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Sustainability, Optimality, and Development Policy
Author(s) -
Farzin Y. Hossein
Publication year - 2010
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2010.00551.x
Subject(s) - economics , intergenerational equity , sustainability , developing country , minimax , context (archaeology) , welfare , poverty , sustainable development , equity (law) , overlapping generations model , public economics , microeconomics , economic growth , market economy , ecology , paleontology , political science , law , biology
Considering sustainability a matter of intergenerational welfare equity, this paper examines whether an optimal development path can also be sustainable. It argues that the general “zero‐net‐aggregate‐investment” condition for an optimal development path to be sustainable in the sense of the maximin criterion of intergenerational justice is too demanding to be practical, especially in the context of developing countries. It further argues that while the maximin criterion of sustainability may be appealing to the rich advanced industrial countries, for the poor developing countries it implies equalization of poverty across generations, and as such is too costly a moral obligation to be acceptable. The paper suggests that a compromise development policy that follows the optimal growth approach but adopts certain measures to mitigate both the intergenerational and intra generational welfare inequalities may be more appropriate for these countries. Some of the principal elements of such a policy are highlighted.