Grand Challenges
for Sustainability
2021
The 17 sustainable development goals (SDGs) to transform our world:
GOAL 1: No Poverty
GOAL 2: Zero Hunger
GOAL 3: Good Health and Well-being
GOAL 4: Quality Education
GOAL 5: Gender Equality
GOAL 6: Clean Water and Sanitation
GOAL 7: Affordable and Clean Energy
GOAL 8: Decent Work and Economic Growth
GOAL 9: Industry, Innovation and Infrastructure
GOAL 10: Reduced Inequality
GOAL 11: Sustainable Cities and Communities
GOAL 12: Responsible Consumption and Production
GOAL 13: Climate Action
GOAL 14: Life Below Water
GOAL 15: Life on Land
GOAL 16: Peace and Justice Strong Institutions
GOAL 17: Partnerships to achieve the Goal
,Economic Growth - Lecture 1
A crowded, unequal and degraded planet
Crowded
7.8 billion people (10 times as much as in 1750)
Output of 90 trillion US$ (200 times more than in 1750)
Both are projected to keep on growing
Unequal
Billions are enjoying longevity and good health
More than a billion people live in abject poverty
Degraded
Anthropocene : Human activity drives the Earth’s physical change
Humanity is threatening the Earth
Changes are dangerous and unprecedented
The role of economic growth
EG as the cause of sustainability problems
EG as the key to eradicating poverty
EG as a part of the solution?
SDGs and Economic Growth ⇒ 8, 9, 10
Big questions
Why are we so rich and they so poor?
What is the engine of EG?
Is our standard of living sustainable?
The consequence for human welfare involved in questions like these are simply staggering: Once
on starts to think about them, it is hard to thing about anything else -Marshall lecture 1985,
Cambridge University
Measuring the standard of living - Measuring economic development
Gross Domestic Product → Market value of total production of goods and services within a country
in a given year.
Three corrections are needed
1) Divide bij population (GDP per capita)
2) Correct for inflation (real versus nominal GDP)
3) Correct for international differences in price levels (PPP)
Preferred measure: GDP per capita at PPP in constant prices
PPP:Big Mac Index
Price of a Big Mac in The Netherlands: 3.75 euro
Price of a Big Mac in the US: 5.51 Dollar
PPP exchange rate: 5.51/3.75= 1.47 dollar/euro
Market exchange rate: 1.20 dollar/euro
,Measuring economic development
Preferred measure: GDP per capita at constant PPP prices
Still only a rough indicator of true ‘wellbeing’/’life satisfaction’/’happiness’, but it is highly (though
imperfectly) correlated with broader measures. Hence, we will use GDP per capita as a useful
summery statistic for wellbeing.
History of Economic Growth
Growth of Gross World Output (international prices of 1990)
, For most of human history: no growth, output at subsistence level
From the end of the 18th century: sustained economic growth
Industrial Revolution
Watt’s improved steam engine (1776)
Started in England and spread (unequally) around the world
Gross World Product (GWP) per capita increased by a factor of 30 over 250 years
Similarly: unprecedented, sustained population growth since the Industrial Revolution
Until 10.000 B.C. population was well below 100 million
In 1AD around 225 million
In 1820 around 1 billion
Currently 7.8 billion
Projection : 9 billion by the early 2040s
The sustained EG since the Industrial revolution has brought us imaginable prosperity, but also has
become a threat to the Earth and to our wellbeing; Large-scale economic activity is changing the
Earth.
Sustainable development → development that meets the needs of the present generation without
compromising the ability of future generations to meet their own needs.
Stylized facts of Economic Growth
Stylized fact 1
There is enormous variation in per capita income across economies. The poorest countries have
per capita incomes that are less than 5 percent of per capita incomes in the richest countries.
Stylized fact 2
Rates of growth vary substantially across countries.
Stylized fact 3
A country’s relative position in the world distribution of per capita incomes is not immutable.
Countries can move from being “poor” to being “rich”, and vice versa.
World Relative Income Distribution
for Sustainability
2021
The 17 sustainable development goals (SDGs) to transform our world:
GOAL 1: No Poverty
GOAL 2: Zero Hunger
GOAL 3: Good Health and Well-being
GOAL 4: Quality Education
GOAL 5: Gender Equality
GOAL 6: Clean Water and Sanitation
GOAL 7: Affordable and Clean Energy
GOAL 8: Decent Work and Economic Growth
GOAL 9: Industry, Innovation and Infrastructure
GOAL 10: Reduced Inequality
GOAL 11: Sustainable Cities and Communities
GOAL 12: Responsible Consumption and Production
GOAL 13: Climate Action
GOAL 14: Life Below Water
GOAL 15: Life on Land
GOAL 16: Peace and Justice Strong Institutions
GOAL 17: Partnerships to achieve the Goal
,Economic Growth - Lecture 1
A crowded, unequal and degraded planet
Crowded
7.8 billion people (10 times as much as in 1750)
Output of 90 trillion US$ (200 times more than in 1750)
Both are projected to keep on growing
Unequal
Billions are enjoying longevity and good health
More than a billion people live in abject poverty
Degraded
Anthropocene : Human activity drives the Earth’s physical change
Humanity is threatening the Earth
Changes are dangerous and unprecedented
The role of economic growth
EG as the cause of sustainability problems
EG as the key to eradicating poverty
EG as a part of the solution?
SDGs and Economic Growth ⇒ 8, 9, 10
Big questions
Why are we so rich and they so poor?
What is the engine of EG?
Is our standard of living sustainable?
The consequence for human welfare involved in questions like these are simply staggering: Once
on starts to think about them, it is hard to thing about anything else -Marshall lecture 1985,
Cambridge University
Measuring the standard of living - Measuring economic development
Gross Domestic Product → Market value of total production of goods and services within a country
in a given year.
Three corrections are needed
1) Divide bij population (GDP per capita)
2) Correct for inflation (real versus nominal GDP)
3) Correct for international differences in price levels (PPP)
Preferred measure: GDP per capita at PPP in constant prices
PPP:Big Mac Index
Price of a Big Mac in The Netherlands: 3.75 euro
Price of a Big Mac in the US: 5.51 Dollar
PPP exchange rate: 5.51/3.75= 1.47 dollar/euro
Market exchange rate: 1.20 dollar/euro
,Measuring economic development
Preferred measure: GDP per capita at constant PPP prices
Still only a rough indicator of true ‘wellbeing’/’life satisfaction’/’happiness’, but it is highly (though
imperfectly) correlated with broader measures. Hence, we will use GDP per capita as a useful
summery statistic for wellbeing.
History of Economic Growth
Growth of Gross World Output (international prices of 1990)
, For most of human history: no growth, output at subsistence level
From the end of the 18th century: sustained economic growth
Industrial Revolution
Watt’s improved steam engine (1776)
Started in England and spread (unequally) around the world
Gross World Product (GWP) per capita increased by a factor of 30 over 250 years
Similarly: unprecedented, sustained population growth since the Industrial Revolution
Until 10.000 B.C. population was well below 100 million
In 1AD around 225 million
In 1820 around 1 billion
Currently 7.8 billion
Projection : 9 billion by the early 2040s
The sustained EG since the Industrial revolution has brought us imaginable prosperity, but also has
become a threat to the Earth and to our wellbeing; Large-scale economic activity is changing the
Earth.
Sustainable development → development that meets the needs of the present generation without
compromising the ability of future generations to meet their own needs.
Stylized facts of Economic Growth
Stylized fact 1
There is enormous variation in per capita income across economies. The poorest countries have
per capita incomes that are less than 5 percent of per capita incomes in the richest countries.
Stylized fact 2
Rates of growth vary substantially across countries.
Stylized fact 3
A country’s relative position in the world distribution of per capita incomes is not immutable.
Countries can move from being “poor” to being “rich”, and vice versa.
World Relative Income Distribution
