GTAP Resources: Resource Display
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"Sustainable Development and Globalization in a World with Unequal Starting Points" by Liddle, Brant Abstract We develop a simulation model, borrowing from economics, demography, and environmental and political science, to simultaneously consider environment, economic development, and population/politics by focusing specifically on the impact of important flows (i.e., effluents, capital, technology, production goods, natural resources, and people). The model can assess sustainable development on three levels: economic (by determining production, consumption, investment, direct foreign investment, foreign aid, technology transfer, and international trade), social (by calculating population growth/change, migration flows, and political stress levels), and environmental (by calculating natural resource use and the difference between environmental pollution and upgrading expenditures). We use the model to explore the challenges of development for countries with different initial conditions (i.e., natural resource endowment, physical and human capital, technology, and population) in a world with movement of goods, people, and capital, free substitution in production, flexible economic structures, and the ability to upgrade input factors via investment. More specifically, we model seven “representative” countries (two rich, three middle, and two poor) that differ in their initial endowments, and thus their development levels and prospects. In each country, there are three production sectors: resource intensive industry (producing a final good), resource nonintensive (“service”) industry (also producing a final good), and natural resource extraction industry (producing an intermediate good). Each country determines the split between consumption and investment for this total trade-modified output via a Keynesian consumption-investment function, modified by social provision for rates of population dependency. A national investor maximizes present discounted value of all investments performed in each period, based on the marginal productivity of different investment types. Relative rates of return form the basis of allocation among six investment categories (physical capital, human capital, natural resource capacity, development of new technology, environmental upgrading, and foreign direct investment). The level of per capita income and human capital affect population fertility and death rates, and international migration is induced by (among other things) differences in wages. We find that, rather than the total physical capacity of the earth being responsible for unsustainable paths, the initial disparities of circumstances among countries and the complex of internal and international human interrelationships can lead to a “social non sustainability”. The greatest challenge for rich countries (given their aging populations) is maintaining sufficient investment, and the greatest poverty trap for poor countries (given their subsistence consumption) is attaining high investment. The impact of globalization (i.e., the international flow of goods, people, and capital) on the various countries differs with respect to starting points, and this relationship can change over time. The modal behavior of the model can be either convergence or divergence among countries depending on the extent of these global flows and the degree to which individual countries can manage them. In general, capital flows (when accompanied by technology transfer) tend to benefit all, migration tends to benefit the source countries (particularly the aging, rich) and the migrants themselves, and the benefits of trade can be either positive or negative depending on country endowments. |
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Public Access  GTAP Resource 1439 (256.4 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
