The concepts of sustained economic growth and sustainable economic growth are often discussed in economic and environmental circles, but they are not always seen as compatible – and I do not think that they should be.
While sustained economic growth focuses on a consistent increase in a country’s economic output over time, sustainable economic growth emphasizes growth that can be maintained over the long term without causing significant negative impacts on the environment, society, or future generations. The question of whether these two types of growth can coexist is a bit difficult to tackle.
Sustained economic growth may have a tendency to feed into a thirst for perpetually increasing returns which may not only be improbable, but impossible. Here’s a bit more on the two concepts and how they may integrate, if at all.
Sustained economic growth v sustainable economic growth
Sustained economic growth refers to a steady increase in a country’s GDP over a period of time. This type of growth is characterized by a continuous upward trajectory in economic performance, driven by factors such as increased productivity, technological advancements, and capital investment. The primary goal is to maintain economic stability and avoid significant fluctuations that could lead to recessions or economic downturns.
Sustainable economic growth, on the other hand, focuses on achieving economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This approach integrates environmental protection, social equity, and economic viability. Sustainable growth aims to balance economic development with the preservation of natural resources and the well-being of society.
Compatibility and challenges
The compatibility of sustained economic growth with sustainable economic growth depends on several factors, including environmental impact, resource management, social equity, and economic policies.
- Environmental impact: Sustained economic growth often leads to increased resource consumption and environmental degradation. To be compatible with sustainable growth, economic activities must minimize environmental harm and use resources efficiently. This requires adopting green technologies and practices that reduce carbon emissions and waste. For example, Denmark has successfully decoupled economic growth from carbon emissions by investing in renewable energy sources such as wind power. This has allowed the country to achieve sustained economic growth while reducing its environmental footprint.
- Resource management: Sustainable growth necessitates the responsible management of natural resources to ensure they are available for future generations. This can be challenging in a model focused solely on sustained growth, which may prioritize short-term economic gains over long-term resource conservation. The concept of the circular economy, which emphasizes recycling and reusing materials, is an example of how resource management can be integrated into economic growth strategies. The European Union is adopting circular economy policies to promote sustainable growth by reducing waste and encouraging the efficient use of resources.
- Social equity: Sustainable economic growth aims to reduce inequalities and ensure that the benefits of growth are shared equitably. Sustained growth, however, may not always address social disparities, potentially leading to increased inequality. Policies that promote inclusive growth, such as investing in education and healthcare, can help bridge this gap. For instance, Costa Rica has achieved high levels of social development and economic growth by prioritizing social investments and environmental sustainability.
- Economic policies: Aligning sustained and sustainable growth requires policies that promote both economic expansion and sustainability. This includes investing in renewable energy, enforcing environmental regulations, and supporting social programs that address inequality. The United Nations’ SDGs highlight the importance of integrating sustained and sustainable growth. SDG 8, for instance, aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
Examples and perspectives
The compatibility of sustained and sustainable growth is evident in countries that have successfully integrated environmental and social considerations into their economic policies. For example, Germany has implemented the Energiewende (energy transition) policy, which aims to shift from fossil fuels to renewable energy sources. While it may be controversial in some quarters, this policy has supported sustained economic growth while reducing greenhouse gas emissions and promoting energy security.
However, it can be argued that continuous economic growth is inherently unsustainable due to the finite nature of Earth’s resources. Instead, some experts advocate for a shift towards a steady-state economy, where economic activities are balanced with ecological limits. This perspective emphasizes the need to rethink traditional growth models and prioritize sustainability over perpetual expansion.
In summary
While sustained economic growth and sustainable economic growth can be compatible, achieving this balance requires a shift in how we approach economic development. It involves integrating environmental and social considerations into economic policies and practices to ensure long-term viability and equity. By adopting sustainable practices and technologies, it is possible to pursue economic growth that benefits both current and future generations.
