Module 2A:

Economic Aspect of
Sustainable Development
Phùng Thanh Bình ([email protected])

This lecture will explore the economic aspect of sustainable

development. We will discuss how economic SDGs can shape new
business models and individual behaviour toward a better future.
Lecture Objectives

1 Understand Economic Aspects 2 Interpret Economic SDGs

Explore the core economic concepts, problems and Unpack the key goals, targets, and indicators related
models that underpin sustainable development. to the economic dimension of sustainability.

3 Examine Interconnectedness 4 Select Good Practices

Analyze how the economic SDGs relate to and impact Identify and explore real-world practices of effective
other aspects of sustainable development. economic sustainability initiatives.

5 Analyze Business Cases 6 Relate to Vietnam

Examine how organizations are addressing the Connect the economic SDGs to the unique context
economic SDGs through their operations and and challenges facing Vietnam.
strategies.
 The Pillars of
Sustainable
Development

This is also known as the "Wedding

Cake" model.

It includes SDGs 8, 9, 10, 12.

Systemic Hierarchy of SDGs by Stockholm Resilience Centre

Benton-Short (2023): The 3 E's principle (Environment - Economy - Equity); including SDGs 1, 8, 9, 12.

• What are your thoughts on this?

 Three Pillars of Sustainable
Development

1 Economic 2 Social
This pillar focuses on economic This pillar emphasizes social
growth, employment, working equity, human rights, and
environment, technologies, and
living standards. It emphasizes access to resources and
sustainable economic opportunities. It aims for a
development and responsible society that meets the needs of
production and consumption. all individuals.

3 Environmental
This pillar focuses on protecting the environment and natural resources
for present and future generations. It promotes sustainable practices
and resource management.
Overview of GDP Measures

GDP stands for Gross Domestic

Product. It measures the total value of
goods and services produced in a
country in a given period.

It is a key indicator of economic performance, but

it has limitations. It does not capture the value of
non-market activities, such as household
production or environmental degradation; and net
income flows abroad.
 Three Approaches to Measuring GDP

Expenditure Approach Income Approach Production (Value-

This method adds up all the This approach calculates GDP by
Added) Approach
expenditures within an economy, adding up all the income earned by This method sums the value added at each
including consumer spending, business individuals and businesses, such as stage of production, avoiding the problem
investment, government spending, and wages, rents, interest, and profits. of double-counting that can occur in the
net exports. expenditure and income approaches.

All three approaches should theoretically arrive at the same GDP figure, though there may be
slight discrepancies due to data collection challenges.
 Current vs. Real Prices
Current Prices Real Prices

Prices at the time of Prices adjusted for inflation

measurement

Not adjusted for inflation Adjusted for inflation

Can be misleading Provides a more accurate picture

Current prices are not adjusted for inflation, so

they can be misleading when comparing
economic data over time. Real prices are adjusted
for inflation, so they provide a more accurate
picture of economic growth.
 Current vs. Real GDP (Per Capita)
Nominal GDP is calculated using current prices, while real GDP is adjusted for inflation.
GDP per capita is GDP divided by the population. It measures the average income per person in a country. Real GDP
per capita provides a more accurate comparison of living standards across different countries and over time.

GDP per capita (2023; current US$) GDP per capita (2023; constant 2015 US$)

Vietnam: 4346.8 Vietnam: 3817.2

https://data.worldbank.org/indicator https://data.worldbank.org/indicator
 GDP Per Capita in PPP
Purchasing Power Parity (PPP) accounts for the relative cost of goods and services in different countries.
• A higher PPP GDP per capita indicates a higher standard of living.
• PPP adjusted GDP per capita provides a more accurate comparison of living standards across countries.
GDP per Capita in PPP Around the World, 2023

https://data.worldbank.org/indicator
World GDP per Capita in PPP Over Time
 Is GDP a Good Measure of
Well-being?

Limitations of Alternative Beyond

GDP Measures Economic Growth
GDP focuses on Other indicators, like Sustainable
economic output, not the Human development
overall well-being. It Development Index emphasizes progress
doesn't account for (HDI) => Module 3, beyond economic
factors like provide a more holistic growth. It aims to
environmental view of well-being by enhance quality of
sustainability, social considering factors like life, social equity, and
equity, and education, health, and environmental
happiness. income inequality. protection.
 Is Economic Growth Always Good?
The Good The-Not-so-Good
• Average lifespans have increased • 2B people still live on less than $2 per day.
from 48 to 71 years since 1960.
• 1 in 9 people don’t have enough to eat.
• Number of people living in abject
poverty (< $1.90 per day) today is half
• In 2015, 6 million children under the age of 5
of what it was in 1990.
died of easily treatable diseases.
• > 2B people have gained access to
clean drinking water.
• Environmental degradation & climate change.

• Has delivered a better quality of life and

brought prosperity and security to • In 2021, the richest 1% of the world owned
nearly 50% of all the wealth, while the bottom
billions of people.
50% owned only 1% of all the wealth.
• All while the population has increased • …
by more than 40%.

Coursera: Sustainability and the circular economy

 The Rise of Neoliberal Economics
• Individuals are self-interested, and aim to maximize
their own wealth.
• The free market is the most efficient economic system.
• Government should be small, and not interfere with the
Milton Friedman free market.
• The sole purpose of business is to generate profits
(the business of business)!
“… there is one and only one social responsibility of business — to use
its resources and engage in activities designed to increase its profits
so long as it stays within the rules of the game, which is to say,
engages in open and free competition without deception fraud.”

Friedrich Hayek Milton Friedman New York Times 1970

Coursera: Sustainability and the circular economy

 The Rise of Neoliberal Economics

Typical Advocates Their Public Policies

• Reduce income tax rates on the
wealthiest individuals

• Reduce corporate tax rates

• Deregulate financial markets

• Reduce the size of government

• Globalize free trade

UK Prime Minister Margaret Thatcher & US Supply-side economics (Trickle-Down Theory)

President Ronald Reagan • Reducing taxes on the wealthy allows them to keep more
of their money and invest it in new enterprises.
• This increases opportunities for people at the bottom.

Coursera: Sustainability and the circular economy

 So, What Happended?

The Good News… The Not-so-Good News…

• The wealthiest got to keep more of their money. • Wealth never actually trickled down, creating the inequality
• Corporate profits rose considerably, gap we see today.
greatly adding to the wealth of their • Deregulated financial markets led to the crashes of 1987,
• shareholders.
A global economy reduced the cost of 2001 and 2008.
most goods, allowing consumers to buy • The middle class has been hollowed out as good paying
more for less. manufacturing jobs went overseas.
• Workers abroad often saw an increase in • The goal of ever increasing growth based on a linear
their standard of living. economy has led to significant environmental degradation
and depletion of natural resources.
• …

Coursera: Sustainability and the circular economy

So, What Happended?

Coursera: Sustainability and the circular economy

So, What Happended?

Coursera: Sustainability and the circular economy

 Income Inequality

GINI Coefficient Kuznets Curve

• The GINI coefficient measures income inequality. It • The Kuznets curve shows the relationship between
ranges from 0 to 1, with 0 representing perfect equality income inequality and economic development.
and 1 representing perfect inequality.
• It suggests that inequality initially rises with economic
• A higher GINI coefficient indicates greater income inequality. growth, then falls.
Income Inequality
 Income Inequality

Chancel, L., Piketty, T., Saez, E., & Zucman, G. (Eds.). (2022). World inequality report 2022. Harvard University Press.
 Income Inequality

Chancel, L., Piketty, T., Saez, E., & Zucman, G. (Eds.). (2022). World inequality report 2022. Harvard University Press.
 Income Inequality

Chancel, L., Piketty, T., Saez, E., & Zucman, G. (Eds.). (2022). World inequality report 2022. Harvard University Press.
 The Linear Economy

The linear "take-make-waste" model has driven global growth, but is unsustainable, causing environmental
degradation, resource depletion, and inequality.

How do we change it?

What makes us better?
How about Doughnut Economics?

Coursera: Sustainability and the circular economy

How about Doughnut Economics?

Coursera: Sustainability and the circular economy

 From Old to New Model of
Development

1 Old Model
Focuses on maximizing economic growth, often at the expense of
environmental and social well-being.

2 Transition
Shifting towards a sustainable development model that prioritizes
both economic growth and social and environmental sustainability.

3 New Model
Prioritizes sustainable development, aiming to meet the needs of the
present generation without compromising the ability of future
generations to meet their own needs.
 SDGs of Economic Aspect
1 SDG 8: Decent Work and 2 SDG 9: Industry,
Economic Growth Innovation, and
Promotes sustained, inclusive, Infrastructure
and sustainable economic Promotes inclusive and sustainable
growth, full and productive industrialization, fostering
employment, and decent work innovation and infrastructure
for all. development for economic growth.

3 SDG 10: Reduced 4 SDG 12: Responsible

Inequalities Consumption and
Reduces inequality within and Production
among countries, focusing on Promotes sustainable
income, wealth, and opportunity. consumption and production
patterns to ensure efficient
resource use and reduce waste.
 SDG 8: Decent Work and
Economic Growth

What is decent work?

Challenges to decent work

Unemployment, lack of social protection, discrimination, child labor, modern slavery, …

Solutions for achieving decent work

Social protection, fair migration governance, green growth, ecotourism, …
 Decent Work

Decent work is defined as jobs that deliver a

fair income, provide security in the
workplace and social protection for families,
and help realize better prospects for
personal development and social
integration.

Fair income refers to earnings that provide adequate

compensation for work, ensuring workers can meet
basic needs, avoid poverty, and receive equal pay for
equal work without discrimination.
 Decent Work

Lack of Material Well-being Unequal Opportunities

Many workers face a lack of material well-being, Access to paid work does not guarantee decent work.
struggling to meet basic needs due to low pay, Many workers experience unequal opportunities due to
inadequate access to resources, or insecure discrimination, lack of social protection, or limited
employment. access to education and training.
 Unemployment

Underutilized Labor Young People and Persons with Rural Areas and
Unemployment Disabilities Unemployment
Underutilized labor Young people Persons with The unemployment
are people who are (ages 15–24) disabilities rate of the working-
willing and continue to be continue to be age population living
available to work much less likely to much less likely to in rural areas tends to
more than they are be in formal be in formal be higher than that in
employed to do. employment. employment. urban areas.

Solutions?
 Lack of Social Protection

What is Social Protection? How does Social Protection work?

Social protection aims to reduce poverty and vulnerability Social protection systems offer assistance through social
through policies and programs. These include benefits for insurance, benefits funded by taxes, and services like public
families, leave for parents, and insurance for unemployment, works programs. They also provide basic income security
injury, illness, and old age. through fee waivers, subsidies, and other schemes.
Social Protection Expenditure
 Discrimination in Employment and
Occupation

Costs of Discrimination Forms of Discrimination Unfair Treatment

Discrimination stifles Workplace discrimination occurs Migrant workers often face unfair
opportunities and wastes based on religion, age, caste, HIV working conditions, excluded from
human talent needed for status, gender, nationality, social insurance programs and long-
economic progress. disabilities, or lifestyle. term benefits.
 Child Labor

Harmful Work Interference with Factors to Consider

Schooling
The International Labour This includes work that is Determining whether work
Organization (ILO) defines dangerous, interferes with constitutes child labor depends on
child labor as work that harms schooling, or forces factors like the child's age, the type
children's development and children to leave school and hours of work, the conditions,
denies them their childhood. prematurely. and national objectives.
 Child Labor
Not all work done by children is classified as child labor. Estimates place
73 million children in hazardous work, the worst form of child labor.
Child Labor
 Modern Slavery

• The ILO defines modern slavery as forced

labor or forced marriage.

• An estimated 40 million people are in modern

slavery: 25 million in forced labor and 15.5
million in forced marriage.

• Modern slavery affects all population groups

but some are more vulnerable.

• Women and girls make up 71% of victims, and

99% of forced labor in sex work.
 Solutions in Achieving Decent Work

Invest in and Expand Ensure Fair and Effective Embrace

Social Protection Migration Governance Green Growth

Social safety nets Fair migration governance Adopting green growth

provide crucial fosters safe and movement strategies promotes
support for individuals, of people, promoting human sustainable development,
preventing poverty and rights and economic creating jobs and reducing
vulnerability. opportunity. environmental impact.
 Target 8.1 1
Sustainable economic growth
2 Target 8.2
Diversify, innovate and upgrade for
Target 8.3 3 economic productivity
Promote policies to support job
SDG 8: Targets

creation and growing enterprises 4 Target 8.4

Improve resource efficiency in
Target 8.5 5 consumption and production
Full employment and decent work with
equal pay 6 Target 8.6
Promote youth employment,
Target 8.7 7 education and training
End modern slavery, trafficking and
child labour 8 Target 8.8
Protect labour rights and promote safe
Target 8.9 9 working environments
Promote sustainable tourism
10 Target 8.9
Universal access to banking, insurance and
https://blueprint.unglobalcompact.org financial services
Interconnectedness
 Analyze SDGs Case Studies

https://blueprint.unglobalcompact.org

Select a Goal, Move to Business Actions, Read Example Practices.

 Analyze SDGs Case Studies

https://blueprint.unglobalcompact.org

Select a Goal, Move to Business Actions, Read How taking action …

 RSM SDG Cases

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 SDG Cases in Vietnam
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THANK YOU!