Sustainable Development, International Sector
February 4, 2009
Foreign aid budget is the first to go when a country is not in good shape
Foreign exchange crisis in 2009/10 in many developing countries, may have to go to IMF to borrow
foreign exchange, IMF sends team over to assess
Millennium goals are going to be further away
Sarcozy, president of France want Steiglitz and Sen to head a 24 member commission to measure
}v}u]v}]oP}ÁZ]v&vU'W}v[Z}ÁooZ]v(}u]}v. Is not an overall indicator
of social and economical well-being.
How to use GDP in a better way, can they provide a measure to social, economical stability
Steiglitz-GDP has always been a flawed measurement of economic performance
-Water shortage of fresh water, pollution of water, waterways in Asia, disease
Sustainability-Bob solow Reading 9.3
social rates of return
-Larry Summers asked to write on sustainable growth
A moral obligation to future generation to treat investment projects on environment and should be
Summer: against this
Can help our future generations by improving infrastructure as by preserving rain forests
As much as educating children as by leaving oil in the ground.
As enlarging scientific knowledge as part of reducing carbon dioxide in the air
Should grandparents have reduce their standard of living when life was worse than now to leave raw
material in the ground for my benefit?
1 billion of people on $1 a day are more important than the future generations.
Summers-interspatial equity dominates intergenerational equity
If a project is bad for environment, will produce diseconomy, reduce social rate of return
Ehrlich-took 5 non-renewable raw materials, the prices fell over 10 years.
Tragedy of the Commons-Cardin
-destruction of public property through capitalism
-there is a field where shepherds have a number of sheep, such that the grass grows, sheep eat the grass
-1 shepherd adds 1 sheep
-Marginal cost is shared among all the shepherds, marginal revenue exceeds cost, if MR>MC, do more
-buy more sheep
-now more sheep than the grass can provide for
-capitalism destroys public entity
Increase in collection of poundage of fish being taken
-fish feeds people
Tragic of Commons-Water
-1 country collects, to provide
Have a hundred ecological problems
-Economic models have weaknesses, relationships that might not hold over time
-most models predict the greatest disaster to be 90 yrs away
-reduce greenhouse emissions CO2 by 5% of 1990 generation level by 2012
-industrial countries agreed that 55% of emissions in 1990 had to agree to the agreement, in order for
US did not join, Russia refused in 2003, no one has to make the Kyoto requirements.
After 2012, even more population, have to reduce even more emissions, emissions and economy have
grown. Need a 20%+ reduction in CO2.
Maurice Strong-would like to see a steep carbon tax in Canada to solve CO2 problem. Tax on gasoline of
0.5-1$ a litre. Demand for gasoline is highly inelastic.
Maybe trains would come back, would raise a huge amount of revenue for government. Petroleum will
C02 emission pollution
(millions of metric tons)
Canada-120 (almost 2% of the world) 1995
Should Canada be forced to increase taxes on CO2 emission, when Russia and china are not needed to
do so as well? No answer
Gordon-2002-Ottawa had 1000 civil servants working on KyotoUZÇ]v[}uµÁ]Z}PuX
Reduced negative impacts on global warming.
Countries that will gain in global warming, is Canada, Russia, the northern part of Canada will be able to
plant trees, large economic gains.
Calcutta-50% of the time ppl needed hospital care due to air pollution from cars
There are many motorcycles that pollute as well. In Mexico city, 3.5 million cars in 1990, one day a week,
ppl are not allowed to use their cars. 200 factories have to cut production. In low income countries, air
pollution in homes from unclean cooking.
-Endangered species act in US in 1973, preserve birds, animal, fish, insects, 956 species listed in the act,
the endangered species act prevented people from cutting down trees in their home.
-huge tracts of land was taken away, profits of forestry industry went down, employment went down,
prices of wood went up
Amazon, cut down the forest
-Nuclear waste in US, has over 100 sites where nuclear waste is temporarily stored, half-life of nuclear
waste is 1000 years, American scientists decided that they were going to Yucca, put canisters of nuclear
waste in the tunnel for storage, might have leaks of waste into the water
Protectionism under an import-substitution strategy
There are arguments for both cases on improved resource allocation through time.
South Korea and Taiwan were protectionists in 1950-60
Latin America-free trade
Theoretical argument for both free trade and protectionism. There are other real world forces that
come into play that have to be factored in
Balance of payment
-summary of the transactions between residents and non-residents
-fixed exchange rate regime (developing), or flexible exchange rate(industrial system)
UNDER A FIXED EXCHANGE RATE SYSTEM
CR(export) DR(imports) BAL
1. Current acct +
(a) Trade export import Favorable
(b) Interest/dividends * **
(c) Travel * **
Bal on Current Deficit
2. Autonomous Capital Flow CR(inflow) DR(outflow)