While the motivating concern of the perspective described in this section is that of global equity, the literature included here has also sought to incorporate concerns of efficiency and sustainability. The main mechanism through which this has been accomplished is by using equity considerations to argue for the protection of the prospects of sustainable development in developing countries. Such an agenda is equivalent to a non-co-ordinated pursuit of sustainability in each country, as well as the formulation of policies that promote economic growth and resource efficiency.

This is analogous to the discussed in Section 1.2, in which it was shown that the cost–benefit perspective enables the assessment and comparison of alternative policy options from an efficiency standpoint. Analogously, the progression from global equity to sustainable development enables the comparison of policy options that emanate from concerns about global equity. This framework has evolved precisely to enable the assessment of the synergies and trade-offs involved in the pursuit of multiple goals–environmental conservation, social equity, economic growth, and poverty eradication (Box 1.2). These analyses touch upon many of the themes relevant to an assessment of the broad range of policy options described above–time horizon, uncertainty, and welfare.

Sustainable development is one of a series of innovative concepts–following such antecedents as human development, equitable development, or appropriate development–that seek to broaden the scope of development theory from its narrow focus on economic growth.¹⁷ However, this evolution has not led to a radical transformation in the operational dimensions of development planning. The focus still continues to be the stock of capital–which in many ways serves as the proxy for welfare or as the index of the “real” or “permanent” income of a society (see Johnson, 1964). As such, much development policy concentrates on measures that stimulate investment and expand the stock of capital. Each innovation has served mainly to expand the definition of the capital stock.

Sustainable development, being the most recent in the series of conceptual advances, subsumes the earlier ones, and rather than meaning simply “development plus natural resource conservation”, includes human development, poverty eradication, and social equity as well. Accordingly, it expands the definition of the capital stock to include human capital (skills), natural capital (natural resources and biodiversity), and, most recently, social capital.¹⁸ In principle therefore, sustainable development is equivalent to investment in this composite stock of capital. However, there are differences of approach rooted in the persistent controversies in development thinking. Some authors focus on investments in all relevant forms of capital, while others focus on the capacity to make such investments. Similarly, the degree of substitution that is possible between kinds of capital -- for example, between natural and human capital -- is a subject of disagreement among researchers. (see Box 1.3).¹⁹

It might appear from the above that sustainable development entails a trade-off between investment in physical capital, social capital, and natural capital, and therefore between economic growth, income distribution, and environmental conservation. However, some branches of development theory have ceased to view these as trade-offs. In particular, the goal of the research on sustainable development–especially conservation strategies and action plans–is to show that under appropriate institutional and social conditions there is a synergy rather than conflict between different goals (IUCN, WWF, and UNEP, 1980). Even earlier, development analysts had begun to question the supposed trade-off between economic growth and income distribution (World Bank, 2000; see also Kuznets, 1955; Hicks, 1979; Chenery, 1980; Fields, 1980).

Table 1.1: Per capita income and carbon emissions in various regions
Reference case, 1990 to 2020 (MtC)
Region/Country	History		Projections			Average annual
						change (%)
	1990	1996	2000	2010	2020	1996 to 2020
North America	1550	1687	1833	2079	2314	1.3
USA	1346	1463	1585	1790	1975	1.3
Canada	126	140	151	162	182	1.1
Western Europe	936	904	947	1021	1114	0.9
Industrialized Asia	364	389	377	435	479	0.9
Japan	274	291	273	322	358	0.9
Australasia	90	99	103	113	122	0.9
Total Developed	2850	2980	3157	3535	3907	1.1
Former Soviet Union (FSU)	991	613	583	666	746	0.8
Eastern Europe (EE)	299	228	243	270	277	0.8
Total EE/FSU	1290	842	827	935	1024	0.8
Developing Asia	1065	1474	1659	2426	3377	3.5
China	620	805	930	1391	2031	3.9
India	153	230	273	386	494	3.2
Middle East	229	283	323	434	555	2.8
Africa	178	198	214	270	325	2.1
Central and South America	174	206	251	418	629	4.8
Total Developing	1646	2161	2447	3547	4886	3.5
Total World	5786	5983	6430	8018	9817	2.1

These debates stem from the earliest days of development thinking, in which a distinction was made between the “balanced growth” advocated by some writers (Rosenstein-Rodan, 1943; Nurkse, 1958), and the strategy of “unbalanced growth” advanced initially by Albert Hirschman (1958). Hirschman argued that growth is a disequilibrium process, which occurs through the efforts of economic agents to overcome bottlenecks that emerge during normal economic activity. Therefore, policy should not be restricted merely to the mobilization of financial transfers and transfer of technology, but should focus on the larger goal of creating the capacity for mobilizing and allocating such resources,²⁰ in effect to create conditions in which economic agents can most effectively respond to bottlenecks.

It is fair to say that the development profession has increasingly invoked themes from the latter approach. The emphasis has shifted from promoting growth towards promoting the capacity for growth. Development policy is concerned increasingly with conditions that stimulate investment–trade liberalization, structural adjustment, skill development, governance, institutional development, and market access–rather than the investment itself. This is partly because the fashion has changed from public to private investment, and partly because a large body of research shows that, while the scarcity of financial resources can inhibit the growth process, inflows do not necessarily promote it (Bauer and Yamey, 1982). For example, a recent review of cross-country experience (World Bank, 1998) discovered that the net impact of foreign resource inflows depends critically on ancillary factors–the nature of domestic policies, the fiscal stance, the institutions of governance, and the openness to international trade flows. “Successful” foreign aid led to US$2 of additional private sector investment for every dollar of aid, while in “failed” cases foreign aid was associated with a net decline in private investment.

Similar shifts have occurred in other areas of development theory and practice. The operationalization of sustainable human development, for example, is increasingly argued to consist not of the simultaneous pursuit of several independent goals, but of investments in social capital to enable the other goals to be pursued through normal market or regulatory mechanisms (Banuri et al., 1994). Poverty eradication programmes focus increasingly on institutional development rather than the creation of physical or social infrastructures. They concentrate on the fact that poor and vulnerable groups generally lack formal organizational structures and recognition as well as the capacity to respond to market opportunities.²¹

Table 1.2. Comparison of cumulative carbon emissions in SRES scenarios and SAR
SRES baseline scenarios	Total emissions 1990 to 2100 (GtC)
B1	989
A1T	1038
B2	1166
A1B	1437
A2	1773
A1FI	2128
IPCC SAR stabilization scenarios (Stabilization level in ppmv CO2)	Total emissions 1990 to 2100 (GtC)
450	630–650
550	870–990
650	1030–1190
750	1200–1300

While many consider equity to be a good thing in and of itself, this alone may not be reason enough to include it within the context of climate change mitigation. The literature on equity and climate change tends to argue rather that the pursuit of equity will help generate support for mitigation efforts; and that by enabling the pursuit of sustainable development within individual countries, it will lead to more effective mitigation (Lipietz, 1995; Rowlands, 1995; Runnals, 1997; Shue, 1995; Jamieson, 1996, 2000; Byrne, et al., 1998; Parikh and Parikh, 1998; Tolba, 1998; Agarwal et al., 1999). Given that developing countries have a large suite of pressing social and economic concerns besides emissions control (Najam, 1995; Runnals, 1995; Tolba, 1998), they tend to be wary of mitigation policies lest they undermine other policy goals. Support for sustainable development, besides its own merits, can generate support for climate policy as well. While global climate policy seeks to push the Annex I countries towards emissions contraction, global sustainable development policy offers the opportunity to nudge the developing countries towards a potentially “convergent” trajectory.

Of course, the question is not simply of nudging and pushing countries towards an ultimately equitable path, but to arrive at a global stabilization that is both equitable and sustainable in the long run. Reaction to the Kyoto targets (Malakoff, 1997) suggests that this would require much more than just slight pushing and nudging. A growing literature suggests that this process would be helped by a the longer term focus on sustainability and the alternative development pathways that could lead to it. This is the subject of the next section.

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