Choosing the right mix: market state and institutions for environmentally sustainable industrial growth

Abstract

Efficiency, Growth and Exports are the main items on nationzs economic agenda. There is some concern (perhaps not adequate) for developing Safety Nets for people hurt/left out by growth. Unfortunately environmental implications of industrial restructuring have not been given adequate attention. We present a framework to identify the appropriate policy response to make growth environmentally sustainable. We see no contradiction between growth and environment sustainability. There is a broad degree of consensus that the size of the cake needs to be expanded. The issue therefore is not to have growth or not. The issue is what kind of growth and what pace of growth. Environmental implications are contingent on the pace and kind of growth. Since environment sustainability and economic growth reinforce each other, we need to make environment as an explicit decision variable in the macro economic policy.