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Green Growth or Degrowth?

Due to continuous scientific warnings about the negative effects of climate change, policymakers have come together to decide which steps need to be addressed in order for the climate crisis to be prevented and the world economy to be preserved. In this paper, we will define the concept of de-growing economies its potential effects on developed as well as developing economies.

Constant warnings about the climate crisis have brought up a ‘de-growth’ movement, which encourages countries not to increase gross domestic product (GDP) and instead to pursue zero or negative growth. GDP per inhabitant increased by more than 6 times in the USA during the last century, so policymakers are debating whether it would be right to use more resources and produce more goods. Because of such a rapid growth in GDP, which is often thought to demonstrate the well-being of a country, economic de-growth would not be harmful for developed nations with rich economies and might even be beneficial in ensuring equal income distribution. De-growth movement might not be effective for developing countries, as it would fully crash their economies. According to Kate Raworth, ending poverty for the 21% of world's population living with less than $1.25 a day would “only require” 0.2% of the world's “accumulated wealth.” In addition, the biggest issue which causes stress about the climate crisis is caused by the top 10% of the global population, as they tend to overuse natural resources in order to produce goods, so that profit could be gained. Therefore, de-growth might be beneficial only if adapted in developed countries so that the share of their income would go to the developing ones.

Supporters of the green growth movement, who now hold respectful positions of various European institutions, the Organization for Economic Co-operation and Development, European governments, and the World Bank, argue that the environment will remain sustainable and world GDP would double its growth at the end of the 22nd century, if right policy measures, ensuring technological growth, will be implemented. Such hopes are supported by ‘absolute decoupling’ – a definition, which explains that while carbon emission is decreasing, GDP may increase. Green growth believers are investigating the impact of huge taxes on fossil fuel extraction and promoting green technologies, while maintaining GDP growth trends.

In addition, as described in ‘Towards green growth. A summary for policymakers’ (2011), green growth is built to stop poverty. Green growth supporters ensure that such an approach would produce efficiently used water, as well as ease the arising health issues caused by environmental degradation. Most importantly, it would develop efficient technologies which would reduce costs and decrease environmental pressure. Such policies would ensure that citizens of countries with low GDP would not spend most of their income on inefficient energy and water use.

Kate Raworth argues that in order for human society to survive, it is essential to create a “doughnut-shaped” system, which would be surrounded by human rights on one side, and environmental sustainability on the other. The sustainable environment requires adequate use of natural resources, so that they are not run out of. Moreover, such measures could only be implemented if humans are guaranteed with the right to access food, water and all other necessities without overusing raw materials produced by the planet. In addition, the author highlights various policies which can be adopted to have both – sustainability and a growing economy. For instance, in several industrial countries, housing is poorly insulated, causing ‘fuel poverty’ among lower class citizens, who are obliged to spend more than 10% of their income, in order to heat their homes. By providing subsidies for home insulation, governments could help to reduce bills, while bringing national carbon emission down as well.

On the other hand, some may say that green growth is impossible. For instance, Jason Hickel and Giorgos Kallis support their claims by looking at factors which are used by the governments to measure ‘decoupling’. To calculate whether an economy is resource-efficient, policymakers divide the GDP by DMC. If the GDP increases and DMC decreases, it means that a state is closer to achieving green growth. Authors explain that DMC cannot be calculated accurately, because its calculations do not include the insights of production’s on the environment. However, in 2017, a conclusion from OECD stated that European countries have reached absolute decoupling. Their GDP is going up and DMC, down. Usage of natural resources in OECD countries decreased from 12 tons per capita in 2000 and was measured as 10 tons per capita in 2015. Therefore, it can be seen that although GDP/DMC calculations do not include transportation and production, they do comprise the number of exports and imports of natural resources.

To conclude, green growth would be a more rational way to further economic development as it would benefit all economies in the world – by raising GDP of both developed and developing nations. De-growth might work for rich countries, since it would result in less money spent on natural resources. Still, it would be a game-changer for poorer countries – the best way to fight poverty and ensure a better life for citizens.

Written by Lana Dolgopolova


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