An axiomatic approach to sustainable development

The paper proposes two axioms that capture the idea of sustainable development and derives the welfare criterion that they imply. The axioms require that neither the present nor the future should play a dictatorial role. Theorem 1 shows there exist sustainable preferences, which satisfy these axioms. They exhibit sensitivity to the present and to the long-run future, and specify trade-offs between them. It examines other welfare criteria which are generally utilized: discounted utility, lim inf. long run averages, overtaking and catching-up criteria, Ramsey's criterion, Rawlsian rules, and the criterion of satisfaction of basic needs, and finds that none satisfies the axioms for sustainability. Theorem 2 gives a characterization of all continuous independent sustainable preferences. Theorem 3 shows that in general sustainable growth paths cannot be approximated by paths which approximate discounted optima. Proposition 1 shows that paths which maximize the present value under a standard price system may fail to reach optimal sustainable welfare levels, and Example 4 that the two criteria can give rise to different value systems.sustainable development; economic development; welfare

Social choice and game theory: recent results with a topological approach

This chapter presents a summary of recent results obtained in game and social choice theories, and highlights the application and the development of tools in algebraic topology. The purpose is expository: no attempt is made to provide complete proofs, for which references are given, nor to review the previous work in this area, which covers a significant subset of the economic literature. The aim is to provide an oriented guide to recent results, through economic examples with geometric interpretations, and to indicate possible fruitful avenues of research.social choice; game theory; algebraic topology; topological; pareto condition; preferences; Nash equilibrium; transversality

Development at the turn of our century

Today's rapid and profound international evolution requires an update of the development agenda. As East-West relations alter radically and forge history, new trends in global capital markets; telecommunications and new technologies erode inexorably the old structures and alter permanently the economic landscape. As the century turns, traditional issues of transfer must be re-examined. New Items emerge on the development agenda. This paper will address the first two of these development issues: capital markets and technologies; and it will examine them in connection with other more traditional issues: 1) voluntary transfers of resources; 2) the debt crisis; 3) the securing of markets for developing countries' exports.growth; development; technology; resources; debt; developing countries

Trade and development in the 1980s

In international circles, the concern of the day is the state of the world economy. There is a general appreciation of the severity of the problem, but no widespread agreement about either diagnosis or solutions. We shall focus here on a particular set of topics that have emerged as major issues during the last decade, and that also seem central to an understanding of the present economic situation. A characteristic of these topics is that they link international and domestic policy areas in so integral a way that neither can be analyzed in isolation from the other. They are: First, the recurrence of recession and unemployment in industrial countries, and the emergence of protectionism. Second, the changing international environment facing the developing countries and, in particular, the issues of export-led strategies and North-South trade in armaments. Third, the pricing of exhaustible resources, including oil, as a major issue in North-South trade, and in the international financial system. Fourth, the role of declining transfers of wealth from industrial to developing countries, and the perceived limitations of the existing international financial institutions.world economy; domestic policy; recession; unemployment; protectionism; armaments; north-south trade; international trade; exhaustible resources; finite resources; natural resources; wealth transfer; industrialization; development; financial institutions; IMF; OECD; GNP; UN; energy; environment; trade

Financial instruments for human development

Economics often provides the wrong incentives to those who control the assets, such as people in developing countries where most forests are located and who could potentially benefit most from conservation . There is increasing unease about this situation, and an emerging view is that standard economic concepts and prescriptions fail to properly account for the value of environmental assets . Economic values seem to be out of step with social values ; it is clear that the economic science of the future should bridge this gap. This paper develops practical ways and new economic thinking to redress this discrepancy: it creates and develops structures and institutions through which the value embodied in environmental assets can be translated into economic return which encourages the conservation of the asset, and induce more equitable and effective use of resources . I will introduce a range of different financial instruments, some of which are connected to global environmental assets such as the planet's atmosphere, and others to local or regional assets, such as watersheds . The financial instruments proposed here all share an unusual feature : they provide economic incentives towards environmental conservation. They do so by altering the economic valuation of these assets in a way that is more aligned with their real values to human societies . By doing so, these mechanisms produce incentives towards more efficient use of resources globally, whether for local resources such as water or for global resources such as a stable atmosphere . The ultimate role of these instruments is to offer a way to fund sustainable human development at a global scale, systematically and reliably. The main message of this article is that we must rethink the foundations of international development to achieve equitable and sustainable economic progress . The Bretton Woods Institutions (World Bank, IMF, GATT) were based on a post World War II model . They encouraged one form of development : resource based industrialization . These organizations are built upon a model funded by voluntary national donations based on taxes, a model that no longer works well . At the same time the globalization of the world economy brings new demands on the international system, requiring more infrastructure for trading and communication, and the need to develop new standards of human development and environmental protection . The current criticism of the Bretton Woods institutions, and of the United Nations within the US and other industrial nations, comes at a time when international organizations may be more needed than ever .developing countries; social values; economic values; sustainable development; environmental assets; economic valuation; international organizations; environmental protection; environmental conservation

The abatement of carbon emissions in industrial and developing countries

"The global environment is a matter of great importance to all nations.... Yet differences of opinions prevail about the main problems, and about the institutions to manage cooperation....The problem of finding carbon abatement policies is complicated by the scientific uncertainty about the impact of carbon emissions on the climate....In order to implement global policies successfully it seems crucial to develop a clear evaluation of the facts, of the different positions, and of the economic issues at stake...The conceptual formulation of markets and the economic data provided by the OECD economic model GREEN could prove very valuable, and will be used in this paper.... A good starting point is provided by the paper "Implementing Global Environmental Policy" by J. Coppel of the OECD Resource Allocation Division.... This paper was commissioned to discuss Coppel's, and to address the same issues while formulating a cooperative approach to carbon emission abatement policy, which takes into consideration the position of developing as well as industrial countries.... I will discuss Coppel's paper, and evaluate his proposal for a carbon abatement tax using basic economics and the data offered by GREEN and other sources such as the IEA. I will propose a complementary set of economic policies, including a modified carbon tax, and other associated policies for containing environmental damage in the context of international trade, and of financial policies y the World Bank and the IMF."global environment; carbon emissions; climate change; global policy; environmental policy; international trade; financial policy; tax; global carbon tax; emission abatement; abatement costs; subsidies; population growth; Pareto efficiency

North-South trade, property rights and the dynamics of environmental resources

The theory of trade based on differential property rights presented here initiated in Chichilnisky (1991), based on the North-South model introduced in Chichilnisky (1981, 1986). The model and the results in this paper differ however from the previous work in that the dynamics of the renewable resource is crucial to our arguments, while all the other pieces consider instead static economies. The distinctive feature of this paper is that we consider the dynamics of the renewable resource which is used as an input to production, and how this varies with different property rights regimes.gains from trade; environmental resources; property rights; international trade

Manipulations and repeated games in future markets

This chapter analyzes the possibility of manipulation in futures markets, concentrating on the effects that manipulation may have on their informational efficiency . We use the concept of manipulation as it arises in the study of noncooperative games with imperfect information . The problem can be summarized as follows : disclosure that is, (less anonymity) may prevent manipulation and therefore improve the informational efficiency of the market . On the other hand, disclosure (less anonymity) may restrict entry, and therefore produce an efficiency loss. There is, in this sense, a tradeoff between informational efficiency and free entry.futures; efficiency; futures markets; games; game theory; manipulation; imperfect information; disclosure; repeated games; one-shot game

Traditional comparative advantages vs. economies of scale: NAFTA and GATT

Regional free trade zones have been unexpectedly successful in the last decade. Since 1980 the European Community enlarged significantly its membership and its scope. It now includes southern European countries, and market-integrating features allowing goods, people, services and capital to flow freely around an area accounting for about one fourth of world economic output. Based on economies of scale - we find a condition that determine whether trading blocks Such as NAFTA and the EU are complementary with and encourage global free trade - when this condition fails, instead, trading blocks undermine free trade. It is the purpose of this paper to re-examine the positive and negative aspects of trading blocs as they relate to gains from free trade. The paper is primarily a discussion of conceptual issues, although it is based on facts and on particular cases which are of interest to the trade liberalization in the Americas. We take a somewhat different approach to a familiar issue. Rather than asking the standard question of whether regional blocs help or hinder global free trade, we ask a more detailed question: what type of customs union is likely to lead to a trade war between the blocs, and what type of customs union is, instead, likely to lead to expanded global trade. In practical terms: what type of trade policies within the blocs will provide economic incentives for expanding free trade. We shall compare the impact on the world economy of free trade blocs which are organized around two alternative principles: one is traditional comparative advantages, the other is economies of scale. The aim is to determine how the patterns of trade inside the blocs determine the trade relations among the blocs.trading blocs; free trade; trade wars; international trade; international policy; comparative advantage; economies of scale; patterns of trade; GATT; NAFTA; EC; trade diversion; resources; emissions; protectionism; returns to scale; interdependence; global environment