Genuine Savings Research Articles

Еcological Approach to Assessing the Sustainability of Economic Growth

The article considers various approaches to the assessment of national wealth taking into account the environmental factor, namely, the depletion of natural resources and damage to the environment. It describes the "Adjusted net savings" indicator developed by the world Bank and calculated annually for all countries of the world. A comparative analysis of this indicator was conducted for various countries, including Azerbaijan. The negative sign of this indicator before 2008 shows that economic growth was associated with the depletion of natural resources in our country. But the well-chosen strategy of the governments aimed at achieving independence of the economies of these countries from natural resources, led to a further change in the sign of genuine savings in these countries to a positive one, which indicates their sustainable development, accompanied by an increase in welfare.

Linking Sustainable Development Assessment in Ireland and the European Union with Economic Theory

Economists offer what is arguably the most internally consistent framework for sustainable development assessment, the so-called “capital approach”. To operationalise the capital approach, measures of the changes in comprehensive national wealth (Genuine Savings) are required. In this paper, we present estimates of Ireland’s Genuine Savings using the updated public spending code for direction and compare our results with existing estimates in the literature. For practical sustainability assessment, no single indicator is capable of providing an all-encompassing answer, but as we demonstrate, the current monitoring of sustainable development in Ireland and across the EU lacks coherence. We suggest potential paths forward for sustainability policy and assessment that preserve the link with economic theory. We show that regardless of the viewpoint taken on sustainability, the capital approach can provide guidance for a coherent assessment framework.

Sustainable Development of Single-Industry Towns in Siberia and the Russian Far East: What is the Price of Regional Economic Growth?

One of the most well-known and relatively easy to compute integral indicators of sustainable development is the indicator of genuine savings. In the present article the emphasis is made on the modifications of the method of genuine savings calculation for the level of municipal units on the example of single-industry towns (monotowns) of Siberia and the Russian Far East. This choice of the object of the study is conditioned by the hypothesis that it is municipalities that experience most of the environmental and social consequences of economic growth in regions. The enterprises’ reports gave rise to the database, which was then used to calculate the genuine savings values of Siberian and Far Eastern single-industry towns. The result is a new classification of single-industry towns, which includes four clusters allocated depending on the level of genuine savings, industry of specialization and population. The new approach to the classification of singleindustry towns can be used by regional and municipal authorities to form a differentiated policy for the sustainable development. The analysis of the average genuine savings of different towns by region has shown that even if the region as a whole is characterized by quite high values of genuine savings, the towns, in which there are real enterprises that yield most of the gross domestic product of the country, experience negative values of genuine savings and are often on the verge of environmental or social disaster

Accounting for Sustainable Development over the Long-Run: Lessons from Germany

AbstractWe construct long-run sustainability indicators based on changes in Comprehensive Wealth - which we refer to as Genuine Savings (GS) - for Germany over the period 1850-2000. We find that German sustainability indicators are positive for the most part, although they are negative during and after the two World Wars and also the Great Depression. We also test the relationship between these wealth changes and a number of measures of well-being over the long-run: changes in consumption as well as changes in average height and infant mortality rates. We find a positive relationship between GS and our well-being indicators over different time horizons, however, the relationship breaks down during WWII. We also test if the GS/Comprehensive Wealth framework is able to cope with massive disinvestment at the end of the Second World War due to war-related destructions and dismantlement. We find that negative rates of GS were by and large avoided due to the accumulation of technology and growth-friendly institutions. We demonstrate the importance of broader measures of capital, including measures of technological progress, and its role in the process of economic development; and the limits of conventional measures of investment to understand why future German consumption did not collapse.

Augmenting the World Bank's estimates: Ireland's genuine savings through boom and bust

The World Bank computes estimates of Genuine Savings (GS), a leading indicator of sustainable development, for most countries. A well-established literature has called for methodological enhancement. This paper presents augmented estimates of Irish GS throughout a period of unprecedented economic expansion and decline (1990–2016). A time-series constructed predominantly from national sources includes the most comprehensive coverage of pollutants in the literature surveyed. We apply a novel method to aid the property rights designation assessment required for transboundary pollutant accounting. In sharp contrast to the World Bank's estimates, our findings suggest that a modern developed economy can exhibit signs of unsustainability. Furthermore, extended environmental damages drive these results suggesting expanded country specific GS may diverge considerably from the World Bank's estimates. We find rapid economic development and rapid declines in environmental damages can occur concurrently and on the transition away from an unsustainable path.

Enhancement of Sustainable Development Statistics for the Russian Regions

Environmental and ecological statistics in Russia is still under formation. Despite the widespread recognition of the importance of providing economic growth within the environmental constraints, there continues to be significant lack of data that could be used to identify trends in the sustainable development, especially at the regional level. The authors argue that genuine savings, a complex indicator of sustainable development, could become such a statistic tool.The analysis shows that today Russia has gained extensive experience in assessing the sustainability of regional development using this indicator, but a comprehensive system for its assessment requires elaboration so that it could be established, as a regular practice in public administration.The article describes fundamental methodological issues of calculating the individual components of genuine savings through the current statistical accounting system in Russia. The paper considers conditions necessary to correctly estimate this indicator and ensure inter-regional and cross-country comparability of the results of such calculations.A version of the method for calculating genuine savings that is presented in this article requires an update of the system of statistical accounting in Russia. Practical application of this method along with the improvement of the system of statistical accounting shall allow for an adequate sustainability assessment of a particular region. This, in turn, shall provide a basis for establishing regional policies to compensate for resource depletion by investing in other types of capital.

Sustainability of an economy relying on two reproducible assets

The highest utility level that can be sustained in an economy is given by the maximin value. To be able to use this value for sustainability accounting, the corresponding maximin problem must be solved. This paper studies the sustainability of an economy composed of two reproducible assets, each producing one of two consumption goods which are substitutes in utility. We characterize the maximin path of the economy, and associated maximin shadow values. We discuss how these shadow values could be used as accounting prices for development paths that differ from the maximin trajectory. The corresponding genuine savings indicator informs on the improvement or decline of the sustainable level of utility and the prospects of future generations.

Do we need just one sustainable development indicator? Could Genuine Savings be that one?

In this brief document we would like to give our point of view about the importance to promote and consolidate an economic indicator of sustainability and suggest Genuine Savings, an indicator in which an increasing number of scholars and institutions are working on. Without hiding the complexity of sustainable development, we believe that consolidating one indicator could help to understand the performance of societies and align actions in order for countries to be in a sustainable path. Moreover, Genuine Savings could help understand sustainability in the long run and could work as an indicator of future well-being.

Female parliamentarism and genuine savings: A cross‐country test

AbstractThe aim of this study to contribute to the ongoing research on the effect of female political participation on socioeconomic outcomes. In this study, we explore the link between the proportion of women in parliament and sustainable development, measured by genuine savings indicator. Our study finds that a 10 percentage point increase in the share of women in parliament is associated with an almost 1.25 percentage point increase in the genuine savings rate. In addition, using instrumental variable regression to overcome the problem of endogeneity, we find that women in parliament have causal effect on genuine savings.

Tackling the Stiglitz Report: Measuring Social Progress and Economic Performance under Various Climate Policy Scenarios

This paper attempts to connect the measurement of social progress from the Stiglitz report and climate change mitigation (CCM) by the Intergovernmental Panel on Climate Change (IPCC) assessment reports. Each report has been addressed insufficiently on the issue, although both reports have common interests in development patterns and pathways for the economy, humanity, and society. This study used our original integrated assessment model and applied for measuring various indicators for sustainable development, such as genuine savings (known as GS) and human appropriation of net photosynthetic primary production (HANPP). We expanded an analysis of sustainable development indicators of quality of life (QoL) and of the human development index (HDI) and introduced a modified quality of life indicator. These indicators expand on the “classical” GDP loss, which has been well analyzed in the majority of CCM literature. Our model’s main framework is based on the Regional Integrated model of Climate and the Economy (RICE) extended from Ramsey-Cass-Koopmans with a simplified climate model and added three original resource balance models with environmental consequences with a life cycle impact assessment (LCIA) model. We prepared various climate policy scenarios ranging from business as usual to economically efficient, CO2 double stabilization, and targeting two degrees Celsius (DC). We believe this work has three contributions. First, in contrast with the World model by the Limits to Growth, our model has an economic foundation where genuine savings is introduced. Second, while the Stiglitz report only extrapolates the current genuine savings trend, we are able to calculate the future trajectories of sustainable development indicators, based on a sophisticated integrated assessment model. Third, when compared to the RICE analysis, which sought the optimal climate policy in the sense of cost-benefit analysis, our model introduces indicators of sustainable development in assessing climate policies.

Using Genuine Savings for Climate Policy Evaluation with an Integrated Assessment Model

There has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies, both in terms of impact measures (beyond GDP) and in terms of modelling complexity (beyond DICE/RICE models). Climate policies aimed at reducing CO2 emissions can have impacts in multiple sectors of the economy, and can change consumption levels over time. We show how the sustainability indicator Genuine Savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well-being. Differences in Genuine Savings rates between CO2 emission reduction scenarios are discussed. We show how a broader, Genuine Savings-based assessment of climate change can result in a re-evaluation of the consequences and costs of inaction in terms of various climate change-related policies; and how multiple environmental and well-being outcomes can be analysed within a unified modelling framework.

Genuine savings as a test of New Zealand weak sustainability

The key aims of this paper are to: (1) to extend the World Bank’s (WB) measure of genuine savings (GS) for New Zealand by using a longer time series of data, 1950–2015; (2) improve GS estimates for New Zealand by adding additional dimensions to GS, i.e. forestry; (3) investigate the relationship between several GS measures and the discounted values of GDP per capita and consumption per capita, used to proxy well-being; (4) test a series of hypotheses which relate GS to the change in future well-being using the framework proposed by Ferreira et al. (World Bank Econ Rev 22(2):233–248, 2008. https://doi.org/10.1093/wber/lhn008) and (5) investigate the effects of a growing population on the availability of future capital stocks by considering the consequences of “wealth-dilution” as defined by Ferreira et al. (2008). The paper makes a contribution to the literature on GS, particularly in the context of New Zealand, by considering patterns of GS and well-being over a longer time span of data than have been previously used and add to a relatively small, but growing literature on tests of GS using long or relatively long time-series data [see, e.g. Greasley et al. (J Environ Econ Manag 67(2):171–188, 2014. https://doi.org/10.1016/j.jeem.2013.12.001, Environ Dev Econ 22:674–98, 2017) and Hanley et al. (Enviro Resour Econ 63(2):313–338, (2016). https://doi.org/10.1007/s10640-015-9928-7]. We conclude, based on the data used here, that New Zealand’s GS has been positive (i.e. weakly sustainable), since the start of our data series, even without allowing for the contribution of technological advancement. However, we also conclude that the effects of a growing population and a savings gap have led to a “wealth-dilution” effect needed to maintain real wealth per capita, as we estimate that there was an average savings gap (GS as a percentage of gross national savings) over the period 1955–2015 of 0.5% per annum.

INPUT–OUTPUT-BASED GENUINE VALUE ADDED AND GENUINE PRODUCTIVITY IN CHINA’S INDUSTRIAL SECTORS (1995–2010)

This paper recalculates value added, capital formation, capital stock and related multifactor productivity in China’s industrial sectors by further developing the genuine savings method of the World Bank. The sector-level natural capital loss was calculated using China’s official input–output table and their extensions for tracing final consumers. The capital output elasticity in the productivity estimation was adjusted based on these tables. The results show that although the loss of natural capital in China’s industrial sectors in terms of value added has slowed, the impacts on their productivity during the past decades is still quite clear.

Verifying the Results of Genuine Savings Assessment in Regions

Verifying the Results of Genuine Savings Assessment in Regions

A Macromarketing View of Sustainable Development in Vietnam.

The authors apply methods and perspectives from several disciplines to explore the effects of Vietnam's economic development on various ecosystems, to offer a macromarketing view of sustainable development in Vietnam. An adapted version of the Sustainable Society Index was used to assess Vietnam's sustainability, how Vietnam's measures compare to other countries, with implications for future sustainable-development. Among several findings, Vietnam earns favorable sustainability ratings in absolute terms for water resources, healthy living, energy use, greenhouse gases, genuine savings, and employment. Ominously, Vietnam and some of its nearby neighbors post poor scores for energy savings and education. Going forward, energy savings, a well-educated population, and a coordinated marketing system will be required to ensure favorable sustainability measures. Drawing on macromarketing explorations of complex and interdependent systems, key factors are considered to redress unsustainable resource exploitation and degradation. Particular attention is given to the complexities and dilemmas inherent to waterways, such as the Mekong River Basin and Delta. The authors argue for multi-win goals, systemic understanding, stakeholder inclusion, and resolutions via cooperation and constructive engagement-including projects, products, services, and institutional leadership for best practices designed and administered to enhance sustainability and citizen/societal well-being.

Weak support for weak sustainability: Genuine savings and long-term wellbeing in Sweden, 1850–2000

We study genuine savings as an indicator of long-term welfare for Sweden for the period 1850 to 2000. Sweden has developed long series of comprehensive ‘green’ national accounts for this entire period and is, therefore, interesting as a testing ground for the hypotheses linking green accounting and sustainability. We find support for the weakest of the hypotheses in the theoretical literature on weak sustainability and genuine savings, namely that genuine savings are correlated with future economic well-being. However, the stronger hypotheses in this literature are not supported: there is no one-to-one relationship between genuine savings and prosperity, there is no indication that the relationship becomes stronger for longer time horizons, or with more comprehensive savings measures. The findings suggest that genuine savings, at least as currently measured in national accounts and satellite accounts, may not be a good forward-looking indicator of future prosperity.

Is Sub-Saharan Africa on a Genuinely Sustainable Development Path? Evidence Using Panel Data

Although resource rich, sub-Saharan Africa (SSA) has in general been characterised by poor economic performance and widespread poverty. The region is, however, now poised to enjoy high levels of growth and is increasingly attracting foreign direct investment (FDI). However, it is important to determine the sustainability of this development path. Given the lack of research on sustainability in the context of SSA, this study attempts to bridge this gap. A capital approach is adopted using the genuine savings (GS) rate computed by the World Bank, a measure of weak sustainability. GS endeavour to assess the sustainability path of countries, based on how ‘well’ they manage their total capital stock through the difference between consumption in natural capital and counter-balancing investments in other forms of man-made capital, namely physical and human. Since GS is based on the assumption of perfect resource substitutability, it can be taken as a limit value of sustainability whereby a country experiencing a positive value of GS is deemed to be weakly sustainable. This article thus aims to investigate whether SSA is on a sustainable development path and the factors affecting GS for this sample of countries. This study looks at a panel data set of 30 SSA countries over a period of 35 years. The fixed, random as well as dynamic effects are taken into account using System-GMM. In particular, improving institutional quality in the countries considered in the sample could directly and significantly improve their weak sustainability. JEL Classification: O11, Q01, B22, C23

The impact of institutional factors on the performance of genuine savings

ABSTRACTThis study investigates institutional factors affecting the performance of genuine savings (GS), which are often used in assessing sustainable development, and adopts a model of autoregressive conditional heteroscedasticity in mean. We pay particular attention to the contribution of institutions to decrease the volatility level of the GS path. The estimation results show that there are two ways in which institutions affect GS performance. First, high quality of institutions enhances the GS level directly. Second, high quality of institutions enhances the GS level via stabilizing the volatility of the GS path. Considering both effects in their totality, institutional improvement plays an important role in realizing a sustainable development path.

Environmental Kuznets Curve with Adjusted Net Savings as a Trade‐Off Between Environment and Development

The Environmental Kuznets Curve (EKC) hypothesises that emissions first increase at low stages of development then decrease once a certain threshold has been reached. The EKC concept is usually used with per capita Gross Domestic Product as the explanatory variable. As others, we find mixed evidence, at best, of such a pattern for CO2 emissions with respect to per capita GDP. We also show that the share of manufacture in GDP and governance/institutions play a significant role in the CO2 emissions–income relationship. As GDP presents shortcomings in representing income, development in a broad perspective or human well‐being, it is then replaced by the World Bank's Adjusted Net Savings (ANS, also known as Genuine Savings). Using the ANS as an explanatory variable, we show that the EKC is generally empirically supported for CO2 emissions. We also show that human capital and natural capital are the main drivers of the downward sloping part of the EKC.

Genuine Savings and Sustainable Development

Genuine Savings and Sustainable Development