1

Development Economics Lecture 13

20.05.2024

modernization – ecological unequal exchange – ecological debt – migration –

technological solutions – degrowth

Even an entire society, a nation, or all simultaneously existing societies taken together,
are not the owners of the earth. They are simply its possessors, its beneficiaries,
and have to bequeath it in an improved state to succeeding generations.
Karl Marx1

In previous lectures we have focused mainly on ‘catching-up’: the assimilation of developing

economies to the core economies. We have discussed the difficulties of achieving this, and the
social costs involved. In this lecture we focus on the environmental costs.

In 1968 G. Hardin published a book entitled The Tragedy of the Commons. ‘Commons’ means
natural resources belonging to and affecting the whole of a community, and which cannot be
divided and allocated. The best example is the atmosphere.2 The book drew attention to the
‘tragedy of the commons’. This is the economic problem in which every individual has an
incentive to consume a common resource at the expense of other individuals, and there is no
way to exclude anyone from consuming. The situation results in overconsumption of the
resource, underinvestment in its maintenance and, ultimately, its depletion.

In 1987 the Brundtland Report of the World Commission on Environment and Development
entitled Our Common Future introduced the concept of sustainable development: “Sustainable
development is development that meets the needs of the present without compromising the
ability of future generations to meet their own needs.” The report drew attention to the
intergenerational welfare effects of current usage of resources. Eventually, ‘sustainable’
became a cliché adjective used to advertise goods, services and investment projects.

Ecological modernization theory

As people became increasingly aware of the problem of environmental degradation and

ecological damage in the last decades of the twentieth century, liberal social scientists initially
presented this as a problem of retarded modernization. Environmental protection in core
countries were contrasted with the lower level of environmental protection in the periphery.
The implication was that peripheral societies do not value the environment as highly as core
societies do. Hence, protection of the environment was seen as a kind of luxury good. This

1
Capital. Volume III. translated by B. Fowkes. Harmondsworth: Penguin. 1976. p. 911.
2
Originally, commons meant property belonging to all members of a community, such as meadows, fields,
forests belonging collectively to a village, free to use for all villagers. The Turkish term for commons is
müşterekler.
 2

approach argued that concern for the environment increases with material affluence (Giljum
and Eisenmenger 2003, 7; Givens et al. 2018, 2).

This hypothesis was depicted with a graph showing an inverted U curve (∩) between the
horizontal axis measuring per capital GDP, and the vertical axis measuring environmental
degradation. The graph implies that, as per capital GDP increases, environmental degradation
first increases, then decreases. The cause of environmental destruction is poverty. As poverty
is eliminated the destruction of the environment will cease.3

So from the liberal viewpoint at that time, the global environmental degradation problem would
be resolved as countries catch up and modernize. This called for free trade, which allegedly not
only helps developing countries catch up, but also helps diffusion of green technologies from
the developed countries to the developing ones. The diagnosis also called for more direct
investment by which core country firms would apply green technologies in peripheral countries
(Giljum et al. 2003, 8).

“…ecological modernization theory and environmental economic perspectives posit that an

unproblematic relationship between economic growth and the environment is possible, suggesting
that the environmental impacts of economic growth tend to diminish, especially after a certain level
of economic prosperity is reached and when certain institutional and cultural changes occur within
societies” (Givens et al. 2018, 2).

Another liberal approach rationalized differences in environmental protection among countries

by arguing that, all societies may not have the same preferences with respect to environmental
protection. Is it not the case that individuals may have different preferences between material
consumption and environmental protection? The issue (they said) is to determine the
preferences of societies, and to adjust protection policies to those preferences.

These views raised objections. A criticism of the view that different societies may have different
preferences between material consumption and environmental protection, and that the problem
is to determine individuals’ preferences, is that the beneficiaries of investments harming the
environment and the victims of such investments are usually different groups. E.g. a power
plant may damage the environment in the vicinity of the plant, but the beneficiaries may be
populations living far from the area of damage. One cannot assume that the question of
environmental protection involves homogenous groups of people facing the same trade-offs
between material consumption and environmental protection. It makes no sense to analyze the
problem with a model of a single agent trying to maximize her utility by balancing her
preferences between two types of ‘goods’.

Moreover, determining socially optimal environmental protection policies is difficult because

the groups that benefit from activities that damage the environment (firms) are better organized,

3
The turning point on the environmental Kuzmets curve at which GDP growth is said to accompany less
environmental degradation has been calculated by someone to be $5000-$8000 per capita (Trantas 2021, 232, ft.
11).
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possess more financial resources, and are able to influence scientific research and to shape
public opinion. The victims of investments that harm the environment locally are often poor
people.

In the period of welfare state policies in the 1960s and 1970s many core states, including the
US federal government, enacted regulatory legislation to protect the commons. They imposed
limits on gas emissions, on smoke emissions and on dumping hazardous waste in nature.
Subsequently in the liberal period in the US, beginning with the Reagan administration, these
policies were scaled back. Various US environmental protection programs were subjected to
cost-benefit analyses, and those that were deemed not worth the costs were terminated. It is
argued that regulatory capture of the US Environmental Protection Agency has taken place
(Oates et al. 2003: 329).4

In the 1990s, in response to critical studies of the relocation of manufacturing to the periphery,
some liberal economists denied that low environmental protection in the periphery is one of the
incentives inducing core country firms to relocate their manufacturing. Their argument was that
the costs associated with obligations to prevent pollution in core countries are very low; not
exceeding 3 per cent of production costs (Muradian and Martinez-Alier 2001, 283) or even one
percent (Giljum ve Eisenmenger 2003, 8). Hence, developing countries did not need to lower
their environmental protection standards to attract foreign direct investment.

But there are indications that the relocation of manufacturing to developing countries has been
motivated by concerns about pollution and environmental damage in the core countries. For
example, in 1992 a Japanese economist wrote:

“True, the trade conditions for importing raw materials and energy resources for domestic
production are strongly in Japan’s favor as a result of the strong yen. But, the ongoing
environmental disruption, or rising non-economic element, such as huge amounts of industrial
wastes created by domestic production activity and air pollution as well as traffic congestion
brought about by energy consumption and merchandise transportation, is now exceeding allowable
limits. In Japan, a country endowed with limited national land with few plains and many mountains,
it is not desirable to expand industrial production activity any further. As the Ministry of
International Trade and Industry (MITI) stresses, Japan is asked urgently to switch to knowledge-
intensive, high value-added industries which are resource and energy-saving-oriented. In other
industries, a transfer overseas of funds and technologies, aids to economic development in
developing nations and international cooperation through reorganization of the international
division of labor are the issues confronting the Japanese economy” (Takanashi 1992, 7-8).

This quotation shows that one of the considerations of the Japanese state in encouraging the
relocation of Japanese manufacturing overseas has been environmental protection. It also

4
The wikipedia article on the United States Environmental Protection Agency, in the section entitled
Controversies, gives an idea of the problems confronting environmental protection the US.
 4

reveals how the government of a core state explicitly plans the reorganization of the
international division of labor.5

Unequal ecological exchange

In the 1990s, as the effects of environmental destruction became more visible, some ecologists
developed a useful concept: the ecological footprint.

The ecological footprint is the land and sea area necessary for the sustainable production of any
level and pattern of consumption. It is based on the following requirements for a given
consumption: (1) land area necessary for agricultural production of food and raw materials on
a sustainable basis, (2) land area necessary for food production from land animals (meat, dairy)
on a sustainable basis, (3) forest area necessary for wood and paper production on a sustainable
basis, (4) sea area necessary for seafood production on a sustainable basis, (5) land area
necessary for people to live on, and for necessary structures, (6) forest area necessary to absorb
CO2 emissions caused by the consumption, (7) land area necessary to absorb the waste matter
caused by the consumption.

This calculation yields the ecological footprint of a given consumption level and pattern. It is
an area measured in global hectares (gha). A nation’s ecological footprint is calculated from its
total annual consumption of all kinds of goods and services.

A related concept is biocapacity. The biocapacity of a geographical area is defined as its ability
to supply sustainably what people demand for consumption. Biocapacity is therefore the
ecosystems’ capacity to produce the biological materials used by people, and to absorb waste
material generated by humans under current management schemes and extraction technologies.
The biocapacity of a region changes from year to year due to climate change and deterioration
of the natural environment. In the National Footprint Accounts, biocapacities of countries are
calculated by multiplying the physical area by a figure called the yield factor.

Biocapacity is also measured in global hectares. Every year the Global Footprint Network
publishes the National Footprint Accounts, including the ecological footprint and biocapacity,
for over 200 countries and regions.6

The calculated difference between the total biocapacity of the earth and the total ecological
footprint of humankind shows that humankind has already pushed material consumption
beyond the capacity of global natural resources to provide for the consumption and to renew
itself. So we are depleting the stock of resources of the earth.

5
The reference to MITI should be noted. In Lecture 7 in the discussion on the developmental state in East Asia,
MITI was mentioned as one of the nodes of centralized economic decision-making in Japan.
What is curious in this quotation is the expression “Japan is asked urgently to switch to knowledge-intensive,
high value-added industries…” Who is asking Japan to do this? The writer seems to be trying to diffuse the
responsibility for the ugly policy he is suggesting.
6
https://data.footprintnetwork.org/
 5

“In 2012, the Earth’s total biocapacity was 12.2 billion gha, or 1.7 gha per person, while humanity’s
Ecological Footprint was 20.1 billion gha, or 2.8 gha per person. The Ecological Footprint is
unequally distributed, with residents of high-income countries placing a disproportionate pressure
on nature as they use more than their fair share of the Earth’s resources. At the other end of the scale,
people in some of the world’s lowest-income countries struggle to meet basic needs.”7

A research covering 138 countries over 1991-2001 (Jorgenson et al. 2007) studied the
determinants of per capita ecological footprint growth. It found no Kuznets curve between per
capita footprint and per capita GDP. On the contrary, it found a positive relation between per
capita footprint and per capita GDP.

Unequal ecological exchange

When a society’s total footprint exceeds the total biocapacity of the country, this does not
necessarily mean that the country’s own natural resources are being overexploited and depleted,
and that its own ecological systems are being damaged. The reason is that, in many countries
the difference between total ecological footprint and total biocapacity is covered by importing
some of the goods that cause the footprint. There are spatial disconnections between the
localities where environmentally damaging consumption is done, and the localities where the
production for this consumption impacts the environment.

So it appears that core countries implement policies to protect the environment in their own
territories, and they import goods the production of which impacts the environment in other
countries. The transition to service-based economies in the core countries is achieved by
relocating or outsourcing environmentally harmful manufacturing industries to peripheral
countries. Hence in some poor countries, the footprint associated with the local consumption is
less that the biocapacity of those countries, but their environment is exploited unsustainably by
their export sectors. And the local environmental damage caused by the production of the
exports of peripheral countries is not reflected in the costs of production.

Therefore international trade involves an unequal ecological exchange (EUE). The argument
that core societies protect their national environments more than the peripheral societies
because they are more concerned about the environment is false, because in fact the
environmental impacts of their consumption occur outside their borders. This misperception
has been named the Netherlands fallacy (Givens et al. 2018, 3-4).

“EUE theory argues that largely through the structure of international trade, wealthier, more
powerful countries within the Global North have disproportionate access to natural resources and
sink capacity—the ability of the environment to absorb waste products—within Global South
nations. These natural resources and waste are linked to all stages along global commodity chains,

7
https://wwf.panda.org/discover/knowledge_hub/all_publications/ecological_footprint2/#:~:text=Both%20bioca
pacity%20and%20Ecological%20Footprint,or%202.8%20gha%20per%20person.
See also https://data.footprintnetwork.org/index.html#/.
 6

including extraction, production, consumption, and disposal. These material flows result in both the
unequal distribution of environmental harms and suppressed human well‐being of populations
within Global South nations … EUE theory draws attention to the displacement of some
environmental harms spatially, to other locations across the planet, and temporally, to future
generations; these spatial and temporal dynamics are commonly referred to as environmental load
displacement …” (Givens et al. 2018, 2-3).

Ecological debt

The research on unequal ecological exchange through trade has led some researchers to
conceive the notion of an ecological debt. It is held that rich countries who over-exploit the
global commons owe an ecological debt to the poor countries who are not using even a small
portion of their fair share of the global commons. They argue that the ‘North’ has been able to
pollute without limits and at little cost to build its economy and industrial base over centuries.
The first discussions of ecological debt took place around 1990.

Accion Ecologica (1999) defined ecological debt as ‘the debt accumulated by northern
industrial countries towards third world countries on account of resource plundering and use of
environmental space to deposit wastes’. The debt arises from (1) exports of raw materials and
other products from relatively poor countries or regions at prices which do not include
compensation for local or global externalities; (2) rich countries or regions making
disproportionate use of environmental space or services without payment (for instance,
dumping carbon dioxide into the atmosphere).

However, the calculation of ecological debt faces difficulties. From what period should one
start to calculate the debt? Should the present generation pay for the debts of past generations?
Moreover, the notion of ecological debt necessitates pricing nature’s services. There is no
consensus amongst researchers and campaigners on how this can be done.

Climate change and migration

Climate change has become a cause of large-scale emigration (e.g. from Afghanistan, Libya,
Pakistan, Somalia). Climate change-induced migration is likely to increase when agriculture
becomes impossible in some regions, and when heat waves and rising sea levels make some
regions uninhabitable.

Current migration has created an array of legal concepts such as migrant, refugee and displaced
person. These terms classify migrants by the cause of the migrant’s movement, her/his motives,
and who is responsible for the support of the migrant. The designation of a person as a climate
change-induced refugee or a migrant has legal implications of responsibility.

Some writers describe migration as an adaptation response to climate change, and hence as a
solution to its effects. They argue that individuals affected by climate change should seize the
opportunities afforded to them by migration. According to these writers, the archetypal climate
 7

refugee is someone who has an entrepreneurial ethos, and who is participating in useful labor
circulation around the world. They argue that it is desirable to show those affected by climate
change that their forced relocation may be an opportunity, rather than a miserable fate.
Moreover, the slowness of climate change gives communities time to plan their migration.

Others criticize this approach:

“The displacement of millions of people is no longer framed as a political scandal, but as a rational
strategy of adaptation. The loss of millions of livelihoods is reframed as unfortunate, but
inevitable. At the same time, the citizens of the industrialized nations continue to drive their SUVs
without a trace of guilt” (Askland et al. 2022, 5, 8).

Those who depict climate change-induced migration in a positive light ignore the fact that, an
influx of migrants often becomes a social and political issue where they have arrived and
provokes public opposition to migration.

All people whose lives are affected by climate change do not or cannot migrate. Some do not
migrate because they do not have the means to move. Some do not migrate because of their
sense of belonging to their home (village or town or country). But these victims of climate
change are also ‘displaced’ in a sense. They lose their customary habitat, they lose what they
knew as ‘home’, which was an extension of themselves. They lose the things that gave meaning
to their lives. Hence some researchers argue that the term displacement should not only refer to
migrants, but also to the victims of climate change who remain where they are (Askland et al.
2022).

Technological solutions

It is argued by some that technological breakthroughs can somehow eliminate environmental

problems connected to economic growth. There are hopes that new technologies will help
reduce CO2 emissions, global warming and climate change. However, each ‘clean’ solution to
an environmental problem is eventually shown to have some other damaging environmental
impact.

For example, in The Impact of Wind Energy on Wildlife and the Environment, a report by the
Global Warming Policy Foundation, it has been reported that wind turbines in Germany are
killing birds in thousands and bats in hundreds of thousands annually, threatening the extinction
of “entire populations” (Elliott 2019).

Another example is electrically powered cars, which are expected to reduce CO2 emissions.
One of the elements necessary to produce car batteries is cobalt. Researchers find that in towns
and villages near cobalt mining operations in the Democratic Republic of Congo, there are
abnormal increases in congenital birth defects. Children are born with cleft palates and more
serious disorders.
 8

Monazite is a mineral that contains elements used to produce the magnets in electric vehicles
and wind turbines. It is produced at the QIT Madagascar Mineral (QMM) mine in Madagascar.
At present, a court in the UK is looking into a case against the major shareholder, Rio Tinto
Mining Company. Medical tests showed that 58 people living around the mine have elevated
levels of lead in their blood, and that the majority of these cases exceed the threshold at which
the World Health Organization recommends clinical and environmental interventions, 5
micrograms per deciliter. The claim alleges that the most likely cause of the elevated lead levels
is the QMM’s mine processes. Meanwhile fishstock are dying in the nearby Lake Ambaravano,
which the local people say is polluted by the mining operation (Wadekar 2024).

Every purported technological solution to each environmental problem requires production of

more goods (electric cars, wind turbines, solar panels). Production of more goods means more
environmental degradation, and more greenhouse gas emissions. Technological fixes to
environmental problems typically involve polluting rivers in order to prevent air pollution, and
producing genetically engineered unwholesome foods in order to expand urban habitats, and
poisoning people in certain localities in order to reduce exhaust gases elsewhere. Green
technologies simply offer new trade-offs, shifting the environmental damage from one place to
another.

Steady state economies and degrowth

The infinitizing drive of capital proceeds as if the limits of the finite elements of production could be
surpassed endlessly. As a result, the drive for capitalist wealth contradicts the very foundations of all
wealth - nature and living labor.
David McNally (2003, 13)

Some researchers are searching for ways to decouple GDP growth from harmful environmental
impacts, e.g. by switching to less resource-using manufacturing and to a more service-based
economy. Other researchers point out that it is not possible to decouple GDP growth from
environmental impacts in a way that would make GDP growth sustainable indefinitely (Tantras
2021, 231-232).

Then the question arises: is a capitalist steady-state economy possible? Can there be a
capitalism without growth? Researchers debate whether, in general, capitalist enterprises can
refrain from investment and accumulation. Some think they cannot (Blauwhof 2012). They
point out that enterprises in capitalist economies run on credit. Repayment of loans plus interest
depends on increasing incomes. That loans require payment of interest imposes the necessity
of economic growth.

But even if GDP growth in the world were to stop now, the current rate of environmental
degradation caused by present global GDP production is still not sustainable. Therefore some
researchers argue that degrowth is necessary to save the planet. In this view, degrowth for a
period might make a transition to a steady state economy possible (Kallis et al. 2012). Degrowth
 9

has become a multidimensional social movement ranging from activism to science (Buch-
Hansen et al. 2021, 2).

In an open letter made public in 2020, more than 1000 experts from 60 countries have called
for degrowth which they defined as

…a democratically planned yet adaptive, sustainable, and equitable downscaling of the economy,
leading to a future where we can live better with less. This requires transforming the current
profit-oriented capitalist system. It opposes blind faith in market forces and dismisses a pursuit
of ‘green growth’ and decoupling as main strategies to solve environmental and social problems
(Trantas 2021, 236).

Another definition of degrowth is “a democratically led redistributive downscaling of

production and consumption in industrialized countries as a means to achieve environmental
sustainability, social justice and well-being”. Another definition is “a planned, coherent policy
to reduce ecological impact, reduce inequality and improve well-being” (Smith et al. 2021, 2).
Reducing GDP is not necessarily the goal of degrowth, but most likely it would be a
consequence of it (O’Neil 2012, 221).

It is noticeable that definitions of degrowth include redistributive policies. If income

redistribution is ruled out, the only solution for satisfying basic needs is the trickle-down effect
of GDP growth.

In capitalist economies GDP growth does cease during economic crises, with bankruptcies,
unemployment and impoverishment. The issue is how to achieve a voluntary transition to a
degrowth economy with social justice, without causing suffering. Various social-economic
reforms are suggested to make degrowth socially acceptable. Some proposals are minimum and
maximum income and wealth limits, progressive income taxes, public employment programs
that guarantee jobs, a basic income for all citizens, reducing the workweek, spreading
ownership of wealth and businesses, and organizing businesses as producer cooperatives
(Blauwhof 2012, 259).

Researchers also debate what kind of political alliances might possibly put an end to the
domination of the state by capitalist interests. In the liberal period, pro-growth interest groups
have entrenched their political and intellectual hegemony. Degrowth proponents fear that states
and corporations may usurp the degrowth concept, as they have usurped the sustainability
concept, and dilute the basic demands for environmental and social justice (Trantas 2021, 228,
236). Some degrowth writers hope that people in different countries confronted with
environmental degradation will join in grass-roots community-based activism (Smith et al.
2021, 3).
 10

Implications for developing countries

Ecological footprint and biocapacity measurements reveal that all societies in the world cannot
sustainably realize the current average per capita consumption of the core societies. The world’s
resources cannot carry the burden. Hence the idea of a universal ‘catching-up’ is incompatible
with the concept of sustainability - unless rich economies agree to degrow substantially while
allowing poor economies to grow (sustainably) at the same time.

The difficulties in reaching a solution can be seen in the international efforts to reduce
greenhouse gas emissions.

The annual United Nations Climate Change Conferences (COP) are mired in disputes over
various issues. One is the funding of reduction of emissions. An Adaptation Fund was
established in 2001 for this purpose. Developing country states have been complaining that the
developed countries have for years failed to deliver the $100 billion per year to the Fund, in
line with their commitments. At COP 27 in 2022, developed country states made efforts to push
the responsibility of financing the Fund to multilateral development banks, international
financial institutions and the private sector. These states also tried to alter the eligibility criteria
as to who should receive funding (TWN 2022).

Developed country states are concerned that different climate change mitigation policies among
countries could create a competitive disadvantage for their domestic businesses by raising
production costs compared to other countries. Differences among countries’ climate policies
can create incentives to relocate economic activities to countries with less stringent or less
comprehensive climate policies. This is called ‘emissions leakage’. Greenhouse gas emissions
leakage occurs when a policy initiative in one country to reduce domestic emissions leads to an
increase in emissions in another country, thus undermining the attempt to reduce emissions.

Policymakers are considering options to address this concern. One approach that has received
interest in recent years is a ‘border carbon adjustment’. A border carbon adjustment is an import
fee or tariff on certain imported emissions-intensive goods. This is intended to mitigate adverse
competitiveness effects when some countries establish more ambitious policies to reduce
greenhouse gas emissions than others. Those who defend border carbon adjustment measures
suggest that the tariffs could also provide funds to provide rebates to domestic producers of
certain materials or products, to compensate their increased costs due to domestic climate
policies. Border carbon adjustment measures have not been implemented in any country yet.
The European Union is considering this option (Congressional Research Service 2023).

Developing country states are wary that developed countries will use border carbon adjustment
measures to protect their businesses from imports. So at COP28, held in December 2023,
developing country states demanded that “trade-related unilateral measures to combat climate
change with cross-border impacts” be discussed at the conference. The developed country states
opposed the demand (TWN 2023).
 11

So the states of various groups of countries are trying to shift the burden of combating climate
change to each other. The conferences on climate change are achieving too little in comparison
to the pressing problems of climate change.

In conclusion, nation states are not able to agree on how to share the burdens of limiting
environmental damage.

Governing elites seem reluctant even to reduce GDP growth rates. Continuous GDP growth
ensures capital accumulation, although science and facts show that the planet’s limited
resources are incompatible with limitless capital accumulation.

On the other hand, GDP growth distracts needy people from demanding income and wealth
redistribution, despite the fact that GDP growth does not eliminate poverty and destitution.

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Askland, Hedda Haugen, Barrie Shannon, Raymond Chiong, Natalie Lockart, Amy Maguire,
Jane Rich, Justin Groizard. 2022. Beyond migration: a critical review of climate induced
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