Net National Product Research Articles

DEVELOPING AN UNIFORM MEASURE OF CSR ACROSS ALL ORGANIZATIONS IN A NATIONAL CONTEXT: A CASE STUDY

ABSTRACT The present study aims to develop an uniform measure of corporate social responsibility (CSR) that can be applied uniformly across all organizations within a national context. CSR has been measured based on the impact that an organization makes in four areas of concern relevant to a country’s national goal of human development. In pursuit of such goal, the relevant areas of concern at the national level are employment generation, net national product at constant prices, conservation of scarce natural and national resources, and environment protection. Aligned with these national areas of concern, CSR areas have been identified to reflect corporate social performance across the board for all organizations using the same set of priorities as allotted at the national level. This analysis is illustrated using a case for an integrated iron and steel plant in India. Keywords uniformity, CSR, alignment, national goal, human development

Trends of Economic Growth and Population Change in Rajasthan: A District Level Panel Data Investigation

The present paper highlights the trends of economic growth in the economy of Rajasthan and discusses its relative share in the national economy of India. It reviews the trends of year-wise growth rate of per capita net national product in India, per capita net state domestic product for Rajasthan state and per capita net district domestic product for districts of Rajasthan for the period of 2004-05 to 2012-13. It is indicative of the fact that the economy of Rajasthan has registered many ups and downs in the growth trajectory, but the current decade is a period of fair stability and positive growth. Results of Random Effects Model suggest that one percentage point increase in population will be able to increase per capita NDDP by 1.125 percent for twenty nine districts of Rajasthan. District dummies show that higher per capita district domestic product districts like Rajsamand and Jaisalmer have a significant positive association while Jaipur, Alwar, Jodhpur, Barmer, Bharatpur and Sikar have a significant negative association with population. In low fifteen per capita income districts only Nagaur district was observed as negatively and significantly associated with population, while Baran, Bundi and Sirohi have been observed as significantly and positively associated with the population.

Intergenerational equity with individual impatience in a model of optimal and sustainable growth

Among the ethical objections to intergenerational impartiality is the violation of consumer sovereignty given that individuals are impatient. We accommodate that concern by distinguishing intra- and inter-generational discounting in an OLG model suitable for analyzing sustainability issues. Under the assumption of constant elasticity of marginal felicity, the optimum trajectory of aggregate consumption is guided, via the Ramsey condition, by the intergenerational discount rate but not the personal discount rate. In an economy with produced capital and a renewable resource, intergenerational neutrality results in a sustained growth path, without the necessity of a sustainability constraint, even in the presence of intragenerational impatience. We also find that green net national product remains constant along the optimal approach path to golden rule consumption.

A methodological improvement for assessing petrochemical projects through life cycle assessment and eco-costs

As the debate on how to effectively link life cycle analysis (LCA) and negative externalities of the products or processes is still unsolved, an improved methodology that involves the private and social (environment) profitability to petrochemical projects in Mexico is presented. We incorporate both environmental impacts, identified through the LCA, using the eco-costs model, within a project appraisal analysis. The eco-costs are a single LCA-based indicator of environmental burden, based on the concept of marginal prevention costs, i.e. costs required to bring back the environmental degradation to a sustainable level. The methodology was carried out in four steps. First, the potential environmental impacts (in physical units) were assessed through life-cycle assessment. Second, the marginal prevention costs of pollution (eco-costs) of impact categories were estimated. Third, since these monetary values are given for a European income level, eco-costs were adjusted to Mexican income levels (i.e., benefit transfer). Fourth, these adjusted values were used for assessing the financial viability of two petrochemical projects at two stages of installed capacity. The costs of marginal prevention (eco-costs) changed from 1.62 USD/kg of acrylonitrile in the old design to 0.926 USD/kg in the redesign. In case of vinyl chloride monomer (VCM), the eco-costs were from 16.08 USD/kg of VCM for the stage design to 1.62 USD/kg for the operational stage (ex post). The sensitivity analysis identified that only 15 % of these eco-costs, in the case of acrylonitrile, and 1.5 % for the VCM, could be incorporated to the costs of the project without affecting the profit on the investment. The developed methodology was helpful to express potential environmental impacts in monetary units as financial indicators in a project appraisal. Thus, the methodology can be used to internalize the eco-costs into product prices, shifting the financial burden to firms and consumers, in order to offset the high costs of the green net national product.

Study on Adoption of Eco-Friendly Management Practices by Vegetable Growers in Indore Block of Indore District (M.P.)

The development of India is depending on agriculture and it is engaging about 70 per cent of its population directly or indirectly. It contributes nearly 37 per cent of the net national product and account for a sizable share of total value of the country's export. The present rate of agriculture production could be doubled if the available technology is appropriately transferred to the farmers for its adoption. It is however reported that not more than 30 to 40 per cent of the technologies have gone to the farming communities so far, even though there is strong network of extension mechanism operating for accelerating agriculture production. The study was conducted in Indore Block of Indore District with 120 vegetable growers of 10 villages which were selected randomly and considered for study on the basis of larger area coverage. Maximum vegetable growers had low extent of adoption of the eco-friendly management practices followed by medium and high extent of adoption of the eco-friendly management practices respectively. Keywords- Eco-friendly farming, Ecological balance, Agrochemical, Sustainable farming

Beyond GDP: The Quest for a Measure of Social Welfare. Part I

The first part of the paper is devoted to the monetary indicators of social welfare. It is shown which methods of quantitative estimating the aggregate wealth and well-being are available in the modern economic theory apart from the traditional GDP measure. The limitations of the methods are also discussed. The author shows which measures of welfare are adequate in the dynamic context: he considers the problems of intertemporal welfare analysis using the Net National Product (NNP) for the sustainability policy and in the context of concern for well-being of the future generations.

Green National Income and Green National Product

We observe that the value of the gross natural increment in natural capital is the appropriate entry in the income side of the national accounts, when “greened.” This entry is zero for the special case of nonrenewable resources. Greening is motivated by the desire to account for the value of changes in the size of the stock of natural capital in net national product. We also report on the problem of the use of distorted prices in national accounting.

The Welfare Economic Theory of Green National Accounts

This paper takes a critical look at the literature on green national accounts. The problem studied is to find a linear index of economic variables that responds to perturbations in the same direction as social well-being. The thesis of a large literature, that net national product (which is a flow) is that index in closed economies, is shown in some interpretations to be simply false and in others to suffer from deep estimation problems. It is argued that capital depreciation using shadow prices should certainly be included in national accounts, but that the right welfare index is a comprehensive measure of wealth, defined as the shadow value of an economy's stock of all capital assets. It is shown that comprehensive wealth is usable as a criterion for policy evaluation as well as for determining sustainable economic development.

Evaluating Projects in a Dynamic Economy: Some New Envelope Results

AbstractThis paper deals with the modern theory of social cost-benefit analysis in a dynamic economy. The theory emphasizes the role of a comprehensive, forward looking, dynamic welfare index within the period of the project rather than that of a project’s long-term consequences. However, what constitutes such a welfare index remains controversial in the recent literature. In this paper, we attempt to shed light on the issue by deriving three equivalent cost-benefit rules for evaluating a small project. In particular, we show that the direct change in a net national product (NNP) qualifies as a convenient welfare index without involving any other induced side effects. The project evaluation criterion thus becomes the present discounted value of the direct changes in NNP over the project period. We also illustrate the application of this theory in a few stylized examples.

SOCIAL ACCOUNTING AND THE PUBLIC SECTOR

This article contributes to the theory of social accounting. As such, it tries to extend earlier literature on the welfare equivalence of the comprehensive net national product in two main directions, both of which refer to the public sector. One is by considering welfare measurement problems associated with public good provision and redistributive policy, respectively, when the public revenues are raised by distortionary taxes. The other is by addressing the consequences of a “federation-like” decision structure, where independent tax and expenditure decisions are made both by the central government and by lower level governments.

Response to "Income, sustainability and the 'microfoundations' of the GPI"

The Genuine Progress Indicator (GPI) is an experiential welfare indicator based on an extended version of Fisher's distinction between income and capital. The primary aim of the GPI is to measure the difference between the net psychic income generated by economic activity (uncancelled benefit) and the natural capital services lost as a consequence of fuelling the economic process (uncancelled cost). Provided this is achieved with some degree of accuracy, the GPI is able to: (a) represent the value added to nature by the economic process; (b) determine whether growth of the economy, if it is presently occurring, is 'economic' or 'uneconomic'; and (c) signal when an economy has exceeded its optimal macroeconomic scale. Nevertheless, there is little doubt that the GPI fails to strictly satisfy the central criterion embodied in the Hicksian concept of income. As such, the GPI is incapable of signalling when an economy has surpassed its maximum sustainable scale. But neither can so-called measures of Hicksian income (e.g., Net National Product (NNP)) since they, too, violate Hicks' central criterion. For this reason, indicators of sustainability are best left to measures of wealth/capital or, better still, comparisons between a nation's ecological footprint and biocapacity.

A note on national income in a dynamic economy

We review the properties of the static measure of changes in economic welfare, national income, in a dynamic economy. It is possible to establish attractive welfare properties by rather simple arguments, and this can be estimated from current data. Its welfare properties are preferable to those of net national product and comparable to those of the state valuation function.

Stock markets and business cycle comovement in Germany before World War I: Evidence from spectral analysis

Historical national account data are often plagued by quality problems, and rivaling series imply different business cycle chronologies. This problem is particularly grave for Germany before World War I [Burhop, C., Wolff, G.B., 2005. A compromise estimate of net national product and the business cycle in Germany 1851–1913. Journal of Economic History 65(3), 615–657]. We exploit the comovement between asset prices and various GNP estimates under the efficient market hypothesis to obtain an improved business cycle dating, and to decide between the various alternative national accounts series. We also examine the comovement between financial markets and various disaggregate indicators of real investment. Employing both time and frequency domain techniques, we find impressive comovement between the stock market, an estimate of the aggregate wage bill, and disaggregate evidence on real investment. Our findings confirm traditional business cycle chronologies for Germany and lead us to discard later, revisionist attempts to date the business cycle.

Wealth and sustainable development: the role of David Pearce

Green net national product was thought to be one way of measuring sustainable income. However, David Pearce understood that a better measure of sustainable development was to look at what a generation is leaving in form of capital assets to later generations. In this article, his arguments and insights are highlighted against recent theoretical advances.

THE MOBILIZATION OF HUMAN RESOURCES AS AN EFFECT OF THE DEPLETION OF ENVIRONMENTAL AND SOCIAL ASSETS

ABSTRACTIn this paper, the growth process is not fed by the accumulation of productive assets (physical and/or human capital, knowledge etc.), but by the depletion of environmental or social resources, which induces individuals to increase their labor supply in order to consume more of the market goods that substitute for the depleted resources. Hence, production is expanded, thus eroding the resources’ ability to regenerate, which decreases with aggregate production. Within this context, the ‘green’ net national product is derived and it is shown how a regulatory authority should manage the resources for achieving Pareto‐optimality.

A Note on National Income in a Dynamic Economy

We review the properties of the conventional static measure of changes in economic welfare, national income, in a dynamic economy. We show that it is possible to establish attractive welfare properties by rather simple arguments and that this variable can be estimated from current data. Its welfare properties are identical to those of the static measure: a small change is a potential Pareto improvement if and only if it leads to an increase in this variable. This gives national income welfare properties that are much preferable to those of net national product.

A Compromise Estimate of German Net National Product, 1851–1913, and its Implications for Growth and Business Cycles

We develop a compromise estimate of the German Net National Product for the years 1851–1913 based on four estimates from Hoffmann (1965) and Hoffmann and Müller (1959) by recalculating industrial production, investment, home and foreign capital income. Because differences remain during the early decades, we compute a weighted average compromise series. Economic activity is shown to be higher than the older estimates suggest. The average growth rate is lower. The average business cycle lasted five years, with high volatility in the early decades. The typical Gründerzeit pattern of boom then prolonged recession after 1873 can not be confirmed.

Comparing augmented sustainability measures for Scotland: Is there a mismatch?

We estimate and compare two empirical measures of the weak sustainability of an economy for the first time: the change in augmented Green Net National Product (GNNP), and the interest on augmented Genuine Savings (GS). Yearly calculations are given for each measure for Scotland during 1992–1999. Augmentation means including, using projections to 2020, changed production possibilities enabled by exogenous technical progress or changing oil prices. The change in augmented GNNP and the interest on augmented GS are both always positive, showing no sustainability problem for Scotland then, according to the assumptions underlying our weak sustainability calculations. However, the former greatly exceeds the latter, even when macroeconomic fluctuations are taken into account. This is a mismatch which poses an unresolved problem with the theory. Resolving it may require respecifying the utility functions used in mainstream growth theory.

Did banks cause the German industrialization?

In this paper, we discuss the causal relationship between growth of bank assets and economic performance (economic growth, capital accumulation, productivity). We analyze new data for German banking (Burhop, C., 2002. Die Entwicklung der deutschen Aktienkreditbanken von 1848 bis 1913: Quantifizierungsversuche. Bankhistorisches Archiv 28, 103–128.) and improved national accounting data (Burhop, C., Wolff, G.B., 2005. A compromise estimate of Germany’s Net National Product 1851–1913 and its relevance for economic growth and cycles. forthcoming, Journal of Economic History.) with several recent VAR/VEC based causality tests. Only weak evidence for a causal influence of banks on economic performance on a nation-wide level is detected. On the other hand, the results support the bank-led growth hypothesis for the modern sector of the German economy. In particular, joint-stock credit banks positively influenced capital formation during the early decades of Germany’s industrialization.

Investing exhaustible resource rents and the path of consumption

Abstract. We set out dollar‐valued net national product for an economy with a wasting essential stock (oil deposit). We take up ‘maintaining capital intact’ and locally unchanging consumption. The percentage change in ‘net investment’ or ‘genuine savings,’ relative to the market rate of interest, denotes whether current consumption is rising, constant, or declining. JEL classification: O13, Q28, F0