Economic Growth and the Environment - Essay Example

ECONOMIC GROWTH AND THE ENVIRONMENT CONTENTS 1 Introduction 3 2 Status of the Economy 4 2.1 Measure of Economic growth 4 2.1.1 GDP Improvement 4 2.1.2 “Improved” Way of Living 5 2.2 Changes in the economy of UK 5 3 Effects of Economic Growth on the Environment 5 3.1 History of Development and its Effects on the Environment 6 3.2 Trade-offs of Economic Growth 6 3.3 Greenhouse gasses and climate change 7 4 Does Economic Growth Really Equate to a Happy Society? 8 5 Conclusion 9 6 References 10 INTRODUCTION Economic growth and development is a product of utilizing and optimizing available resources and increasing the capacity of an economy to meet demands of its consumers. Fribbance (2009, p. 16) also explains that economic change is a “crucial means of improving the standard of living in developing countries.” Although economic change is most often viewed in a positive light, repercussions to the societies and, most importantly, the environment must be taken into account. As the demand or the capacity to produce increases, the required resources to satiate those demands also increase. Thus, it is important to note the relationship economic growth entails and the strain it puts on the environment where it derives its resources from. Impacts on the environment range not only from the waste by-products generated from such growth but also to the consequences that is felt by the ecosystem such as the effect of greenhouse gases to global warming. But economic growth, accompanied with technological advancements, might also entail that more environmental friendly technology are available to counter or avoid such effects. STATUS OF THE ECONOMY Over the decades, the UK economy has been significantly rising. They are considered as a developed economy because of high income levels and a large service sector. It is basically an open economy wherein global trade is lush and investments in and from other economies is aplenty. A contrast of this economy would be that of North Korea and Bhutan, wherein only few and limited trades with other nations are exercised (Fribbance 2009, p. 27). Measure of Economic Growth It is difficult to quantify economic growth, with so many factors and entities to consider in the economy. But here are a few measures wherein economic growth can be visibly interpreted: GDP Improvement From the 1900s to 2008, it can be noted that UK’s GDP has significantly improved. This can be attributed with the following factors: Foreign Direct Investments (FDI), where UK ranked with the largest quantity of outward FDI as a percentage of GDP. Result of the aggressive policies of political parties to prioritize the growth of GDP, which also reflects the economic growth. “Improved” Way of Living Over the decades, with the changes and economic growth of UK, several factors were observable in the life of its people. The following are cited by Fribbance on the first section: Life expectancy of the people in UK rose. Per capita income is almost double than what it was decades ago. People in UK also have wider access on variety of goods due to the globalised economy. Technological developments also flourished. Poverty was also driven to a minimum in UK. While material satisfaction is bettered with economic growth, studies have shown that overall life satisfaction does not follow such trend. Even though UK has experienced drastic growth in their GDP through the past decades and the citizens had increased incomes, the proportion of people saying they are ‘very happy’ has fallen from 52 per cent to 36 per cent in 2005 (BBC Online 2006, quoted in Fribbance, 2009). Changes in the economy of UK Because of the aggressive policies of UK for globalization and liberalization, UK has transitioned to specialize in providing and creating services. Manufacturing jobs were outsourced to their assets abroad. As a result, not only was economic growth felt by other nations but its adverse effects were also suffered globally. EFFECTS OF ECONOMIC GROWTH TO THE ENVIRONMENT For all the positive changes economic growth can impart on society, it also posts detrimental risks to the environment. History of Development and its Effects on the Environment Throughout the course of history, phases of economic activities have its adverse effects on its resource components and had environmental repurcusions. Van den Bergh (2004, p 17) summarized the phases in his study of evolutionary growth. Table 1 depicts the Environmental and resource aspects of long waves of economic activities and development of technology. Trade-offs of Economic Growth In the current era of economic growth, the following were trade-offs and cases observed in the UK in the decade of 1900: Increased pollution as economy grows due to factory industrial outputs. With increasing purchasing power, consumption also increases. High consumer electronics and travel via cars and airplanes contribute to air pollution. Consumption of more domestic energy Amount of by-product wastes increases with production. Greenhouse gasses and climate change Greenhouse gasses are the cited main culprit for climate change. Pryke (2009) mentions the following: Burning of fossil fuels in industrial production, electric generation, space heating and transport, and emissions from livestock farming are main contributors to greenhouse gasses. Failure to maintain healthy forests and other ecosystems that can absorb greenhouse gasses also furthers its effect. All these causes are closely connected to economic growth. While UK has pursued to be a “weightless” economy, contradicting the argument that economic growth equates to greater pollution, depending on their global assets such as other economies like China for their industrial processing needs does not remove the fact that their economy still damages the environment. Until new technology arises, wherein industries do not have to heavily rely on fossil fuels for its operations, societies are forced instead to create policies and rules in order to buffer climate change. DOES ECONOMIC GROWTH REALLY EQUATE TO A HAPPY SOCIETY? In section 3, Fribbance mentions that there is a new global measure of progress known as the Happy Planet Index. It is important to note the following: Life expectancy, human wellbeing, and the damage done via a country’s environmental footprint’ are the criteria for HPI. Large countries with high GDPs and economic growth fared poorly, highlighting the fact that they do the most significant environmental damage. Vanuatu, topping the HPI, is a non-consumer-driven society which instead focuses on the welfare and goodwill of its people. Panayotou (2003, p. 45) stated that the relationship between economic growth and environmental quality, whether positive or negative, is not fixed along a country’s development path; indeed it may change sign from positive to negative as a country reaches a level of income at which people demand and afford more efficient infrastructure and a cleaner environment. For the large economic driven countries with high income, awareness and demand for cleaner and healthier environment is key to the improvement of the welfare of the society. CONCLUSION There is a trade-off between economic growth and quality of the environment. Policies and advancement in technology must go hand in hand to cushion and minimize the economic growth effects to the environment. Economic growth is not a measuring stick for a happy society. A good quality of living environment is also a prerequisite to good living. Word Count: 1214 words REFERENCES Fribbance, I. (2009) ‘The changing UK economy: making a greener and happier society?’ in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University. Panayotou, T. (2003) ‘Economic Growth and the Environment’ in Secretariat of the Economic Commission for Europe. Economic Survey of Europe, Geneva. Pryke, M. (2009) ‘Living in a common world’ in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University. Van der Bergh, J. (2004) Evolutionary Analysis of the Relationship between Economic Growth, Environmental Quality and Resource Scarcity. Tinderbergen Institute Discussion Paper. Read More