Marbella, Gracelyn T.

BSA 2-1

Chapter 10

1. Is sustainable development a practical and feasible goal for nations? What might
be some of the difficulties and possible trade-offs? Explain your answer.

Sustainable development is a pattern of development which stresses on the fact

that while meeting the needs of the present generation, needs of the future generation
should not be compromised. In other words, natural resources should be utilized in such
a manner that not only needs of present generation gets fulfilled but sufficient resources
remain for the usage of the future generation as well. In fact, sustainable development
talks about the minimum environmental protection for future generations.

We all know that environmental degradation slowdown the pace of economic

development by imposing high costs in terms of health-related expenses and reduced
productivity especially on the developing countries. Since, economic development is an
outmost necessity for the developing countries because of large scale poverty and low
income. This environmental degradation will severely hit these countries in terms of
achieving required economic development. Thus, need of the hour is to find solution to
various environmental problems and restrict or reverse environmental degradation. Some
of the respective solutions are enhancement in productivity of resources and
improvement in living conditions of poor and such but these solutions could only be
achieved if environmental-friendly sustainable growth is achieved Thus, in their own
interest (achieving economic development, enhancing standard of living, and increasing
productivity) sustainable development is not only feasible and practical but a necessary
goal for nations especially developing nations.

Some of the difficulties and possible trade-offs in path of achieving sustainable

development are rising consumption level world wide as well as high rates of population
growth. Both these challenges or difficulties are putting enormous pressure on the natural
resources and are leading to their unsustainable use. Slowdown of population growth
rates, strengthening of institutional framework especially in developing countries with
respect to security of land tenure rights, availability of credit, inputs, and information so
that poor people can make resource augmenting investment and help in preservation
rather than destruction of environmental assets from which they derive their livelihood.
These are some tradeoffs which are required to achieve sustainable development.
3. What types of environmental problems do the rural and urban poor share? What
are some differences in the conditions they face?

Rapid population increases, accompanied by heavy rural-urban migration, are

leading to unprecedented rates of urban population growth, sometimes at twice the rate
of national growth. The types of environmental problems that rural and urban poor share
are prevalence of unhealthy living condition in terms of lack of clean water and sanitation
facilities which in turn leads to spread of infectious diseases and the increased quantity
of air borne pollutants due to use of biomass fuels in rural areas and heavy vehicular
traffic in urban areas. Consequently, few governments are prepared to cope with the
vastly increased strain on existing urban water supplies and sanitation facilities. The
resulting environmental ills pose extreme health hazards for the growing numbers of
people exposed to them. Such conditions threaten to precipitate the collapse of the
existing urban infrastructure and create circumstances ripe for epidemics and national
health crises.

5. What steps might governments in less developed countries take to reduce

overexploitation of natural resources? What impact do pricing policies have?

The steps that the governments in less developed countries might take to reduce
overexploitation of natural resources are the following: natural resources should be priced
in proper manner so that their true cost could be recovered because it has been witnessed
that subsidized natural resources has led to wasteful usage; programs involving usage
and preservation of natural resources should have community involvement component in
them especially involvement of poor communities because they are the ones who are
major losers in over-exploitation of natural resources; most natural resources get over-
exploited due to their common property resource nature. So, clearer property rights and
resource ownership would restrict the over-exploitation of natural resources; poor people
generally do not have access to alternative sources of income and in absence of such
alternative sources of income, they tend to be over dependent on natural resources for
their livelihood and thus over-exploit the natural resources. If government provides them
with avenues that can pave way for alternative sources of income then their dependence
on natural resources will be reduced and with that over-exploitation of natural resources
can be restricted. Pricing policies may have impact on reducing overexploitation of natural
resources as these regulate and control how are these must be utilized and there would
be some quotas, maximum exploitation and such. Also, these would prevent having
products that are overpriced and prevent abuses when it comes to natural resources.
7. Why are the objectives of economic development and sustainable growth
mutually reinforcing?

The objectives of economic development and sustainable growth are mutually

reinforcing because environmental degradation slowdowns the pace of economic
development by reducing the productivity of resources and raising health related cost. In
such scenario, sustainable growth by restricting or reversing the environmental
degradation can eliminate the factors that reduce the pace of economic development and
help the countries concerned in increasing the pace of economic development.

9. What are some of the costs associated with environmental degradation? How
might they detract from economic growth? What are the developmental
implications?

Some of the costs associated with environmental degradation include the

increased water pollution and water scarcity; loss of bio-diversity in terms of extinction of
plant and animal species thus reducing the adaptability of ecosystem; environmental
degradation is giving rise to global warming which is responsible for climate and
atmospheric changes and has increased the rise of occurrence of natural disasters; and
environmental degradation in terms of over cultivation of land and unsustainable harvest
of soil has lead to serious costs in terms of soil degradation and deforestation thus
reducing the productivity of land and watershed ability and carbon sequestration services
as provide by forests.

Environmental degradation can also detract from the pace of economic

development by imposing high costs on developing countries through health-related
expenses and the reduced productivity of resources. The poorest 20% of the poor in both
rural and urban areas will experience the consequences of environmental ills most
acutely. Severe environmental degradation, due to population pressures on marginal
land, has led to falling farm productivity and per capita food production. Since the
cultivation of marginal land is largely the domain of lower-income groups, the losses are
suffered by those who can least afford them. Similarly, the inaccessibility of sanitation
and clean water mainly affects the poor and is believed to be responsible for a
preponderance of infectious disease worldwide. Because the solutions to these and many
other environmental problems involve enhancing the productivity of resources and
improving living conditions among the poor, achieving environmentally sustainable
growth is synonymous with our definition of economic development.
11. In what ways can developed nations best contribute to the alleviation of global
and domestic environmental problems? Be specific.

Industrial countries can help developing nations in their efforts to improve the
environment of development in three areas: (1) trade liberalization, (2) debt relief, and (3)
financial and technological assistance.

Trade policies. Eliminating trade barriers against developing-country exports by

stimulating economic growth in the developing world, creating new jobs, and encouraging
rural development could significantly reduce the level of absolute poverty. In addition to
trade barriers, the industrialized countries penalize developing-country exports by heavily
subsidizing their own agricultural sectors.

Debt Relief. Wider access to international markets not only raises incomes but
also improves the ability of heavily indebted countries to service their debt. Heavy debt
servicing drastically reduces funds available to developing country governments for
domestic social programs, including those designed to alleviate poverty and reduce
environmental degradation. Debt-for-nature swaps offer an attractive and mutually
beneficial way for the developing world to retire its foreign-denominated debt while
guaranteeing the protection of tropical rain forests.

Development Assistance. Substantial new development assistance is necessary

in developing countries to achieve sustainable development. These investments would
be used for a variety of programs to alleviate poverty, provide services, and promote
sustainable patterns of production. The most general approach is to support programs to
alleviate landlessness and poverty, to help eliminate the socioeconomic causes of some
of the tropical deforestation. Specific tactics include purchase of timber rights by national
and international agencies, together with paying indigenous communities to monitor forest
preservation.

As for the global development, developed countries can directly contribute to

global environmental improvement through their own efforts to (1) reduce harmful
emissions, including greenhouse gases, (2) undertake R&D to develop green
technologies and pollution control for themselves and for developing countries, and (3)
alter their own environmentally harmful patterns of demand.

Emission Controls. The developed world can make to the global environment will
be through a clear demonstration of their own commitment to a cleaner environment.

Research and Development. Growing public support for stricter environmental

regulation in the industrialized world is likely to lead to the development of both cheaper
emissions abatement technologies and cleaner (or “greener") production processes.
Innovations resulting from research and development will enhance efforts to reduce
emissions if they are adopted in developing countries.

Import Restrictions. International treaties to limit the destruction of endangered

resources will have little effect if wealthy nations continue to provide lucrative markets for
the sale of such goods. Import restrictions are an effective way of reducing undesired
international trade. Consumer sovereignty expressed through boycotts and other forms
of pressure on corporations can be effective.

13. What is the environmental Kuznets curve? What factors may make it plausible?
In what cases does it seem implausible?

Environmental Kuznets curve is a graph reflecting the concept that pollution and
other environmental degradation first rises and then falls with increases in income per
capita. There is evidence that this holds for some pollutants, such as sulfur dioxide and
particulate matter in the air, but not for others, such as emissions of greenhouse gases.
In other words, this curve tries to suggest that as the income rises, society’s means and
willingness to pay for environmental protection also increases.

According to the theory, as incomes rise, societies will have both the means and
the willingness to pay for environmental protection. Indeed, there is evidence that this
inverted-U relationship holds for at least some local pollutants, such as particulate matter
in the air, sulfur dioxide, and nitrogen oxides. Other environmental problems, such as
unsafe water and poor sanitation, begin to improve as income rises even from very low
levels. These are average patterns that vary across countries. And to the extent an
income-pollution relationship holds, the patterns by themselves are not informative about
causality.

Environmental pollution itself may also cause slow economic growth; or third
factors, such as bad institutions, can lead to both high pollution and low income per capita.
Moreover, better environmental regulation does not spring into existence automatically
with higher income; this largely depends on the political process. This is a particular
problem when it comes to global public goods, such as greenhouse gases. Finally, even
if the inverted-U environmental Kuznets curve relationship does hold for such global
public goods in the very long term, some damage, such as loss of biodiversity, may well
prove to be irreversible.
15. How do farmers in developing countries adapt to climate change that they
experience?

Adaptation takes place in two forms: “planned” (or policy) adaptation undertaken
by governments and “autonomous” (or private) adaptation undertaken directly by
households, farms, and firms in response to climate change they experience or anticipate.
The distinction between autonomous or private and planned or policy adaptation is not a
sharp one—governments respond to citizens, and government incentives affect what
individuals choose to do—but the categories are useful for analysis of adaptation. These
responses are in some ways complements and in other ways substitutes. If autonomous
adaptation increases the marginal benefit of planned adaptation and vice versa, they are
considered complements—for example, when farmers respond to increasing temperature
by planting new varieties and government research institutes develop new heat-resistant
seeds. But if autonomous adaptation reduces the need for planned adaptation and vice
versa, then they are substitutes—for example, if government builds reservoirs and
irrigation systems, farmers have less incentive to change crops or conserve water.

17. What are natural resources–based livelihoods, and how are they threatened?

Natural resources-based livelihoods refer to the livelihoods or earning activities

that directly are based on extraction or usage of natural resources. This includes
agricultural activities, fishing activates, and forest-based activities and the like. In
developing countries, much natural resource exploitation has been locally unsustainable
and has occurred in a manner and on a scale that often bypasses the poor. In Africa and
Asia, what had been common village lands may be “spontaneously” privatized.
Governments may grant or allow (or overlook) foreign or national companies’ logging,
fishing, and mining without regard to the people who depend on these lands and
resources for their livelihoods and way of life. Or they may designate common lands used
by the poor to be “protected” areas—although corruption and poaching may negate any
ecological gains—thereby banning the livelihood and way of life of the poor, giving them
no incentive to take part in protection.
19. What is the international community doing to assist the least developed
countries (such as Niger) with resilience to climate change? Can you identify any
limitations to this assistance?

In order to assist the least developed countries like Niger with resilience to climate
change, the international community is channelizing funds by different means. The case
with Niger is exemplary. The already precarious natural environment of Niger is
deteriorating. It has affected water scarcity and food insecurity. To this end, the global
community has responded well.

The Global Environment Fund with other agencies has extended its support to
Niger in its National Adaptation Program of Action in 2006 which was a UN initiative. A
Pilot Program for Climate Resilience (PPCR) has considered the appeal made by Niger
and has accepted it in one of the 20 developing countries. PPCR has funded and assisted
in Niger’s Strategic Program for Climate Resilience (SPCR) 2010.The funds granted by
PPCR are channelized through the World Bank. On the other hand, the International
Finance Corporation (IFC) is working with Niger to funds its climate information platform
through PPCR loans. IFC is also planning for a weather index insurance program.
Marbella, Gracelyn T.

BSA 2-1

Chapter 11

1. Why do you think so many developing countries were convinced of the

necessity of development planning? Were the reasons strictly economic?
Comment.

So many developing countries were convinced of the necessity of development

planning because these countries surely believe that development planning is their most
direct and surest way to achieve economic progress. In fact, up to 1980s, development
plans are the way of economic and social life of most developing countries. Every five
years or so, latest development plans are released with great pomp and show.

It was widely believed in many developing countries that it is through national

planning that they can develop the institutional and organizational mechanism which can
help then in overcoming the major obstacles to development and achieving high rate of
economic growth in sustained and continuous manner. Also, to lift their economies in
comparable terms with their former rulers, these countries believe that they require
comprehensive national plan. Even though, result across countries with regards to
performance of development plans is not encouraging but few countries have in fact
utilize the framework of development planning in effective manner in accelerating growth,
reducing poverty, and reaching human development goals.

It is true that governments in developing countries have used the development

planning in mobilizing and channelizing the scarce resources to the areas which can help
the country in achieving long-term objectives. However, not always that development
planning is utilized to achieve economic goals only. Countries utilize development
planning in terms of achieving social objectives as well. Development plans also include
policies and framework pertaining to achievement of social goals such as improved
standards of education and health etc. Apart from this, development plans are also used
to control private economic activity so that a harmonious relationship between desires of
private business operators and social objectives of government could be maintained.
3. Planning is said to be more than just the formulation of quantitative economic
targets. It is often described as a process. What is meant by the planning process,
and what are some of its basic characteristics?

The planning process itself can be described as an exercise in which a government

first chooses social objectives, then sets various targets, and finally organizes a
framework for implementing, coordinating, and monitoring a development plan. It refers
to the process of anticipating future course of events and deciding the best course of
action. It is also a deliberate attempt to create change since in case of developing
economies, planning process is used to change the economic outlook from traditional
framework to modern framework. Planning process is a deliberate and conscious effort
that is used to formulate a sequence of action in an orderly manner so that pre-determined
objectives and goals could be achieved. Thus, planning process could be assumed as a
systematic attempt to decide a particular course of action for the future. Also, planning
process is unique in the sense that it establishes objectives for group efforts and also lays
down steps to accomplish them.

Proponents of economic planning for developing countries argue that the

uncontrolled market economy can, and often does, subject these nations to economic
dualism, unstable markets, low investment in key sectors, and low levels of employment.
In particular, they claim that the market economy is not geared to the principal operational
task of poor countries: mobilizing limited resources in a way that will bring about the
structural change necessary to stimulate a sustained and balanced growth of the entire
economy. Planning has come to be accepted, therefore, as an essential and pivotal
means of guiding and accelerating economic growth in almost all developing countries

5. There is much talk today about the demise of development planning. Many
observers assert that development planning has been a failure. List and explain
some of the major reasons for plan failures. Which reasons do you think are the
most important? Explain your thinking.

Some major reasons for plan failures are the following:

• Plans are often very grand in design but have little in terms of specific polices
required to achieve specific and stated objectives. Also, it has been witnessed
that considerable gap exists between the plan formulation and its
implementation. This gap breeds inefficiency and leads to failure of planning.
 • For undertaking economic planning, data regarding the different set of
economic indicators id required. It is often seen especially in poor developing
countries that in absence of qualified economists, statisticians, and planning
personnel data required for planning purpose are generally weak, inadequate
or non-existent. This made the attempt to formulate and carry out a detailed
and comprehensive plan – a futile exercise.
• Most developing countries are dependent on foreign aid, international trade,
foreign capital flows etc. to achieve desired rate of economic growth. Any
fluctuations on any of these front imbalances the short term forecasting let
alone long – term planning to be undertaken by these countries.
• One reason for the failure of development planning in developing countries is
the institutional weakness. Persons responsible for formulating or
implementing the plans are generally incompetent or unqualified. Irrelevant and
cumbersome beaurocratic procedures are added. Innovation and change is
resisted, regional goals are given more importance than national goals and
prevalence of corruption weakens the process of planning right from the start
itself.
• Planning failure also occurs in the developing countries due to lack of political
will also. It has been seen that in absence of required political will development
plans often act as tool to promote the interest of powerful elites or vested
interest groups rather than as a means of developing long – term interest of all
citizens.
• Sometimes internal conflict, violence, and failure of state to undertake basic
functions of governance also results in the failure of development planning as
well.

I think that that last one is the most important since it must be done and be
managed properly first by the government so the others will follow. How will a plan be
accomplished if there is already a conflict among those who are in the government and
violence? Since it is their responsibility, the issues within it must be resolved first.

7. What are some of the difficulties associated with the establishment of market
economies in developing countries? In what type of country is the market more
likely to succeed? Why?

Some of the difficulties associated with the establishment of market economies in

developing countries include the following:
• There is lack of clearly established property rights in the developing countries
which is an important requirement for the establishment of free markets.
Moreover, procedures required for establishing property rights and their
transfer are also conspicuous by their absence in these countries.
• Property rights require strong legal support in terms of commercial laws and
strong, impartial, and independent judicial system to be enforceable.
Developing countries generally have weak laws and judicial system. Judicial
system in most developing countries is generally corrupt, biased, and work
under the direction of the government of the day. Therefore, enforcement of
property rights is grossly doubtful.
• Developing countries are mired by excessive licensing requirements even in
those industries which have no significant externalities. Also, various barriers
prevail in these countries with regards to enter particular trade, profession, and
to attain government offices. Thus, equal economic opportunity a prerequisite
for the establishment of free market is generally absent in these countries.
• Currencies in developing countries are not stable enough. Occurrence of
balance of payment disequilibrium or trade deficit generally leads to instability
in currency values. Also, most developing countries do not have well
established banking system. It is true that banking system exist in developing
countries but its operation is limited to few big cities or major trading centers
whereas vast majority of population in developing country is out of the preview
of banking sector. Stable currency and reliable banking system is also a
necessary requirement for establishment of market economies.
• Establishment of free markets requires operation of perfect market in terms of
adequate information being dispensed to both buyers and sellers with regard
to products offered and the state of their respective demand and supply. This
kind of information, due to imperfect and disorganized markets in developing
countries, is not at all available in developing market and therefore it is difficult
to establish market economies in developing countries.
• A well-functioning market system requires safety nets in terms of monetary help
being provided to the individuals affected by certain economic misfortunes such
injuries sustained during work, involuntary unemployment etc. but developing
countries due to their weak laws and most economic transactions happening in
unorganized sector does not have provision of such safety nets for majority of
labor force and therefore makes it difficult to establish a well-functioning market
economy in developing countries.
 • Innovation is an important constituent of well-functioning market economy and
for innovation to take place strong system regarding the issuance and
enforcement of patents and copyrights is required. In many developing
countries system of patent and copyrights is either nonexistent or is very weak,
this acts as a constraint in encouraging innovation and thus give birth to one
more difficulty in establishment of market economies in developing economies.

9. What features of the political process make effective development policymaking

so difficult?

The New Consensus does not include some features that many commentators
have considered significant to East Asian success, such as an active or at least a highly
targeted industrial policy—picking winners—to overcome coordination failures, because
these remain controversial. There are doubts about the replicability of industrial policy
experiences—specifically in encouraging particular industrial activities—of these
countries, and the most widely held perspective is that industrial policy is generally
ineffective when government is less capable or more constrained (though some
specialists conclude from this problem that it should be a priority to raise government
capabilities in these fields in other countries).

The New Consensus view represents in part a renewed recognition that markets
do fail; that at times these failures cannot be addressed without a significant and ongoing
role for government—that market failure can be significantly worse than government
failure after all; and that when governance is poor, it can often be improved. Indeed, a
key part of government’s role is to help secure the foundations for economic development
by ensuring that the requirements for an effective market-based economy are met.

11. Do you think that setting goals for development could in itself help a
developing nation to achieve those goals? Why or why not?

I do believe that setting goals for development could in itself help a developing
nation to achieve those goals as long as there is a proper implementation and plans to
be administered which in aligned to these goals. These goals being set may help a
developing nation to achieve these since it will be their guide on what are the things that
they need to do, what are the things that they have done already, in which aspect does
they have to focus on. Also, one factor that must be considered to this one is if the goals
set are achievable in a certain period of time with regards to a country’s available
resources and the government capabilities. Moreover, it is important to consider if these
goals would really be a step towards the development of a nation depending on what it
needs and what it has. Thus, goals that are set must have a list of actions that must be
followed, plans that have to be done with the presence and support of the government.

13. Discuss the components of the original Washington Consensus. What do you
think was most lacking from this framework? What important factors have
achieved widespread acceptance in the evolution toward a new consensus?

Washington consensus was encapsulated by John Williamson and has stressed

on the free market approach to development followed in those years by the IMF, World
Bank, and key U.S. government agencies, along with some other developed countries at
the time. The 10 points of the Washington Consensus are striking at least as much for
what they do not contain as for what they do. There is no mention of shared growth, of
the central need to focus on eliminating absolute poverty to achieve development in any
meaningful sense, or of reducing inequality, as central ends in themselves as well as
instruments of economic growth.

This consensus indicates that government should play minimal role in economy
because proponents of this consensus believe that involvement of government will make
things worse than better. Prevalent also was the view that poverty would be taken care
of by growth and was not a major obstacle in itself to growth and development; but this
view, is no longer considered adequate by most development specialists.

This consensus does not view poverty as a major obstacle to growth and
development and state that with growth, poverty will itself be taken care of. This
consensus has advocated that instead of indulging in direct production of goods and
services government should use its resources towards health, education, and
infrastructure.

Tax base should be broadened and marginal tax rates should be cut.
Establishment of clear and secure property rights should be undertaken. Licensing
system should be abolished and deregulation, trade liberalization, and privatization
should be the outlook of the economy. Financial markets should be liberalized and all
barriers to FDI should be eliminated.
15. Explain the differences between characteristics of public goods and private
goods and services. How can goods and services provided by nongovernmental
organizations be considered in this framework?

A public good is an entity that provides benefits to all individuals simultaneously

and whose enjoyment by one person in no way diminishes that of other. The former
feature is known as non-rivalry and the latter is referred to as non-excludability in
consumption. A private good on the other hand is privately owned and used when the
owner purchases it.

The major differences in the characteristics of public and private goods are:
ownership to a private good is exclusive to the one who buys it while public good can be
used by anyone to whom it is provided; public good cannot be supplied by the private
industries since they are supplied in extremely large quantities at a very minimal price
and are supplied by the government; owner of the private good exclude others from using
it while public good has no exclusive owner but all in the group use it; and private good is
sold for same price for different quantities while public good is supplied in same quantity
for different prices.

In contrast to private goods, public goods are nonexcludable (it is impossible to

prevent individuals from consuming them except at excessive cost) and nonrival
(consumption by individuals does not reduce the amount of the good available for
consumption by others).

Activities in which NGOs have comparative advantage typically lie between

conventional private and public goods in these dimensions. In particular, they tend to be
partially rival, partially excludable, rival but not excludable, or excludable but not rival. The
result is a typology that includes “private goods” (high excludability, high rivalry) in the
upper righthand corner, referred to here as Type I goods, and “public goods” (low
excludability, low rivalry) in the lower left-hand corner, referred to here as Type III goods.
The production and distribution of these Type I and Type III goods are generally assigned
to the market and the public sector, respectively. The other two corners represent goods
that are hybrids of the other two.