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Sustainability and Optimality in Economic Development: Theoretical Insights and Policy Prospects

Y. Hossein Farzin ()

No 2007.89, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper takes sustainability to be a matter of intergenerational welfare equality and examines whether an optimal development path can also be sustainable. It argues that the general “zero-net-aggregate-investment” condition for an optimal development path to be sustainable in the sense of the maximin criterion of intergenerational justice is too demanding to be practical, especially in the context of developing countries. The maximin criterion of sustainability may be more appealing to the rich advanced industrial countries, but is too costly and ethically unreasonable for developing nations as it would act as an intergenerational “poverty equalizer”. The paper suggests that a compromise development policy that follows the optimal growth approach but adopts certain measures to mitigate the intergenerational and intragenerational welfare inequalities may better serve these countries. Some of the principal elements of such a policy are highlighted.

Keywords: Sustainability; Intergenerational Equity; Optimality; Discounting; Development Policy (search for similar items in EconPapers)
JEL-codes: Q01 Q56 O21 O13 D62 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-env
Date: 2007-09
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Working Paper: Sustainability and Optimality in Economic Development: Theoretical Insights and Policy Prospects (2007) Downloads
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