Sustainability in Asian Countries: Perspectives from Economics

Abstract

Studies on sustainable development rely on diverse and seemingly conflicting concepts that yield contrasting results. The root of these conflicting concepts is the lack of agreement on the path toward achieving sustainable development (SD), namely, weak (or economic) versus strong (or ecological) sustainability. This article revisits the Solow-Hartwick model (Solow 1974, 1986; Hartwick 1977, 1978a, 1978b), which suggests that an economy can achieve intergenerational equity by mandating the Hartwick rule of investing the amount of rents from natural capital into renewable capital. It constructs a modified Solow-Hartwick model in which the assumptions of constant population and no technological progress are relaxed and from which it derives a more general form of the Hartwick rule. The modified Solow-Hartwick investment rule presents how weak sustainability can be attained and explains how the residual Hotelling rents (or proceeds from natural resources) could be utilized in order to achieve strong sustainability. In this article, we apply the modified Solow-Hartwick investment rule to a selection of developing and developed Asian economies to assess their sustainability. We then compare our results with two existing measures of sustainability, the genuine savings (GS) model and the Environmental Sustainability Index (ESI), both of which frequently present contradicting evaluations on the status of sustainability.