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Often people face dilemma in distinguishing between economic growth and economic development. Economic growth can be described as sectoral growth in real national income, gross domestic product (GDP) or per capita income; economic development encompasses a larger area like literacy rate, life expectancy, poverty rate, specific measure of economic welfare that does take into account important aspects such as leisure time, environmental quality, freedom, or social justice.
Many developing/emerging economies concentrate on increasing GDP while discounting some other social measures like maternity leave (for both sexes), money transfer to the needy (particularly in time of natural disaster) and also when the income of a family of four, for example, falls below the income of poverty or extreme poverty level as defined by international institutions.
Ban Ki-moon, the former UN Secretary General, said two years back that it was no longer good enough for economies simply to grow. The world must also end extreme poverty, a goal within reach by 2030. "We must manage the economy to protect rather than destroy the environment. And we must promote a fairer distribution of prosperity, rather than a society divided between the very rich and the very poor. We use the term 'sustainable development' precisely to mean economic growth that ends extreme poverty, increases social inclusion, and is environmentally healthy". The Paris Agreement was adopted in December, 2015 and entire world agreed upon a roadmap to lowering temperature. Then Barack Obama was the President of the US. Now, President Donald Trump, whose "America First" slogan catapulted him to the Presidency, has withdrawn the US from the Paris Agreement. Withdrawal from the Paris Agreement, like Brexit, may take four years i.e. the end of Trump's tenure of office unless he is re-elected. Thus, one is tempted to hope that the US, the largest polluter of carbon dioxide in the atmosphere, may eventually change course.
Jeffrey Sachs, Director of Earth Institute at the Columbia University and author of the seminal book The End of Poverty, spoke of the calamity facing humanity today. There are seven billion people on the planet, and each one is responsible for the release, on average, of a bit more than four tons of carbon dioxide into the atmosphere in a year. This CO2 is emitted when people burn coal, oil, and gas to produce electricity, drive cars, or heat their homes. All told, humans emit roughly 30 billion tons of CO2 per year into the atmosphere, enough to change the climate sharply within a few decades. By 2050, there will most likely be more than nine billion people. If these people are richer than people now (and therefore using more energy per person), total emissions worldwide could double or even triple.
David Griggs of Monash Institute (Australia) holds the view that the effects of human behaviour on the planet's ecosystems have become so significant in the last few centuries that many scientists believe that the planet has entered a new geological epoch, dubbed the Anthropocene.
The United Nations has now tasked the nations of the world to achieve Sustainable Development Goals (SDG). Seventeen high-priority goals for sustainable development include: End extreme poverty and hunger; Achieve development and prosperity for all without ruining the environment; Ensure learning for all children and youth; Achieve gender equality and reduce inequalities; Achieve health and well-being at all ages; Increase agricultural production in an environmentally sustainable manner, thereby achieving food security and rural prosperity; Make cities productive and environmentally sustainable; Curb human-induced climate change with sustainable energy; Protect ecosystems and ensure sound management of natural resources; Improve governance and align business behaviour with all of the goals. Jeffrey Sachs explains that sustainable development aims at three interconnected goals: economic development (including the end of poverty), social inclusion (including the end of gender and ethnic discrimination, and real economic opportunity for all), and environmental sustainability, especially to address dire threats such as human-induced climate change and species extinction.
Sachs challenges us to think about the meaning of a "good society"-not just in terms of economic progress but also in terms of social cohesion, trust, community, responsibility to other species, and the wellbeing of future generations. It is a tall order. Changing the humans from being "nasty and brutish" to a Gandhian philosophy of human equality that will address the wants and needs of the neighbours who are starving and dying of thirst will be revolutionary. MIT's Daron Acemoglu and Harvard Professor James Robinson maintain in their book Why Nations Fail that the lesson of history is to get the economics right and politics right to make it good. Which is why they do not believe that China has found the magic formula for combining political control and economic growth. "Our analysis," says Acemoglu, "is that China is experiencing growth under extractive institutions - under the authoritarian grip of the Communist Party, which has been able to monopolise power and mobilise resources at a scale that has allowed for a burst of economic growth starting from a very low base," but it is not sustainable because it doesn't foster the degree of "creative destruction" that is so vital for innovation and higher incomes. "Sustained economic growth requires innovation," the authors write, "and innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also destabilises established power relations in politics." "Unless China makes the transition to an economy based on creative destruction, its growth will not last," opines Acemoglu.
The Austrian economist Joseph Schumpeter who coined the paradoxical term "creative destruction" (Capitalism, Socialism and Democracy-1942) meant that creative destruction occurs when something new kills something older. A good example is personal computers. The industry, led by Microsoft and Intel, destroyed many mainframe computer companies, but in doing so, entrepreneurs created one of the most important inventions of this century. Schumpeter goes so far as to say that the "process of creative destruction is the essential fact about capitalism." Herein lies the paradox of progress. A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. Schumpeter's enduring term reminds one that in capitalism, pain and gain are inextricably linked.
One has to remind oneself of Joseph Stglitz's warning that "An economic and political system that does not deliver for most citizens is one that is not sustainable in the long run". Demographic dividend and cheap labour that Bangladesh feels would attract foreign investment would perhaps be in sunset industries. As for other industries, unless we can provide skilled manpower commensurate with the demands of the investors we will possibly be left with empty promises.