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Guide to Sustainable Development and Environmental Policy
DUKE UNIVERSITY PRESS
Copyright © 2001 Duke University Press
All right reserved. ISBN: 978-0-8223-2745-5
Chapter One
Basic Concepts of Development and Environment
1.1 Development: Introductory Concepts, Criteria, and Measurements
1.1.1 CAPITAL
Absorptive Capacity, Economic: the ability of the economy to use capital productively. Rapid natural-resource exploitation that brings large volumes of capital into an economy often results in disappointing economic growth because low absorptive capacity limits the returns on investment. R. P.
Capital: 1) physical assets produced by the economy, and financial assets, available as inputs for further production. This definition of capital is the classic definition of the factor of production that combines with land and labor as inputs in the production process. The value of physical capital can be calculated from the present value of the goods and services that the capital creates over time;
2) more broadly, all inputs available for economic activity, including human capital, technological capital, and natural-resource capital.
Capital Accumulation (in ENVIRONMENTAL ACCOUNTING): an environmentally adjusted concept of capital formation that accounts for depletion anddegradation of NATURAL CAPITAL. See also SECTION 5.1.1.
Capital-Resource Substitution: a measurement of the degree of substitutability between humanmade capital and natural resources in production. For example, if the elasticity of substitution is 1.0 (perfect elasticity) between tractors and hectares of arable land in agriculture, a farmer with two tractors and one hundred hectares should theoretically be able to produce as much agriculture output as one with one tractor and two hundred hectares of land. R. P.
Critical Natural Capital: a concept introduced by the proponents of the STRONG SUSTAINABILITY approach that some resources, such as the ozone layer, the carbon cycle, or BIODIVERSITY have primary (e.g., ecological) values as well as secondary (e.g., human-use-based, or market) values. Given that humanmade capital often cannot completely or directly substitute the ecological capital, this school argues that a minimum goal of SUSTAINABLE DEVELOPMENT is to protect critical natural capital.
See David W. Pearce, Blueprint 3: Measuring Sustainable Development (London: Earth-scan, 1994).
Cultural Capital: 1) the factors that provide human societies with the means and adaptations to deal with the natural environment and to actively modify it. It includes the way people view the world and the universe (cosmology); environmental philosophy and ethics, including religion; traditional ecological knowledge; and social and political institutions. See also SOCIAL CAPITAL.
See Fikret Berkes and Carl Folke, "A Systems Perspective on the Interrelations between Natural, Human-made and Cultural Capital," Ecological Economics 5 (1992): 1-8. Fikret Berkes
2) cultural beliefs and practices held by particular groups within society, as influenced by history, education, habitual practices, income levels, etc. For example, Max Weber argued that cultural capital of specific groups provides them with orientations to succeed or fail at development (e.g., attributing economic success to the "Protestant ethic"). Differences in cultural capital can divide societies along class and ethnic lines.
See Max Weber, The Protestant Ethic and the Spirit of Capitalism (New York: Charles Scribner's Sons, 1958); Pierre Bourdieu, Distinction: A Social Critique of the Judgement of Taste (Cambridge, MA: Harvard University Press, 1984).
Ecological Capital: a notion used in ENVIRONMENTAL ACCOUNTING to define the contribution of the environment to economic activity. See also NATURAL CAPITAL/NATURAL ASSETS. See, generally, SECTION 5.1.1.
Human Capital: capital that comprises all individuals' capacities for work (skills, knowledge, health, strength, motivation) as well as the networks and organizations through which they are mobilized. Human capital therefore encompasses both individual resources and SOCIAL CAPITAL.
National Heritage (National Estate, Natural Patrimony): a designation given by governments to the components of the cultural and natural environment that are of national value and need to be preserved for the benefit of the nation. Such components possess aesthetic, historical, scientific, social, cultural, ecological, or other values. They may include rare species, parks and reserves, museums and sites of archaeological interest, or nature sites of special merit. Some components, such as Lake Baikal and the Hermitage in Russia, belong to the global world heritage and are to be preserved in accordance with the WORLD HERITAGE CONVENTION.
Natural Capital/Natural Assets: 1) the stock of life-supporting systems, BIODIVERSITY, renewable and nonrenewable resources. Natural capital excludes humanmade capital. The contribution of the concept is in clarifying that environmental resources are assets in the economy insofar as they contribute to economic productivity and welfare. R. P.
2) defined narrowly, the noncommercialized part of the natural environment that provides environmental services not captured in the standard GROSS NATIONAL PRODUCT (GNP) account. In contrast, return on the commercialized environment, such as agricultural lands or oil reserves, are reflected in GNP statistics and therefore counted as part of a country's economic production and wealth. Natural capital, defined in that sense, can be measured by a NATURAL CAPITAL INDICATOR.
Natural Wealth. See NATURAL CAPITAL/NATIONAL ASSETS.
Social Capital: the level of trust, public commitment, and capacity for cooperation of a community or group that provides a basis for effective functioning. Social capital is said to rest on the capacity of social institutions, ranging from political and legal institutions to clubs and voluntary groups, to foster cooperation and instill identification with broad societal units. Advocates of the social-capital concept, dating at least as far back as Max Weber's notion of moral behavior of individuals toward all other members of society as a component of the "Protestant ethic," have argued that it is essential for understanding why economic growth does or does not occur; thus it should be considered as an "input" in the production process just like other forms of capital. They argue that economic development and democracy require the strengthening of micro-level social institutions as much as the provision of money, development expertise, or formal macrolevel democratic practices. Some theories of social capital (such as those of Edward Banfield and Robert Putnam) argue that social capital is so deeply imbedded in social institutions that its level persists over many generations. The maintenance of social capital is considered to be one of the prerequisites of STRONG SUSTAINABILITY.
See Edward Banfield, The Moral Basis of a Backward Society (Chicago: Free Press, 1958); Max Weber, The Protestant Ethic and the Spirit of Capitalism (New York: Charles Scribner's Sons, 1958); Robert D. Putnam, Making Democracy Work (Princeton, NJ: Princeton University Press, 1993).
Undercapitalization: the lack of adequate investment capital to operate a firm, industry, or sector at high levels of efficiency and societal benefit. While many economies suffer from excess capital that is drawn without productive purposes into an industry or sector, the opposite problem of undercapitalization hampers the adoption of optimal scale and technologies. Undercapitalization may reflect price distortions that make other industries or sectors more attractive for investment, or it may reflect government decisions to drain capital away from a particular firm, industry, or sector. For many decades the governments of developing countries undercapitalized the agricultural sector through pricing and taxing policies that drew capital into industry. In some cases, governments have also undercapitalized their own state enterprises in the resource sectors, in order to bring the resource surplus into the central treasury or to weaken the enterprises when their power seemed threatening to the government.
1.1.2 CLASSIFICATION OF NATIONS AND MAJOR POLITICAL UNITS BY DEVELOPMENT CHARACTERISTICS
Countries in Transition: formerly centrally planned economies making the transition to a market economy. The designation covers Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, the Republic of Moldova, Poland, Romania, the Russian Federation, Slovakia, Slovenia, Tajikistan, Turkmenistan, Ukraine, the former Yugoslav Republic of Macedonia, and Yugoslavia. Major international environmental conventions acknowledge special circumstances of these countries. For instance, within the FRAMEWORK CONVENTION ON CLIMATE CHANGE, countries in transition as well as ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD) countries, agreed to voluntarily reduce their greenhouse emissions by the year 2000 to 1990 levels. However, in contrast to the OECD countries, these nations are not obligated to provide technological, financial, and intellectual assistance for reducing greenhouse emissions from DEVELOPING COUNTRIES.
Developed Countries: nations with relatively high levels of economic infrastructure and production so as to yield high national income. Although the status of being a developed country is often determined by per capita income levels, not everyone agrees that national income per capita per se is equivalent to "development." Countries with high revenues from raw materials, such as certain oil-exporting countries, may not be "developed" in terms of long-range productive capacity. A similar controversy surrounds the tendency to equate development with industrialization, in light of several cases of nations that are prosperous and productive without heavy reliance on manufacturing (e.g., Norway).
Developing Countries (Less Developed Countries [LDCS]): nations with relatively low levels of economic development. Various international agencies define nation-states as developing if they fall below certain targets, for instance, in terms of GROSS NATIONAL PRODUCT (GNP), industrial production, literacy rates. The United Nations, UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION (UNIDO), the BRETTON WOODS INSTITUTIONS, and some other international organizations and development agencies have each produced their own lists of developing countries that are slightly different. There is an important debate whether countries with high GROSS DOMESTIC PRODUCT (GDP) per capita (like Kuwait or Saudi Arabia) ought to be considered "developing" because of economic or social characteristics not captured by aggregate income.
Most international environmental conventions give developing countries substantial concessions in terms of financial assistance, technology transfer, and extended time schedules for implementation of obligations. For instance, within the framework of the GLOBAL CLIMATE CONVENTION they are not supposed to match commitments by industrialized countries to cut GREENHOUSE GASES, and they are entitled to financial assistance and technology from the developed nations to initiate changes in their environmental policies.
East vs. West: an outdated but still widely used reference to the division of the world in terms of cultural and political matters. The "West" is equated with the developed countries, while the "East" refers in some cases to the former socialist bloc and more often to all countries other than the First World.
Economy in Transition. See COUNTRIES IN TRANSITION.
Fifth World: a label applied by some geographers in reference to the poorest and LEAST DEVELOPED COUNTRIES of the world. Some scholars use this term in relation to refugees.
First World. See INDUSTRIAL COUNTRIES.
Fourth World: 1) See LEAST DEVELOPED COUNTRIES (LLDS).
2) a label denoting indigenous minorities who lack political autonomy or adequate status (such as the Dayaks in Indonesian Kalimantan or the so-called pygmies of Central Africa), who have often been displaced onto marginal lands (highlands or remote forests), or end up in urban slums. The connotation of the term is that they remain culturally separate, even if their traditional lifestyles erode in the face of pressure from the more dominant cultures.
Group of 7 (G-7): 1) a grouping of seven of the wealthiest nations: the United States, France, the United Kingdom, Germany, Canada, Italy, and Japan. The leaders of these states annually gather at an economic summit to discuss most serious world concerns and to coordinate their actions. The Group was set up in 1975 at the peak of the world energy crisis triggered by the ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) decision to raise the price of oil. Since 1988, environmental concerns have been included on the agenda of the summit along with other major political and economic problems. For the last few years, the president of the Russian Federation has attended the G-7 meetings; these meetings are typically labeled the "Group of 8."
2) also "Megadiversity 7"-a label for the countries that in combination contain more than a half of the world's biodiversity: Australia, Brazil, Colombia, Democratic Republic of Congo (formerly Zaire), Indonesia, Madagascar, and Mexico.
Group of 77 (G-77): an organization of DEVELOPING COUNTRIES that emerged during the preparatory stage for the first UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD) in 1964 in response to the growing recognition of the North-South rift in the world economy. Since then, G-77 membership has increased to 132 in 1997 and its permanent institutional structure has been developed.
Industrial Countries (First World): term denoting the world's wealthier nations, but usually excluding the high-per-capita-income, raw-material-exporting countries such as Saudi Arabia or Brunei that have very little manufacturing. The term is somewhat of a throwback to the conception that economic wealth and development correspond to the degree to which a nation has industrialized, even though several "industrial countries," such as Norway, do not have large industrial sectors.
Least Developed Countries (LLDCS): countries identified by the United Nations as low-income countries encountering long-term constraints to economic growth, particularly low levels of human resource development and severe structural weaknesses in development: e.g., the lowest income (per capita gross domestic product [GDP] of $100 or less at 1970 prices), low level of industrialization (secondary or manufacturing industries contributing of 10 percent or less of GDP), and lowest literacy rates (20 percent or less of literate persons over age fifteen). The main purpose of this classification is to identify the countries in most need of foreign assistance. As of 1997, the number of LLDCS was roughly forty-eight. Ethiopia with its negative annual growth rates of per capita income, national poverty line of 86, HUMAN DEVELOPMENT INDEX (HDI) value of 0.244 and GENDER-RELATED DEVELOPMENT INDEX (GDI) value of 0.233 is an exemplar of this category. See also FOURTH WORLD.
See United Nations Development Programme, Human Development Report (New York: UNDP, 1997).
Less Developed Countries (LDCS): See DEVELOPING COUNTRIES.
Newly Industrializing Countries (NICS): countries that since the 1970s were able to achieve rapid (although not always consistent) growth of manufacturing output and to create a modern industrialized society. Principally located in Southeast Asia and Latin America, they may not be considered part of the THIRD WORLD, in the sense that they are not entitled to development assistance or other special prerogatives provided to the Southern nations within the frameworks of international environmental agreements. The UN list of NICS includes Thailand, Singapore, South Korea, Taiwan, Malaysia, Brazil, and Mexico.
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