Sustainable Development and Growth Models

Sustainable Development for Emerging Markets

• Growth is a more basic measure, focusing on income increase, poverty reduction, and income inequality.
• Development is a more complex measure, looking at increased living standards, employment opportunities, GNI (Gross National Income) at PPP (Purchasing Power Parity), and GDP per capita at PPP.
• Important measures for assessing growth include GDP, GNI, Gini index, Lorenz curve, HDI (Human Development Index), education, health, and access to finance.
• Sources of growth and development include capital, labor, technology, and institutions.
• The BRICS countries are Brazil, Russia, India, China, and South Africa.

Endogenous Growth – Romer Model

• Kaldor's Stylized Facts emphasize broad, empirical regularities in growth patterns across economies that are relatively consistent across developed economies.
• Romer's Stylized Facts pinpoint knowledge, technology, and innovation's role in driving growth. It also illustrates the dynamic interplay between capital and knowledge for sustained growth.

Solow Model

• The Solow Model identifies inputs (capital, labor input, technical knowledge, and efficiency) as necessary factors in a production function.
• The model addresses differences seen in GDP per capita across countries like China by considering variations in capital per worker and efficiency of capital and labor combination within a country.
• Investment, calculated as saving (less depreciation), is crucial for output per capita growth.

Economic Growth

• Adjusting GDP per capita using PPP minimizes differences between richer and poorer countries.
• Long-term changes due to the industrial revolution include high growth rates and medium GDP, alongside rapid population growth.
• Sub-Saharan countries face structural issues, hindering growth from low capacity and weak institutions, poor education and infrastructure, and an over-reliance on resource extraction.
• Recent trends in growth show resilience in parts of Asia, with swift rebounds through robust manufacturing, strong domestic demand, and effective pandemic responses; also, issues in Africa and Latin America from longstanding structural issues.
• Human capital levels are often higher than expected economic output in certain countries, but lower in others.

Labor and Economic Development

• Labor share and economic development do not correlate.
• Sector specialization shapes labor inputs (resource-rich vs. service-driven countries).
• Trade and competitiveness influence performance, emphasizing export-led strategies. This includes trade liberalization, subsidizing specific sectors, and currency management.
• Global competitiveness relies on robust institutions, infrastructure, stable macroeconomics and efficient market functions, including health care and education.

Special Economic Zones (SEZs)

• SEZs aim to improve economic development through attracting investment, creating jobs, boosting infrastructure, promoting exports, and facilitating skill and technology transfer.
• SEZs have risks in areas like relaxing regulations (illicit activities), becoming associated with criminal activity, and insufficient infrastructure.
• Governance, policies, and infrastructure development are significant components of a successful, sustainable SEZ initiative.

Poverty and Inequalities

• Poverty rates are measurable using national poverty lines, and the Gini coefficient serves to measure relative income inequality.
• Limitations to these include arbitrary poverty thresholds, regional differences, and the difficulty in comparing data across countries.
• Conditional cash transfer programs (CCTs) aim to address traditional social assistance program failures by focusing on health, nutrition, and education, typically tied to education or enrollment.

Strengthening Governance and Transparency

• Governance and transparency are crucial for development.
• Domestic firm linkages and investments in infrastructure/skill development are key.
• Chaebol in South Korea's role needs to be considered when understanding development.

Structural Change

• Rapid industrialization and urbanization are linked; migration generally benefits those migrating though some countries do not have strong links between structural change and rural-urban migration.
• Stronger links can lead to industrialization, job creation in urban areas, and attracting rural workers.
• Potential limitations occur in countries like Sub-Saharan Africa, where job creation does not always keep pace with rural-urban migration. Limited opportunities in urban areas contribute to high unemployment.

Education

• Vocational training provides practical skills targeted towards specific labor demands.
• Aims to address a perceived mismatch between education and labor needs.
• Align industrial and educational policies to skill demand and supply.

Human Capital Development

• Human development is measured by the Human Development Index and other similar indices.
• Under-investment often occurs in human capital due to high upfront costs, uncertainty about future demand, lack of information, and time/credit constraints.
• Increasing affordability and improving access are policy solutions to increase education levels and improve human capital development.

Population Dynamics and Health

• Population dynamics are related to factors such as birth rates, death rates, migration, and life expectancy.
• Demographic dividend is when working-age population is high, correlating with increased income per capita.
• Issues with population aging, such as strains on the health system, and the sustainability of pension systems in developed countries, warrant considerations when evaluating a country's outlook.
• A lack of infrastructure, and other socioeconomic factors, can be detrimental to development.