Ch. 12 - Sustainable Development Flashcards
The first decade of the 21st century experienced extreme uncertainty and risk because of the
2007-2008 financial crisis
Beck (1986) asserts the two main reasons for the current societal problems are the inability of
modern societies to produce enough
stability and sustainability.
firmness in position, permanence, and resistance to change, especially in a disruptive way. In other words, avoiding large swings in
economic activity, high inflation, and excessive volatility in exchange rates and financial
markets.
Stability as defined by the International Monetary Fund (2012)
The challenge in economic stability is that __________ should be avoided
excessive economic highs and lows. The fluctuations themselves are unavoidable.
designed a theoretical framework the importance of raising government
spending in harsh times and preventing long-lasting depressions.
Keynes (1923)
In the next half-century, the ________ followed Keynesian formula and economists refined it developing sophisticated models of fiscal policy and monetary policy.
capitalist system
______- expanded with the free market reforms of the American President Ronald Reagan and Margaret Thatcher of the United Kingdom
Neoliberalism
considers the long term capacities of a system to exist, not its short-term resistance
to change.
Sustainability
is the responsible use of resources, where the present needs are meet, without sacrificing the needs and resources of the future generation.
Sustainability, as defined by the Bruntland Report (World Commission on Environment and Development, 1987) prepared for the United Nations in 1987
According to him, it is hard to discern the issue of possible depletion of resources in economic theories, because price mechanisms in market economies would translate scarcity into higher costs and reduced consumption of the good. This explains why more attention was to the problem of what combination of resources could induce growth.
Sebastian (2014)
He prophesized on the grim consequences of a rising population which consumes all
surplus food production and thus prevents a rise in living standards.
Malthus (1978)
The grim consequences of a rising population which consumes all surplus food production and thus prevents a rise in living standards. The solution was
increased agriculture
Increased agriculture culminated for more than two centuries in the Green Revolution in countries such as
India and Bangladesh
He analyzed how public goods got exhausted by actors in a free market economy. He argues
non-regulated access to fishery will quickly lead to empty seas and eventually lead to the
collapse of the fishery industry in many countries
Hardin (1968)
While in 1972, the _____ published a ground breaking study which agrees with Hardin.
Club of Rome
According to Sebastian (2014) there are three areas of economic models that should be rethought and redesigned.
Firstly, the issue of what is an efficient market needs a new explanation.
Secondly, the fact that we must accept that there are many different institutional ways to achieve
and implement an efficient economic systems, but it does not necessarily mean that a country’s
economic system will have the same result to other countries.
Thirdly, redesign on the programs that are designed to achieve economic growth and economic development.
are the most fundamental, constructional element of economies
Markets
Another strong assumption is that markets always tend to a state of equilibrium controlled by the _________. If there is a situation of imbalance caused by external shocks, these forces push markets automatically towards an efficient equilibrium level of price, no matter what kind of shock caused them
demand and supply
The spectacular expansion of globalization, economic reforms in the USA, United Kingdom and Latin America, the collapse of communism created an end of
history atmosphere
The neo-liberal agenda brought some problems.
First, it increased exposition of the world
economic systems on crisis and contagion effects. The second problem is efficiency. Poverty trap destroys the capacities of human capital and makes domestic demand unstable. The third problem is the legitimacy of market based solutions. According to Rodrik (2007), market itself is not able to produce legitimacy, but it needs acceptance of all actors
The modern capitalism developed in the last 200 years is based on the assumption of growth and expansion. The more products produced, the better for the economy and the people. This is measured by the Gross Domestic Product (GDP) index focusing on the performance of national economies. However, the GDP is not flawless. Its enchanting numbers can show only one dimension of growth, hiding others
The Roll-Over Effect
According to him, the search can be speeded up by the economic crisis and cassandric voices that our global economic system is now at the end of its known shape. He also prophesied that the world economy is moving towards a time of a great stagnation. For example, the close-to-recession situation of Japan in 1990 should be perceived as the new normal. There are no low hanging fruits anymore
Cowen (2011)
