................................................................................................24

3.4.1 A) International and regional cooperation and coordination....................24

3.4.2 B) Management related activities.........................................................25

3.4.3 C) Data and information.....................................................................26

3.5 Making trade and environment mutually supportive.........................................27

3.6 Market........................................................................................................28

3.6.1 Market in view of development...........................................................31

3.6.2 Challenges of markets in sustainable development................................31

3.6.3 The prospects of markets....................................................................31

4 TECHNOLOGY...............................................................................34

4.1 Introduction.................................................................................................34

4.2 Research and development............................................................................35

4.3 Human Behavior..........................................................................................36

4.4 Technological alternatives.............................................................................37

4.4.1 Knowledge economy..........................................................................37

4.4.2 Green Technology..............................................................................38

5 REFERENCES.................................................................................39

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1 SUSTAINABLE DEVELOPMENT AND HAPPINESS

Once I was traveling near the river of my country. I saw a fisher man. I went near to talk and

I started my conversation by asking his name. Then I asked him how much fish he catches in

a day. He replied 10. I asked him why not work for more hours and catch more fish. He

smiled and asked why? I said I am a Business student. I will give you a good idea of how to

think for future and be a Big Business man. Then I said, if you work little bit more this river

consist more fish. The fish demand is also increasing. You can sell more and can earn more

revenue. He replied: Then? Then, you can invest your money in purchasing Ships. He again

Replied, Then? I again replied: then you can fish more and earn more and with that money

you can Buy your own industry of Fish Processing and can sell your own fish, branded on

your own name. He again replied: then? I was surprised, and said, don’t you want to earn

more money, be rich and successful. He smiled and said, I work 4 hours a day, I sell fish and

earn good amount to cover my family daily expenses. The free time I get, I spend with my

family. Then we sit together, roast fish and see the sun going down. It was beautiful scenery.

Then, I realized Happiness is not about money and bigger status but it is about enjoying life.

We were taught to make profit and how to make empty consumers pocket, in doing so we

forget the most important part of life: What about Happiness? Is money the only motivation

in life? Looking at this simple example in Border picture, if every Government of the world

think as a Fisherman but not as a college freshmen who wants to achieve profit in any cost by

experimenting his/her crazy idea in the field of Economics or Business then world can be a

better place to live or more happier place to live in.

There are always limited resources and unlimited wants. Wants are increasing and do not

have any full stop and the available resources are not enough to fulfill those unfulfilled wants.

Of course, there are different ways of how to utilize the resources. Government adopts

different methods or more precisely different method of government philosophy to utilize the

available resources but fight still continues with the people of Extreme Capitalist who believe

in no Government intervention in the Resource allocation by the private sector and on the

other hand people who still believe government intervention is required for the proper

resource allocation and maintain the overall living standard. The fight continues but general

people won’t eat philosophy and they need basics items to live and be happy. Whoever

provides it, they are interested in their philosophy. Besides, it is a thing of praise that

Business world has included the Social responsibility in their study materials. Business

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experts say it is a way to create safe environment and be responsible for the society as well

and in doing that it also helps to earn profit by increasing consumer loyalty. Whatever the

case, even the so called Extreme capitalist believe Business is not only for expansion or about

cash but also about taking responsibility of the society and provide them with happiness. It

makes the growing fault about the capitalism more balanced. Human beings are rational they

make rational decision but sometimes it is better to decide not to focus decision on the

figures. Trade war and a war of Growth figure are some figures governments have to divert

their look and see to more qualitative figures. Especially the emerging economy with the high

rate of suicide, preferably China, needs to understand the Sustainable development then the

huge trade surplus and big currency reserve do not earn happiness among the people.

Government of every nation is giving importance to the numbers. GDP and the GDP per

capita have become the major figures to measure the economic success of the nation. GDP is

about the measure of the total output of the nation which is measured in the market value in

dollar. GDP per capita is about the average value of the GDP per person in a nation. The

more GDP and GDP per capita the better for the nation and the countrymen. But, is it

correct?

The critics of the GDP and GDP per capita believe that GDP per capita is the way to measure

the economic growth and living standard but it is inadequate and inappropriate when we

make a shift from raw economic data to the reality of the living experiences of economic

participants. Ben Harper in his Book “Diamonds on the Inside” has mentioned the view

above in the Book. He also mentioned this important point that life is more than what

happens in the office. By this he means to say that GDP figures ignore the quality of life,

education, literacy and Happiness which are more important in the individual life.

Besides, how given big GDP figures were achieved are never taken care of. The economic

growth may only help the rich, and the money invested by the Government may not have the

Trickle Down effect to the poor. It means, even the Economic Growth is achieved, it is not

Fruitful. It increases the Income Inequality. Besides, the Economic Growth is never

Sustainable if large mass of people is not considered and is not affected positively.

Referring to the World fastest nations in Economic Growth, India and China, who are

growing by the Double Digit standard, it is very interesting to ask them: what are they going

to achieve in the future? The overall Beijing city is not seen in the working day due to the

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pollution and the cloud formed by it. People are dying of lung cancer and other air borne

disease and the health standard has highly degraded. In addition, the pollution is affecting the

old cultural heritages of China. Moreover, due to such a busy life in China especially people

who are committing suicide are increasing in number. So, should these facts be put aside and

Government be more focused on the Economic Growth? The answer is No and it is from the

Chinese premier Wen Jim Bao. China must ensure social stability by reducing inflation and

corruption, Premier Wen Jia bao has told the parliament’s annual session. Mr Wen accepted

that uneven economic development was a “serious problem”. Mr Wen has been addressing

about 3,000 delegates to open the National People’s Congress in the Great Hall of the People

in Beijing.On the other hand, rise of Economic growth is not always about Government

increasing their huge surplus in people`s wellbeing but on nuclear especially. Of course, the

rise in nuclear investment may add more value to the country`s GDP but it merely helps

people in any way. And I believe this is the main way which makes citizens unhappy. Nations

get threatened by their sudden rise in the economic growth and they turn to purchase the

weapons to make them safer. Look at the example of India who according to recent Wiki

leaks, leaked document revealed that the ruling party of the India has offered each law maker

from the opposition 2.3 Million dollar for the vote to sign the nuclear deal with U.S. China is

also set to increase their investment in military spending. Spending will increase by 12.7% to

601.1bn yuan ($91.5bn; £56.2bn) up from 532.1bn yuan last year, officials said.

The above figure clearly suggests China Increasing Military Expenditure with their

increasing economic growth. It creates fears among citizens. See the position of India:

instead of being happy Indians are worried of their future with their trouble neighbor

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Pakistan. They are worried about the possible nuclear war and it is not making them happy

and it has been shown in the survey carried out by the Indian statics department. After

Mumbai attack, people were blaming Economic Growth and later the Nuclear Investment as a

main reason of fear and unhappiness.

Also, in developing nations economic growth does not always mean Economic Development.

The big multinational firms eager to enter the nation with huge pools of labor and weak labor

law are ready to exploit these labors to earn the benefit of economies of scale. Trade Union is

weak and never protects the labor rights and the wastage from these big multinational firms

affects the overall society and some effect lives forever. The best example for this type of

disaster is the Bhopal Chemical Disaster, which later known as the Bhopal Disaster as one of

the world`s worst Industrial catastrophe according to the BBC. Chief of the operation of the

chemical factory Warren Anderson was believed to be sent to U.S after this disaster. It clearly

shows how much Government is venerable to multinational companies. The casualties are

many. The point I want to make from this example is that Government is very weak against

Multinational Firms. They are always focused to make nation with more investment friendly

nation. It is one of the biggest disasters which came to high light but there has been many

small disaster which government itself tries to hide against media. It will help nation with the

FDI investment but does not protect human or labor right and the environment, hence it also

degrades happiness among the people and Government is not promoting sustainable

development but economic growth in any way, by hook or by crook.

Secondly, the rule of law and the developing country status in it is really poor. In the

developing nation itself, there has been lots of brutality going on in the name of religion.

These nations are: India, Iran, and Pakistan which have a fast growing economy but are

lagging behind the happiness index. Especially in the Muslim nations where laws are made

by god not by lawmakers and are followed anyhow. Barbaric Brutality is given the name of

God`s law and Government is closing its eyes on this issues. Likewise, the dictatorship is also

not helping people to increase their happiness, whatever growth is. Besides, they only care

about numbers not the happiness so Sustainable development is also not properly promoted.

See the example of China, Saudi Arabia, Syria to name some. Abdullah bin Abdul Aziz,

Saudi Arabia n King is distributing oil money to the Saudi people but, still, people are not

happy there including other nations mentioned here. The development in these nations is not

sustainable and it is just being pumped up by oil, increase of S. Arabia. The oil ends, growth

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ends. Oil price is growing, so does the economics of S. Arabia but people are not happy.

Why? No free idea flow in the Economy. Everything has to be passed from the firewall of the

Government. Don’t you feel shocked when you have to listen BBC news in a recorded format

after government officials listen to it and then is only passed to the people. Yes, it happens

and same thing is going on in Vietnam after the communist government took over of the

Nation. People love to be independent and want to live free and these types of restriction are

not only killing the new ideas but also make people unhappy and due to this reason the

economic development is being sacrificed for economic growth.

Furthermore, dictators archiving growth by unjustified methods are killing environmental

value and people happiness and it is never sustainable. Take example of N. Korea due to the

dictatorship of Kim Jon Ill, the people are suffering for the Embargo of the Western Society.

There, System of Market has failed, economy as was described in the Economist May issue

of 2009 is supported by China and resources are as well. Economy is growing. Key question

to be asked is: Is the given growth successful and does it make N. Koreans Happy? Whether

economy will be successful or not would be better described by Chinese but whether N.

Koreans are happy or not can be described by them, and they have answered, a big No.

Economic growth is there but not sustainable and it is only helping rich people of the North

Korean Political Party not the poor people who are still in the slump, so are they happy? Not

at all. See the Bhutanese Government. Their economy is growing due to the Indian

Investment on Hydro power. People`s living standard is rising. But, political freedom is Nil.

King of Bhutan who is extraditing the Nepalese minority from Bhutan. It has created world

largest refugees in Nepal Boarder. Political freedom is restricted and whoever speaks about it

is killed. Due to this reason there is mass division in the thinking of people and everyday

protest against the king is making the situation worse. In this situation as-well, growth is

there but not sustainable and people are not happy. Yet government of all types is focusing on

numbers. Jasmine Rise in China, Gugger Rise in India, Nigeria Niger delta Oil war, Morgan

Tsangarie rise for democracy in Zimbabwe are the common examples of people not satisfied

by the government Growth measures and they want a sustainable way of growth where

happiness maintains its importance. These issues can be better explained by Charles Taylor in

the court for the child labor, blood diamond issues to name some. Thirdly, we also need to

consider Government Economic Policy. It plays vital role in achieving sustainable growth

and keeping people happy. Government Economic policy consists of Fiscal, Monetary and

Exchange rate policy. Basically these components affect people, their living style and overall

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nation status. Fiscal policy is about Government Spending and tax system. Monetary policy is

about the interest rate fixation and Exchange rate policy. Government tries to make their

nation investment friendly. In doing so, they use these policy to get more FDI. They change

their Economic Measure to get hot money from the investor. In doing so, government not

only creates a situation of confusion among countrymen but it will affect the future exception

in a negative way. The economy might be grown by those hot money but is it Sustainable?

Not at all, hot money will seek and move around to search for more return. Besides, it will

restrict consumers from purchasing more and enjoying their lives because they are always

worried about future.

Government policy on Export and Import also affect people and the Economy in most

significant way. Government might be getting growth by gaining advantage from their pools

of labor which cut their cost and make them more prices competitive in the international

market but it is not sustainable. Moreover, the restriction policy on import and government

policy to intervene in the currency operation is most common nowadays. The recent

headlines about Yuan being kept at a certain rate and even being decreased to gain

competitive advantage in price is another policy government adopts to gain fuel for economic

growth. In the short term they will increase the foreign currency reserve of the nation but in

long term, it will bring conflict in the trade and the neighbors might also copy their idea.

Besides, if a nation is adopting Beggar my neighbors policy then they also may restrict the

import by many protectionist measures. It not only creates trade war as was mentioned above

but it also restricts consumers to purchase goods. How can a countrymen be happy to see a

nation with a growth but he is not able to get what he wants?

In fact, the imbalance in the representation of the developing nation in the powerful

organization is also affecting the global happiness index and the sustainable development.

IMF preserves the 17.7 percent voting right and overall nations has in average 2-4 percent

voting right. The recent crisis in Pakistan due to the trade deficit and their loan from IMF is

the key area of my above statement. After signing the IMF loan they have to cut their subsidy

to the agriculture and were forced to open up their market where China was so eager to start

dumping for their technological goods. Lots of protest and conflict were raised due to it. The

same thing is true with the developed nation as-well. The massive rise in the protest in

Ireland, Greece shows how unhappy people are to the intervention of IMF to their economy

even though it is good to save their future.

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So, what is the solution for them? Wangari Maathai, the noble Peace prize winner for her

role to save environment believes Sustainable development, democracy and peace are

indivisible as an idea whose time has come. Sustainable development is about providing the

needs of present generation without sacrificing the sources to meet the future demand of the

future generation. The governments need to redefine their goals and need to sit on the round

table and decide next where to go. It is wrong way when developed nation is putting blame of

environmental pollution on overall developing nation and developing nation also need to take

the responsibility. The new Kyoto protocol needed to be remade where present environmental

destruction has to be shared equally among these nations. It will help to overcome some of

the unhappiness among the people. Besides, they say, empty stomach is a place for the

experiment of the devil. Government has to look for how to reduce poverty and maintain the

social values then to achieve unnecessary digit of growth.

Pukar Bhatta

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2 SUSTAINABLE ECONOMICS IN BUSINESS

2.1 Introduction

True economic sustainability encourages the responsible use of resources. This involves not

only making sure that the country or business is making profit but also ensuring that its

operation is environmentally friendly and doesn’t create environmental concern that could

cause harm to the balance of the local ecology. In most scenarios the measure of economic

stability is presented in monetary terms; the effective use of resources is evaluated in

monetary terms because it is able to identify the amount of return generated by the effective

and efficient use of resources. By doing this one can identify areas of the operation in which

resources are not being utilized judiciously (in the most efficient manner) and take steps to

correct the situation. In other words the monetary term is a form of monitoring and evaluation

device used to measure the efficiencies of government and businesses is managing the

available economics resources.

There is the need to state that people in leadership position also play a part in economics

sustainability of a country. There is nothing like economics reform (a change for the better as

a result correcting hitches of corruption or bringing a positive change in the economy)

without peace; with or without abundance of mineral resources. More so, no amount of

economic wealth can buy any nation`s peace if injustice is exhibited by the people who were

elected to lead. No doubt, the slogan – “if you want peace, then work for justice” – simply

illustrates that people who are treated unjustly will prevent the attainment of peace (as

currently been experienced in North African and Arab nations today) until the wrongs to

which they are subject are righted. Real economic reforms can only strife with peace which is

more than armistice, more than the cessation of violence. Peace is unity and harmony. In a

peaceful world, people are all pleased to cooperate with government and its policies to work,

making infrastructure grow and protecting them, living and sustaining healthy living,

developing entrepreneurship, supporting goals and aiding the attainment of government’s

implementation of budgets. When there is peace of mind to work then economic

sustainability is likely to be attained.

The World Business Council for Sustainable Development, founded in 1995, has formulated

the business case for sustainable development and argues that "sustainable development is

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good for business and business is good for sustainable development". This view is also

maintained by proponents of the concept of industrial ecology. The theory of industrial

ecology declares that industry should be viewed as a series of interlocking man-made

ecosystems interfacing with the natural global ecosystem.

For the business community, sustainability is more than mere window-dressing. By adopting

sustainable practices, companies can gain competitive edge, increase their market share, and

boost shareholder value. What’s more, the growing demand for 'green' products has created

major new markets in which sharp-eyed eco-entrepreneurs are reaping rewards.

As governments retreat from their wide-ranging role, the private sector must step into the

breach.

Björn Stigson, President of the World Business Council for Sustainable Development

(WBCSD)

The striking feature of the global drive toward sustainable development is the extent to which

the agenda has evolved since the 1992 ‘Earth Summit’ in Rio: at least, certainly the way in

which the emphasis has changed. This has important implications and poses new challenges

for business.

The immediate post-Rio focus for business was on how to marry economic efficiency with

environmental excellence to ensure continued economic growth, while consuming the

world’s resources and protecting its environment in a way that did not compromise the needs

of future generations.

2.2 The business Response: Challenges of sustainable economics in business

The business response was the concept of eco-efficiency: combining environmental and

economic performance to create more value – for business itself and also, crucially, for the

whole community – with less impact. Many companies are today well advanced toward eco-

efficiency, and it has also become a widely accepted policy concept, endorsed by, among

others, the OECD and the European Commission.

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Of course, more in business need to adopt eco-efficiency, not only the multinationals based in

the industrialised countries but also small and medium enterprises in all sectors in all

countries. So the work of the WBCSD in pushing eco-efficiency further and faster within the

whole business community remains of the utmost importance.

But sustainable development is built on three pillars: economic growth, ecological balance

and social progress. These items have always been on the sustainability agenda, but until

recently the third – the social pillar – has received less attention. That is changing: far greater

emphasis is being placed now on social progress, and specifically on what business is doing

to contribute to this goal, and how it is delivering its contribution. This has opened up a raft

of issues.

One is globalisation with a human face, as UN Secretary-General Kofi Annan has described

the issue. Opening up world markets has, without doubt, created unprecedented global

economic growth – with the promise of even more prosperity. Unfortunately, the benefits of

this have not been shared equally across the globe. This is leading, understandably, to some

questioning about the role and function of free markets.

Clearly, business believes in free and open markets, but markets must work for everyone.

That is why the WBCSD has accepted Kofi Annan’s invitation to engage in the process of

developing a ‘Global Compact’ between the UN and business to promote a shared set of core

values. The aim is to underpin globalisation and free, open markets with stable societies and a

fair distribution of the benefits.

Of course, companies have long been responding to social changes and pressures. The

difference now, as the emphasis is put more on the social pillar of sustainable development, is

that corporate social responsibility has become an institutionalised element in the debate

about what civil society expects from business.

Making markets work fits in with this. The question of sustainable production and sustainable

consumption was raised at Rio in 1992, and will be a key theme for the third Earth Summit in

2002. Though it has more to do, business has largely got to grips with the production issues:

the more difficult challenge is the consumption side of the equation – more difficult because

it involves much more complicated trade-offs in society generally. The WBCSD’s working

group on ‘sustainability through the market’ is using multi-stakeholder dialogues to try to

develop and agree new solutions to this issue.

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Transparency and accountability are further challenges for business. “Everyone knows

everything about you all the time” in today’s information-driven, globalised world. The

management of reputation thus becomes a central element in running a corporation, and this

involves communicating, explicitly, the values and principles on which companies base their

operations – and, centrally, how they live up to those values and principles. Corporations face

increasingly intense scrutiny: to contend with this, they will have to enforce a set of

globalised corporate values throughout their operations.

2.3 Positive effects of Sustainable economics in business

The world is becoming smaller and smaller each day as a result of globalisation.

Globalisation has afforded the formation of multinational company (businesses), these

multicultural businesses also have their own positive and negative effect on business and the

economy of a country on the whole

Generally the presence and activities of multinational corporations in the developing world

has been the subject of controversy of discussions on development policy. The theoretical

background for the negative verdict is largely from the ideological left (for example, the

theory of peripheral capitalism and Latin American dependency theories). The scepticism

shown is often partly based on negative experiences in the late 1960s and early 1970s, with

blatant examples of incorrect behaviour for instance, inappropriate influence of political

decisions, exploitative wages and poor social conditions. In recent years the impact on

developing countries of multinational corporations has been judged more favourably.

Comparative surveys by the International Labour Organization (ILO) of social conditions,

effects on employment, choice of technology and training by multinationals and local

companies paint a positive picture for multinationals - certainly in comparison with local

companies. This view is confirmed by studies from the UN Centre for Transnational

Corporations (UNCTC) since the early eighties.

Most multinationals make a positive contribution to the economic growth of developing

countries through their investments, products and services. This is primarily through:

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• Translating theoretical knowledge into practical results by the correct use of their products

and services, for example in agriculture, health and industry;

• Providing access to modern technological and management know-how (e.g. research,

development, marketing, finance);

• Investment and employment

• Training in all areas, on all hierarchical levels.

The benefits for host countries from a multinational's presence vary according to its structure,

product range, services and sphere of activity. Suitable regulatory and financial conditions, a

dependable legal system, an adequate infrastructure and a well-functioning government help

reinforce such potentially positive effects, while their absence prevents or hinders them.

As is the case with any economic or social activity, multinationals in developing countries

can also generate conflicts of interest. A commercial enterprise seeking profit optimization

pursues its own corporate objectives such as achieving an acceptable rate of return on

invested capital, gaining market share, or ensuring its long term competitiveness, rather than

supporting the host country's economic and social development objectives. The result is that

corporations and host country authorities have diverging opinions on very fundamental

issues:

• Repatriation of profits to the parent company is in most cases essential in order to contribute

to overhead costs incurred at headquarters (e.g. for research and development) as well as to

corporate profits as repayment for financial risks. Host countries often consider this a

regrettable drain on limited foreign exchange and a burden on the balance of payments.

• Patents which safeguard the results of a company's research and the associated transfer of

patent and licensing fees may lead to conflicts because developing countries prefer the lower

priced product imitations (e.g. generics).

• A corporation's research policy and its strategic direction may also not coincide with the

developing country's interests and needs.

• A company's location policy, for example of production facilities, is largely determined by

economic criteria (e.g. volume of production, market size, availability of high quality raw

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materials and technical skills), and not by a government's need to become self-sufficient

through the local production of specific goods.

There are other potential areas of conflict that differ from company to company and country

to country. Solving such conflicts requires a serious evaluation of the interests of and benefits

to both parties, taking the overall social and economic benefit of a company and product

concerned into consideration. There are no universally valid answers.

2.4 Case study

In the following paragraphs I would present a case studies which depicts how sustainable a

line of business can be

Case study #1 Is Gasohol sustainable?

The current American administration-like its predecessor has renewed the government’s

commitment to the production and use of gasohol- a blend of 10% grain-based ethanol and

90% gasoline. The principal component of government support for ethanol production is a

significant tax break which makes gasohol price-competitive with regular gasoline at the

pump. Several major reasons have been advanced for this de facto subsidy, Firstly to reduces

dependence on foreign oil supplies, secondly, to reduce urban air pollution and finally to

provide additional income to the farm sector.

To appreciate why none of these reasons is correct one must understand the technology of

ethanol production. First, grain, corn or other biomass is converted to fermentable sugar.

Next, these sugar are then fermented, typically with yeast, until they reach a natural limit of

12% ethanol. Finally the alcohol content is increased to as high as 100% through the process

of distillation. The critical factor in the entire process is the quality of energy required for

distillation.

When net energy analysis is applied to the typical American ethanol process based on corn

input and fossil fuel based distillation, it becomes apparent that ethanol production has near

zero or negative net energy balance. In common parlance, this means that it takes more

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energy to produce this fuel than is available from the final product in the form useful energy.

Net energy confirms the suspicion that if the government was no heavily subsidizing gasohol,

no one would produce or consume it.

Why does a government ostensibly committed to free market principles continue to pursue a

policy which appears irrational? We will consider the three rationales for gasohol production:

Firstly, it reduces dependence on foreign oil, ironically, because of a potentially negative

energy balance; the production of gasohol may marginally increase energy import

dependence. Also it reduces urban air pollution; the combustion of gasohol tends to decrease

the emission of carbon monoxide but increase the output of hydrocarbons and production of

ozone (NRC,1999). It does, however, shift the locus of some pollution from the urban area to

areas where ethanol is produces. Thirdly, it produces additional farm income, but there are

farmers who lose as well as gain from this policy (USDA 1998)

Several hypotheses have been advance for government maintaining policies which are

favourable to the production of gasohol. First, government may wish to appear to be tackling

the problem of foreign oil dependence which no exceeds 50% of domestic consumption- a

figure above that which characterized the energy crises of the 1970’s. Second, the

government may wish to appear to be addressing the problem of urban pollution, although

there are other more cost effective ways of doing so, such as tighter fuel economy and

emission standards and high gasoline taxes. Or, finally the government may be responding to

special interest group lobbying. Promoting the use of gasohol increases the income of farmers

who produce the feedstock for ethanol.

In addition, the has been a strong lobbying effort for many year by the agribusiness giant,

Archer Daniels Midland (ADM), which is estimated to control between 60 and 70 per cent of

U.S ethanol production. ADM has made significant financial contribution to both domestic

and republic parties over the last decade (Bovard, 1995; New York times, January 16 1996).

James Bovard, an analyst with the CATO institute has commented that “AMD” political

strategy has long been based on the ideas that politicians should control prices and market

and that AMD and Andreas (the company’s CEO) should control politician’s (New York

times, January 16 1996).

Regardless of which positive explanation for government intervention is correct, the

continued production and use of ethanol in the transportation sector, with current technology,

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agriculture practices and feedstock contributes nothing to sustainability and distract

government from more productive but potentially less politically acceptable polices to create

a more sustainable transportation sector

2.5 How sustainable development can be achieved in business

The concept of sustainable development has received growing recognition, but it is a new

idea for many business executives. For most, the concept remains abstract and theoretical.

Protecting an organization’s capital base is a well-accepted business principle. Yet

organizations do not generally recognize the possibility of extending this notion to the

world’s natural and human resources.

If sustainable development is to achieve its potential, it must be integrated into the planning

and measurement systems of business enterprises. And for that to happen, the concept must

be articulated in terms that are familiar to business leaders.

The following definition is suggested: For the business enterprise, sustainable development

means adopting business strategies and activities that meet the needs of the enterprise and its

stakeholders today while protecting, sustaining and enhancing the human and natural

resources that will be needed in the future

This definition is intended to help business directors apply the concept of sustainable

development to their own organizations. However, it is important to emphasize that

sustainable development cannot be achieved by a single enterprise (or, for that matter, by the

entire business community) in isolation. Sustainable development is a pervasive philosophy

to which every participant in the global economy (including consumers and government)

must subscribe, if we are to meet today’s needs without compromising the ability of future

generations to meet their own.

It has become a cliché that environmental problems are substantial, and that economic growth

contributes to them. A common response is stricter environmental regulation, which often

inhibits growth. The result can be a trade-off between a healthy environment on the one hand

and healthy growth on the other. As a consequence, opportunities for business may be

constrained.

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However, there are some forms of development that are both environmentally and socially

sustainable. They lead not to a trade-off but to an improved environment, together with

development that does not draw down our environmental capital. This is what sustainable

development is all about - a revolutionary change in the way we approach these issues.

Businesses and societies can find approaches that will move towards all three goals -

environmental protection, social wellbeing and economic development at the same time.

Sustainable development is good business in itself. It creates opportunities for suppliers of

‘green consumers’, developers of environmentally safer materials and processes, firms that

invest in eco-efficiency and those that engage themselves in social well-being. These

enterprises will generally have a competitive advantage. They will earn their local

community’s goodwill and see their efforts reflected in the bottom line.

While business traditionally seeks precision and practicality as the basis for its planning

efforts, sustainable development is a concept that is not amenable to simple and universal

definition. It is fluid, and changes over time in response to increased information and

society’s evolving priorities.

The role of business in contributing to sustainable development remains indefinite. While all

business enterprises can make a contribution towards its attainment, the ability to make a

difference varies by sector and organization size.

Some executives consider the principal objective of business to be making money. Others

recognize a broader social role. There is no consensus among business leaders as to the best

balance between narrow self-interest and actions taken for the good of society.

Companies continually face the need to trade off what they would ‘like’ to do and what they

‘must’ do in pursuit of financial survival. Businesses also face trade-offs when dealing with

the transition to sustainable practices. For example, a chemical company whose plant has

excessive effluent discharges might decide to replace it with a more effective treatment

facility. But should the company close the existing plant during the two or three-year

construction period and risk losing market share? Or should it continue to operate the

polluting plant despite the cost of fines and adverse public relations? Which is the better

course of action in terms of economy, social wellbeing and the environment?

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Moreover, many areas of sustainable development remain technically ambiguous, making it

difficult to plan an effective course of action. For example, the forestry industry has had

difficulty defining what constitutes sustainable forest management. Some critics believe that

simply replacing trees is not enough, because harvesting destroys the biodiversity of the

forest. Clearly, more research will be needed to resolve such technical issues.

From a broader perspective, however, it is clearly in the interest of business to operate within

a healthy environment and economy. It is equally plain that, on a global basis, growing and

sustainable economies in the developing countries will provide the best opportunities for

expanding markets.

To some, sustainable development and environmental stewardship are synonymous. In the

short term, sound environmental performance is probably a reasonable objective for most

businesses, with sustainable development as a longer term goal. However, this can lead to

confusion. In the developed world, the focus is on environmental management, while in

developing countries, rapid and sustainable development is paramount.

The global economy is coming under growing pressure to pay for the restoration of damaged

environments. But this economic engine is being asked to help solve other pressing problems

at the same time. The challenge is to solve all of these problems in a sustainable manner, so

as to generate continuing development.

Despite ambiguities about definitions, there is now widespread support for sustainable

development principles within the business community. However, for that support to grow, it

will be important to recognize and reward initiatives that are being taken to turn the concept

into reality.

To pursue sustainable development, companies must minimize their environmental footprint,

while simultaneously working to create social and economic value. Although many

corporations embrace sustainable development, practitioners often wonder whether this

commitment adds value to their bottom line.

To address this question, companies need to approach sustainable development from three

perspectives. First, they should determine why sustainable development, when properly

applied, is good for their business. Second, they need to calculate the potential impact of

sustainable development on share price. And third, they need to compare the share-price

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performance of a portfolio of large capitalization companies that are top-tier practitioners of

sustainable development, with the share price of those not particularly recognized for their

sustainable development practices.

There are numerous reasons why a company may embrace sustainable development, though

two or three are usually most applicable to a particular industry and company. For example,

the key reason for most mining companies may be to ensure that they are welcomed into a

host community, whereas a primary driver for the hospitality sector may be to build customer

loyalty.

A business can also attain sustainable economics by performing a stakeholder analysis; this is

required in order to identify all the parties that are directly or indirectly affected by the

enterprise’s operations. It sets out the issues, concerns and information needs of the

stakeholders with respect to the organization’s sustainable development activities. Identifying

the parties that have a vested interest in a business enterprise is a central component of the

sustainable development concept, and leads to greater corporate accountability

The next objective is to articulate the basic values that the enterprise expects its employees to

follow with respect to sustainable development, and to set targets for operating performance.

Senior management is responsible for formulating a sustainable development policy for its

organization, and for establishing specific objectives. Sustainable development means more

than just ‘the environment’. It has social elements as well, such as the alleviation of poverty

and distributional equity. Drafting a policy statement that is both inspirational and capable of

influencing behaviour is a challenging task. However, the benefits justify the effort.

However we must conclude that few business activities can be truly sustainable-only less

unsustainable. But even a small shift from unsustainable practices would be a step in the right

direction, allowing more time to tackle this immense problem. It is the nature of our market

system that the total output of the economy is the result of the aggregation of numerous

individual corporate and individual decisions. Those corporations which have recognised and

profitably implemented sustainability concepts are still among the minority. There may, in

fact, be fundamental limits to how many sectors are capable of restructuring for complete or

partial sustainability development are still potentially sustainable significant.

POSSIBLE CONCLUSION: So what is the bottom line? Is global sustainability achievable in

the near to midterm future? The answer is almost certainly no, given the convergence of

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continued population growth, the nature of current technology, the structure of industrial

production market-driven incentives which favour current consumption over investment, and

prevailing social values and attitudes.

The goal of achieving sustainable development is arguably the greatest challenge mankind

has ever faced, requiring a concerted joint effort among consumers, business and

government. It can be argued that if sustainable development is indeed to be achieved, then

the ‘sine qua non’( a Latin word which literally means “without which no” ; an essential

requirement or condition) is the education of the emerging business elite in the fundamental

principles of sustainable development; for only with the active engagement of business

community is there any realistic hope that our economic, social and ecological system can

achieve sustainability.

Yasmin El-Alawa

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3 TRADE

3.1 International trade theory and development strategy

“Integration into the world economy has proven a powerful instrument for countries to

promote economic growth. These trends point to the need to liberalize trade further’’ {Staffs

of World Bank and IMF, Market Access for Developing Countries Exports, 2001}

“However misguided the old model of blanket protection intended to nurture import

substitute industries, it would be a mistake to go the other extreme and deny developing

countries the opportunity of actively nurturing the development of an industrial sector’’

{Report of the High-Level Panel on Financing for Development (Zedillo Commission),

2001}

According to Todaro and Smith, {2009, 589} “Globalization is one of the most frequently

used words in discussion of development, trade and international political economy’’.

Globalization yields large net benefits, both for the world economy and for individual

countries. But managing the process of globalization requires that those that gain from it

compensate those who lose. Without such willingness to share, we risk not only the rise of

protectionism but a loss of social cohesion. Both of these problems are already evident.

{Andrew Gillespie 2007, 454 (John Kay Financial Times, 2006 May 309)}

Globalization can be defined as the process by which the economies of the world become

increasingly integrated, leading to a global economy and, increasingly, global economic

policymaking. It also refers to the increased openness of economies to international trade,

financial flows, and direct foreign investment. {Todaro and Smith 2009, 589}

Globalization involves opportunities and benefits as well as costs and risks. Globalization can

lead to economic growth and higher standards of living, it also leads to political integration

and greater stability by tying countries together {Andrew Gillespie 2007, 454}

Globalization offers opportunities and challenges for sustainable development. We recognize

that globalization and interdependence are offering new opportunities for trade, investment

and capital flows and advances in technology, including information technology, for the

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growth of the world economy, development and the improvement of living standards around

the world. At the same time, there remain serious challenges, including serious financial

crises, insecurity, poverty, exclusion and inequality within and among societies. The

developing countries and countries with economies in transition face special difficulties in

responding to those challenges and opportunities. Globalization should be fully inclusive and

equitable, and there is a strong need for policies and measures at the national and

international levels, formulated and implemented with the full and effective participation of

developing countries and countries with economies in transition, to help them to respond

effectively to those challenges and opportunities. (UN Department of Economic and Social

Affairs, {Referred 23.04.2011])

3.2 Trade liberalization

Promoting sustainable development through trade - Basis for action

An open, equitable, secure, non-discriminatory and predictable multilateral trading system

that is consistent with the goals of sustainable development and leads to the optimal

distribution of global production in accordance with comparative advantage is of benefit to

all trading partners. Moreover, improved market access for developing countries' exports in

conjunction with sound macroeconomic and environmental policies would have a positive

environmental impact and therefore make an important contribution towards sustainable

development.

Experience has shown that sustainable development requires a commitment to sound

economic policies and management, an effective and predictable public administration, the

integration of environmental concerns into decision-making and progress towards democratic

government, in the light of country-specific conditions, which allows for full participation of

all parties concerned. These attributes are essential for the fulfillment of the policy directions

and objectives listed below.

The commodity sector dominates the economies of many developing countries in terms of

production, employment and export earnings. An important feature of the world commodity

economy in the 1980s was the prevalence of very low and declining real prices for most

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commodities in international markets and a resulting substantial contraction in commodity

export earnings for many producing countries. The ability of those countries to mobilize,

through international trade, the resources needed to finance investments required for

sustainable development may be impaired by this development and by tariff and non-tariff

impediments, including tariff escalation, limiting their access to export markets. The removal

of existing distortions in international trade is essential. In particular, the achievement of this

objective requires that there be substantial and progressive reduction in the support and

protection of agriculture - covering internal regimes, market access and export subsidies - as

well as of industry and other sectors, in order to avoid inflicting large losses on the more

efficient producers, especially in developing countries. Thus, in agriculture, industry and

other sectors, there is scope for initiatives aimed at trade liberalization and at policies to make

production more responsive to environment and development needs. Trade liberalization

should therefore be pursued on a global basis across economic sectors so as to contribute to

sustainable development.

The international trading environment has been affected by a number of developments that

have created new challenges and opportunities and have made multilateral economic

cooperation of even greater importance. World trade has continued to grow faster than world

output in recent years. However, the expansion of world trade has been unevenly spread, and

only a limited number of developing countries have been capable of achieving appreciable

growth in their exports. Protectionist pressures and unilateral policy actions continue to

endanger the functioning of an open multilateral trading system, affecting particularly the

export interests of developing countries. Economic integration processes have intensified in

recent years and should impart dynamism to global trade and enhance the trade and

development possibilities for developing countries. In recent years, a growing number of

these countries have adopted courageous policy reforms involving ambitious autonomous

trade liberalization, while far-reaching reforms and profound restructuring processes are

taking place in Central and Eastern European countries, paving the way for their integration

into the world economy and the international trading system. Increased attention is being

devoted to enhancing the role of enterprises and promoting competitive markets through

adoption of competitive policies. The GSP has proved to be a useful trade policy instrument,

although its objectives will have to be fulfilled, and trade facilitation strategies relating to

electronic data interchange (EDI) have been effective in improving the trading efficiency of

the public and private sectors. The interactions between environment policies and trade issues

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are manifold and have not yet been fully assessed. An early, balanced, comprehensive and

successful outcome of the Uruguay Round of multilateral trade negotiations would bring

about further liberalization and expansion of world trade, enhance the trade and development

possibilities of developing countries and provide greater security and predictability to the

international trading system.

3.3 Objectives

(a) To promote an open, non-discriminatory and equitable multilateral trading system that

will enable all countries - in particular, the developing countries - to improve their economic

structures and improve the standard of living of their populations through sustained economic

development;

(b) To improve access to markets for exports of developing countries;

(c) To improve the functioning of commodity markets and achieve sound, compatible and

consistent commodity policies at national and international levels with a view to optimizing

the contribution of the commodity sector to sustainable development, taking into account

environmental considerations;

(d)To promote and support policies, domestic and international, that makes economic growth

and environmental protection mutually supportive.

3.4 Activities

3.4.1 A) International and regional cooperation and coordination

Promoting an international trading system that takes account of the needs of

developing countries

(a) Halt and reverse protectionism in order to bring about further liberalization and expansion

of world trade, to the benefit of all countries, in particular the developing countries;

25

(b) Provide for an equitable, secure, non-discriminatory and predictable international trading

system;

(c) Facilitate, in a timely way, the integration of all countries into the world economy and the

international trading system;

(d) Ensure that environment and trade policies are mutually supportive, with a view to

achieving sustainable development;

The international community should aim at finding ways and means of achieving a better

functioning and enhanced transparency of commodity markets, greater diversification of the

commodity sector in developing economies within a macroeconomic framework that takes

into consideration a country's economic structure, resource endowments and market

opportunities, and better management of natural resources that takes into account the

necessities of sustainable development.

Therefore, all countries should implement previous commitments to halt and reverse

protectionism and further expand market access, particularly in areas of interest to developing

countries. This improvement of market access will be facilitated by appropriate structural

adjustment in developed countries. Developing countries should continue the trade-policy

reforms and structural adjustment they have undertaken. It is thus urgent to achieve an

improvement in market access conditions for commodities, notably through the progressive

removal of barriers that restrict imports, particularly from developing countries, of

commodity products in primary and processed forms, as well as the substantial and

progressive reduction of types of support that induce uncompetitive production, such as

production and export subsidies. 

3.4.2 B) Management related activities

Developing domestic policies that maximize the benefits of trade liberalization for

sustainable development

For developing countries to benefit from the liberalization of trading systems, they should

implement the following policies, as appropriate:

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(a) Create a domestic environment supportive of an optimal balance between production for

the domestic and export markets and remove biases against exports and discourage inefficient

import-substitution;

(b) Promote the policy framework and the infrastructure required to improve the efficiency of

export and import trade as well as the functioning of domestic markets.

2.14. The following policies should be adopted by developing countries with respect to

commodities consistent with market efficiency:

(a) Expand processing, distribution and improve marketing practices and the competitiveness

of the commodity sector;

(b) Diversify in order to reduce dependence on commodity exports;

(c) Reflect efficient and sustainable use of factors of production in the formation of

commodity prices, including the reflection of environmental, social and resources costs.

3.4.3 C) Data and information

Encouraging data collection and research

Improving international cooperation in commodity trade and the diversification of the

sector

With regard to commodity trade, Governments should, directly or through appropriate

international organizations, where appropriate:

(a)  Seek optimal functioning of commodity markets, inter alia, through improved market

transparency involving exchanges of views and information on investment plans, prospects

and markets for individual commodities. Substantive negotiations between producers and

consumers should be pursued with a view to achieving viable and more efficient international

agreements that take into account market trends, or arrangements, as well as study groups. In

this regard, particular attention should be paid to the agreements on cocoa, coffee, sugar and

tropical timber. The importance of international commodity agreements and arrangements is

underlined. Occupational health and safety matters, technology transfer and services

27

associated with the production, marketing and promotion of commodities, as well as

environmental considerations, should be taken into account;

(b)  Continue to apply compensation mechanisms for shortfalls in commodity export earnings

of developing countries in order to encourage diversification efforts;

(c)  Provide assistance to developing countries upon request in the design and implementation

of commodity policies and the gathering and utilization of information on commodity

markets;

(d)  Support the efforts of developing countries to promote the policy framework and

infrastructure required to improve the efficiency of export and import trade;

(e)  Support the diversification initiatives of the developing countries at the national, regional

and international levels.

3.5 Making trade and environment mutually supportive

Basis for action

Environment and trade policies should be mutually supportive. An open, multilateral trading

system makes possible a more efficient allocation and use of resources and thereby

contributes to an increase in production and incomes and to lessening demands on the

environment. It thus provides additional resources needed for economic growth and

development and improved environmental protection. A sound environment, on the other

hand, provides the ecological and other resources needed to sustain growth and underpin a

continuing expansion of trade. An open, multilateral trading system, supported by the

adoption of sound environmental policies, would have a positive impact on the environment

and contribute to sustainable development.

Objectives

(a)  To make international trade and environment policies mutually supportive in favour of

sustainable development.

(b)  To encourage international productivity and competitiveness and encourage a

constructive role on the part of industry in dealing with environment and development issues.

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Activities

Developing an environment/trade and development agenda

(a)  Elaborate adequate studies for the better understanding of the relationship between trade

and environment for the promotion of sustainable development;

(b)  Promote a dialogue between trade, development and environment communities;

(c)  In those cases when trade measures related to environment are used, ensure transparency

and compatibility with international obligations (UN Department of Economic and Social

Affairs, {Referred 23.04.2011])

3.6 Market

Here, I think we are going up against three big myths. The first myth is that sustainability is a

luxury good or a public relations gimmick for rich companies in rich countries. And we

should have no illusions. This is exactly what the skeptical NGOs and the media are asking:

Are companies that put sustainability on the agenda for real? Or is it a whitewash? Is there

really a business case for sustainability?

We put the question to ourselves first. Since IFC (International Finance Centre) was founded

in 1956, there was an invested in about 140 countries with more than 2,500 companies in a

wide array of sectors – financial, infrastructure, manufacturing, extractive industries, health

and education, among others.

So we have a wealth of experience. And when we started looking at our experience with

sustainability in mind, we found that going beyond the "do no harm" approach – where we

focused just on compliance with environmental and social standards -- represented an

opportunity for us. I said, "Let's go beyond 'do no harm' and actively 'do good' on

environmental and social issues. We should set a higher goal. This can add value for us.”

We found that some of the most impressive examples in this report were not the cases where

companies had simply adopted a "do no harm" approach. Standards, of course, are important.

However, the most impressive examples were the companies who viewed sustainability as a

market opportunity. They were the ones making the tremendous gains. They were the ones

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with the most exciting prospects. So we believe that -- particularly in the emerging markets --

aligning sustainability and the business case can make a huge difference.

Here I want to be a little bit provocative. Generally speaking, we are told that the multilateral

development banks should not compete with one another. And that makes sense on a number

of levels. We don't want duplication of bureaucracies. We don't want the development banks

to be judged simply by the growth of their lending – regardless of whether it is good or bad.

And we don't want the development banks to undercut each other on environmental and

social standards.

But I think sustainability is one area where it would be great to see a little bit of competition.

I would love to see the development banks compete with one another to offer the best

environmental and social expertise, the best community development, the most efficient

energy technologies, the most renewable energy technologies, and the most innovative

environmental financing. I think that is one competition that would benefit everyone.

The key here is to do it within "the business case." It should face a market test. Investments

that increase both profitability and sustainability should be the goal. I am convinced that this

is the way to go. What would be the consequences? The governments, businesses, and civil

society partners of the developing nations – would reap enormous benefits.

The second big myth about sustainability is one that many of you have wrestled with already.

This is the myth that sustainability is a downstream cost, that it happens after the "real"

business is done and revenues have started to flow, and that we do it just for reputation.

I think that is just wrong. If that is our definition of sustainability, then we don't get it. That's

not much different from saying to a local community, "I pay my taxes and I don't break the

law, so I don't have to do anything else."

But what we are learning is that -- particularly in nations that have weaker institutions,

infrastructure, and governance -- communities want and expect businesses to create public

goods -- such as clean air, clean water, biodiversity, and public health – and make them

available rather than simply paying the taxes so governments can try to buy them.

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In a lot of cases, depending on the location, this actually represents a business opportunity.

Businesses find themselves in a position to use their comparative advantages and improve

profitability. And they can generate additional profits by creating public goods – even global

public goods – as part of normal operations. In fact, the simple act of making that process

transparent and engaging local communities can help generate even more opportunities and

change the calculation of risk and return. I want to stress here that this is not philanthropy. It's

good business.

For example, several years ago there was an invested in Mozal – a world-class aluminum

smelter in Mozambique. The business opportunity was fantastic because of the location of the

natural resources. But workers in the region had high rates of malaria and AIDs. By

identifying these issues early and working with the company to address them, we improved

both profitability and public health.

Is that type of synergy and contribution to sustainability going to happen everywhere? No. Of

course not. The scale and nature of the public goods created by businesses are highly

dependent on location and sector. In fact, there may be more variation by location than by

sector, because the local needs of the community and local definitions of sustainability vary

so much. What works in Africa may not work in Brazil. What works in India may not work in

China. To put it another way, the new thinking on sustainability is the old thinking about real

estate: location, location, location.

So the first myth was the myth of relevance for the emerging markets. The second myth is the

myth about the business case. The third myth is what I call the myth of the early adopter.

This is the myth that sustainability is smart business for companies that need to play defense,

but that there is nothing to gain by being the first to experiment. That is a very powerful

myth. And, once again, if this is our definition of sustainability, we don't get it. If we really

believe there is value in sustainability, then we have every incentive to get that value, to grow

it, and to share it.

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3.6.1 Market in view of development

The rise of emerging markets is changing the traditional view of development as follows.

First, foreign "investment" is replacing foreign "assistance." Investing in the emerging

markets is no longer associated with the traditional notion of providing development

assistance to poorer nations. Second, emerging markets are rationalizing their trade relations

and capital investment with industrialized countries. Trade and capital flows are directed

more toward new market opportunities, and less by political consideration. Third, the

increasing two-way trade and capital flows between emerging markets and industrialized

countries reflect the transition from dependency to global interdependency. The accelerated

information exchange, especially with the aid of the Internet, is integrating emerging markets

into the global market at a faster pace.

3.6.2 Challenges of markets in sustainable development

In their effort to create a market economy and to ensure sustainable development, emerging

markets still face big challenges that come from fundamental problems associated with their

traditional economic and political systems. A market economy requires those countries to

redefine the role of the government in the development process and to reduce the

government's undue intervention. Another serious problem that those countries have to

confront is controlling corruption, which distorts the business environment and impedes the

development process. An even more challenging task for those countries is to undertake

structural reforms with their financial system, legal system, and political system, so as to

guarantee a disciplined and stable economy that is relatively free of political disturbances and

interference.

3.6.3 The prospects of markets

Emerging markets are the "key swing factor" in the future growth of world trade and global

financial stability, and they will become critical players in global politics. They have a huge

untapped potential and they are determined to undertake domestic reforms to support

32

sustainable economic growth. If they can maintain political stability and succeed with their

structural reforms, their future is promising.

Conclusion

A liberal global economic order is one that is built on the foundation of private property and

free trade—in goods, resources, and ideas.  Spontaneous co-operation through market

exchanges leads to mutual gains and help foster peaceful relations among nations. 

Sustainable development in the liberal sense means development consistent with freedom—

not freedom from want, which is a false and impossible freedom, but freedom from the

illegitimate use of force. 

When the state steps beyond its just function of safeguarding property, broadly conceived,

and tries to impose an artificial or planned order on the spontaneous market order, the

“simple system of natural liberty” suffers as freedom and justice give way to power. 

Rich countries that adhere to the principles of a market-liberal order can help poor countries

more by sticking to those principles than by adopting policies designed to achieve some

vague concept of “social justice.”  The West should also recognize that limited government is

more important for sustainable development than democracy, in the sense of universal

suffrage. 

The freedom to exchange is an important human right as well as being a practical means to

coordinate economic life.  Free markets based on private property rights allow individuals to

take full responsibility for their actions and to fully utilize existing information.  The

adaptability of markets means that errors seldom accumulate.  Prices and profits will reflect

new information, and firms that cannot compete will go bankrupt. 

The failure of state-led development is now evident.  At the end of the 20th century, with all

its collectivist experiments, the World Bank (1997: 1) noted, “State-led intervention

emphasized market failures and accorded the state a central role in correcting them.  But the

institutional assumptions implicit in this world view were, as we all realize today, too

simplistic.”  The substitution of plan for market led to an increase in the inequality of power

and widespread corruption in poor countries that choose socialism over liberalism.

One such country was India, the world’s largest democracy.  That country was devoted to

state-led development for many years before it began to liberalize.  B. R. Shenoy, a leading

33

Indian economist who was influenced by Bauer’s work, argued against foreign aid and in

favor of economic liberalism.  In 1970, he wrote:

“Individual freedom is worth having not only for its own sake; economic development is apt

to be in proportion to the freedom which the individual has in the choice of his occupation, in

the disposal of his income, and investment of his savings.  If the individual is deprived of

these economic freedoms—and we have been engaged in this nefarious business under the

guise of planning—how different would such an individual be from a slave?  Under the

policy measures mis-called planning, we forgo both freedom and progress.” (Shenoy 2004:

100)

That market-liberal vision of sustainable development was largely lost sight of until the

failure of central planning made it impossible to ignore the superiority of the market.  But the

case for freedom as a moral force for development has yet to be fully understood and

embraced.

Adeoyo Lawrence

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4 TECHNOLOGY

4.1 Introduction

What does improve our lives? Is it money, is it politics or is it religion? Maybe the best answer would be TECHNOLOGY. What is technology? Technology is a pencil to write with, a car to provide faster transportation or a pair of glasses to improve our sight. How will our life look like without all the technological appliances surrounding us? Every little invention becomes a part of our everyday life and gradually our existence relates more and more to technological innovations. From wheel invention to space traveling, technology has proved that there is no limit for development, innovation or creativity, not in an era of growth, travel and control over the planet.

Technology is the usage of tools, techniques or methods of organization in order to solve a problem. Is marked by different purposes: from being a physical change in the environment to establishing relationships between humans. Technology has affected society and its surroundings in a number of ways. In many societies, technology has helped develop more advanced economies (including today's global economy) and has allowed the rise of a leisure class.

Many technological processes produce unwanted by-products, known as pollution, and deplete natural resources, to the detriment of the Earth and its environment. Various implementations of technology influence the values of a society and new technology often raises new ethical questions. Examples include the rise of the notion of efficiency in terms of human productivity, a term originally applied only to machines.

The notion of technology has been continuously canged due to the rapid development and advance tecgniques. All the fields of science and technology have seen segnificat changes either was natural or social sciences, engineering, medical and health science, electronic, agriculture or humanities.

35

4.2 Research and development

“…we must invest in education, infrastructure, and high-value research and development to help our economy grow, keep us globally competitive, and make it easier for businesses to create jobs.” (US National Commision of Fiscal Resposability and Reform)

Scientist are those responsable for the most positive aspects of society, their research keeps a regional economy strong even in difficult economic times. The main goal of research is to increase man, culture and society knowledge and use it to devise new applications and further more new technologies. At the base of every technological field lays research and development which represents the relationship between technology and economic growth. R&D has a special economic significance apart from its conventional association with scientific and technological development.

R&D investment generally reflects a government's or organization's willingness to forgo current operations or profit to improve future performance or returns, and its abilities to conduct research and development. Countries like Sweeden, Finland, Japan or USA have been rewarded for research and development in different fields and technologies..

In the context of commerce R&D is usually seen as future-oriented trends, long-term measures intended to improve or change the current situation. In the run for more creativity, higher profit or greater market share businesses make segnificant investents in R&D projects.

Even in the most critical economic time gouvernments rely on research as this is the only way to find solutions or improve a system. European Union`s biggest investement in R&D and innovation has been launched in 2010 when European Commision has allocated 6.4 billion euro to organizations, universities and industries, providing jobs for nearly 16000 people. Several areas are supposed to be financed: health, knowledge-based bio-economy, environment and nanotechnologies. FP7 (Seventh Framework Programme) is the largest sigle research programme in the world with a budget of more than 50 billion euro.

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4.3 Human Behavior

For generation we have been raised in a monetary-system, a system with visible flaws, system which we have been aiming to improve and even make it perfect. At the very base of monetary-system was the purpose of profit, benefit for those who best play the game.

In the last decades industry has seen the most significant development in history so far. All fields of industry have been reaching levels never seen before. And development and technology have been playing a significant role.

But with the development comes the issue of sustainability; the industry system we have seen so far has been designed to be destructive, the human behavior we have seen so far has been destructive to the wellbeing of people. Technology at its highest level is avoided to be used; products are intentionally designed not to last encouraging consumerism and economic growth due to higher and higher demand. So can we trust the quality of products and services delivered to us? Does the industry care for people? Can they afford to be ethical? What is wellbeing of people in this context?

Dumping toxic waste……having a monopoly enterprise…..downsizing the labor force the goal is the same: profit! They are all different degrees of the same self-supporting mechanism which always puts the wellbeing of people second to monetary game.

When a new project is to be done there are two main questions: how much it will cost and do we have the resources? But is the system enough efficient and sustainable? Or abundant? No. Efficiency, sustainability and abundance do not create profit and this is all the system is about. Scarcity brings profit: keeping products valuable, slowing down the oil production, maintain the scarcity of diamonds….and today water and air are becoming a scarcity. Does this mean that sustainability and abundance will never occur in a monetary system? Yes they can, by continuously advance technology to its most efficient and productive faze, education and information access technology can change human beings to behave ethical and decent. At the most initial stage human behavior was intended to be environmentally determined.

Lionel Robbins identifies human behavior as “a relationship between given ends and scarce means which have alternative uses”. We have all the resources and we can gradually create a sustainable technology as a solution for an intelligent management of Earth`s resources. These resources give us the matrials needed to create prosperity through sustainable technology.

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4.4 Technological alternatives

4.4.1 Knowledge economy

A more advanced technology in the field of information and communication can lead to a knowledge economy (seen as a product) or a knowledge based economy (seen as a tool). This refers to an economy focused on the production and management of knowledge technologies such as knowledge engineering and knowledge management. This produces economic benefits as well as job creation and involves economists, computer scientists, engineers, mathematicians as well as psychologists and sociologists.

Can be seen as a extencion of information society ( where over 70% of workers in developed economies are information workers who use their heads more than their hands), determines success in industrial economy and emphesises on ”know-how” resources maybe more than on other economical resources. It differes of traditional economy mostly by the fact that knowledge economics are not of scarcity but rather of abundance. Unlike most resouces that become depleted when used, information and knowledge can be shared and grown through application, human capital/competence is a key component of value as well as increased communication.

Main aspects of knowledge economy are health and wellbeing, high sustainable performance, public value. More and more research programmes are launched, the aim of which is to set out a credible view of what a balanced and sustinable economy would look like in 2020 or 2040. A major role is played by gouvernments, organizations and institutions through decisions making.

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4.4.2 Green Technology

“We can constantly create new things …but we cannot create a new world”! (Kentano Matsuura)

After the “information technology” explosion over the last two decades, is expected an explosion of “green technology”. A significant start has already been done. High investments are being made by governments, businesses, organizations to bring innovation and changes in daily life through sustainability and viability.

A green technology would slowly lead to a green economy era where human wellbeing and social equity are put first, environmental risks and ecological scarcities are significantly reduced. An era where we use technology wisely and maintain the environment. Some of the most targeted sectors for green development through technology are:

Renewable energy: wind, solar, wave, geothermal, biogas and fuel cell. The renewable fuels industry will create economic activity, jobs, will generate income and it will pay for itself. There will be a transition from fossil fuel industry jobs to renewable fuels, there will be a shift and a time to adapt to the evolving energy.

Clean transportation: mostly based on the renewable alternative fuels, electric car (advanced battery storage technology), and public transit. Advanced technology for high speed transportation using less energy.

Waste management: Reduce-Reuse-Recycle and sustainable packaging are the main aspects to emphasize on.

Green buildings and land management: green products and materials for construction represent an important shift in construction industry. Organic agriculture and soil stabilization as well as reforestation are more and more targeted for water and air quality.

Water management and green chemistry: water purification and allocation as well as the invention, design and application of chemical products and processes to reduce or to eliminate the use and generation of hazardous substances.

Other alternatives

Green nanotechnology: involves the manipulation of materials at the scale of the nanometer, one billionth of a meter. Some scientists believe that mastery of this subject is forthcoming that will transform the way that everything in the world is manufactured. "Green nanotechnology" is the application of green chemistry and green engineering principles to this field.

Victoria Berci

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5 REFERENCES

“Essentials of Economics” John Sloman, Third Edition

“A history of economic theory and method” Robert Hebert, Economics Series

“ Industrial Biotechnology”- Sustainable Growth and Economic Success Wim Soetaert and Erick Vandamme

www.wikipedia.com

journal by>Blair W. Feltmate

Article from Novartis Foundation for sustainable development

Esty, D. C., Porter, M. E., Industrial Ecology and Competitiveness: Strategic Implications for the Firm, Journal of Industrial Ecology Winter 1998, Vol. 2, No. 1: 35-43.

Business strategies for sustainable development: Based on the book Business Strategy for Sustainable Development: Leadership and Accountability for the 90s, published in 1992 by the International Institute for Sustainable Development in conjunction with Deloitte & Touche and the World Business Council for Sustainable Development.

Article from webmaster on Sustainable development and business; BSD global-IISD’s business and sustainable development.

Todaro, M.P & Smith, S.C. 2009. Economic Development. 10th Edition. Essex, England. Pearson Education

Andrew Gillespie.2007. Foundations of Economics , Oxford University Press.

Division of Sustainable Development. This page was last modified April 2011 .UN Department of Economic and Social Affairs,[www-document] {Referred 23.04.2011]) Available at http://www.un.org/esa/dsd/agenda21/res_agenda21_02.shtml

http://www.unep.fr/scp/csd/wssd/docs/TM/tm_section_01.pdf

http://www.ifc.org/ifcext/home.nsf/Content/SustainableDevelopmentinEmergingMark

http://www.uiowa.edu/ifdebook/faq/faq_docs/emerging_markets.shtml

http://www.ejsd.org/public/journal_article/5

http://www.ciel.org/Publications/services.pdf

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Wikipedia, The Economist, The New York times, Paul Krugman Economics Review, Thomas L. Friedman Lexus and Olive tree, Superfrekonomics, Foreign Policy Magazine, Noam Chomsky Profit over people, BBC