Sustainable Growth

What is it about?

Definition/Description Daly and Costanza argue, based on their analyses, that the concept of “sustainable growth” is a bad oxymoron which should be rejected (Costanza and Daly 1992; Daly 1990, 2010). Other researchers have defined the concept in various ways. Traditionally, sustainable growth reflects the view of very weak sustainability position. It has meant the realistically achievable growth that a company or national economy could maintain without running into problems (MBN 2018). Today the term has two positions: weak and strong sustainability. Based on the neoclassical weak sustainability position, sustainable growth can continue as long as utility is not declined, the reduction of natural resources are replenished by the increase of the natural or produced resources (Turner 1993; Neumayer 2003), and the negative impact on environment is compensated by innovative technologies (Turner 1993). When the concept of sustainable growth is used by environmentalists and advocates a variant of strong sustainability position (Pezzey and Toman 2005; Turner 1993), the concept is seen as a synonym of economic growth (MBN 2018). They stress that sustainable growth can continue over the long term if intolerable pollution is not created or all the nonrenewable resources are not used up. In ecological sustainability (the second variant of strong sustainability position, Pezzey and Toman 2005; Turner 1993), it emphasized environmental protection in a global ecological, socioeconomic, and political context (Sharpley 2000). In this connection, the concept of sustainable growth means growth that is repeatable, ethical, and responsible to, and for, current and future communities (Miller 2018).

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Photo by Precondo CA on Unsplash

Photo by Precondo CA on Unsplash

Why is it important?

Summary In recent decades, global concern has emerged about the nonrenewability of natural resources as a factor limiting production and the threat to long-term economic growth caused by environmental destabilization and pollution. So, financial markets have started to realize the need to take into account an environmentally friendly approach and aspects of sustainable growth in their investment decisions. The difficult problem to be solved is how sustainable growth can be achieved, especially as the perceptions of researchers concerning the concept differ. Some scientists, e.g., Daly and Costanza, have argued that the whole concept must be rejected as a bad oxymoron. Others have considered it usable, but defined it differently depending on the starting points and perspectives. Based on the neoclassical views, sustainable growth can continue as long as total capital stock is not declined, the reduction of natural resources is replenished by the increase of the natural or produced resources, and the negative impact on environment is compensated by innovative technologies. In strong sustainability position, environmentalists see the concept as a synonym of economic growth, and advocates of ecological sustainability in their part think that sustainable growth means growth that is repeatable, ethical, and responsible to, and for, current and future communities. The key issues in the contents and objectives defined by the European Commission for sustainable growth are environmental protection, improving the EU citizens’ knowledge and skills and maintaining economic competitiveness.