Accounting for sustainable development over the long-run : lessons from Germany
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We construct long-run sustainability indicators based on changes in Comprehensive Wealth – which we refer to as Genuine Savings - for Germany over the period 1850-2000. We find that German sustainability indicators are positive for the most part, although they are negative during and after the two World Wars and also the Great Depression. We also test the relationship between these wealth changes and a number of measures of well-being over the long-run: changes in consumption as well as changes in average height and infant mortality rates. We find a positive relationship between GS and our well-being indicators over different time horizons, however the relationship breaks down during WWII. We also test if the Genuine Savings/Comprehensive Wealth framework is able to cope with massive disinvestment at the end of World War 2 due to war-related destructions and dismantlement. We find that negative rates of Genuine Savings were by and large avoided due to the accumulation of technology and growth-friendly institutions. We demonstrate the importance of broader measures of capital, including measures of technological progress, and its role in the process of economic development; and the limits of conventional measures of investment to understand why future German consumption did not collapse.
Blum , M , McLaughlin , E & Hanley , N 2017 , ' Accounting for sustainable development over the long-run : lessons from Germany ' , German Economic Review , vol. Early View . https://doi.org/10.1111/geer.12148
German Economic Review
© 2017 German Economic Association (Verein für Socialpolitik). This work has been made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at: https://doi.org/10.1111/geer.12148
DescriptionWe thank the Leverhulme Trust for partly funding this work, under the project ‘History and the Future: predictive power of sustainable development indicators’.
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