economy and sustainability

1. Is world economy sustainable?
By
Maxwell Ranasinghe

2. • There is lot of talk about sustainability as the
world faces insurmountable problems with
the current socio economic model.
• One has to probe into relationship between
humans and natural environment to
understand the concept of sustainability
• Before that we need to understand humans
and the natural environment

3. • Humans could be categorised into three types
in this regard
• Humans who lived in the past, currently living
on the planet and the humans that would
inhabit the plant in future.
• Natural environment could be categorised
into two major elements
– Biotic
– Physical

4. • The physical element consists of non living
matter
– found under, on and above soil
• The biotic environment consists of
– Fauna and flora

5. • The humans who lived in the past and live
currently on the planet have drastically
changed the physical and biotic environment
• That was done mainly by
– Developing agriculture
– Industry
– Infrastructure
– Human settlements

6. • Human needs and wants are ever increasing
and infinite
• But the biotic and physical environment that
have to supply raw materials to such needs
and wants are not increasing and finite
• That’s is the juncture where the conflict arises
between the human and the environment

7. Story of humans
• You can crudely tell the story of our species in
three stages.
• In the first, which lasted for the vast majority of our
time on Earth, from the emergence of Homo
sapiens over 300,000 years ago to about 12,000
years ago, humans lived largely nomadic
lifestyles, subsisting through hunting and
foraging for food.
• In the second, lasting from about 10,000 BC to
around 1750 AD, humans adopted agriculture,
allowing for a more secure supply of food and
leading to the establishment of towns, cities, even
empires.

8. • The third period, in which we all live, is
characterized by an unprecedented
phenomenon: sustained economic growth.
Quality of life went from improving very
gradually if at all for the vast majority of
human history to improving very, very
quickly.
• But in highly unequal in distribution of income
• This inequality is seen within countries as well
as among countries

9. • In the early civilisation men gathered food from forest and
lived under trees or caves and did not do any harm as such
to the environment.
• Even in the pre industrial era the humans did not have the
capacity to change the environment drastically
• The world before 1750 was as world of poverty, most
people in most ages lived difficult rural lives, always on the
edge of famine, disease and early death.
• However, they built treasures for human history, like the
Egyptian pyramids, the Acropolis, the Great Wall of China,
dagabas and tanks of Sri Lanka and the Notre Dame
Cathedral

10. • However after the industrial revolution (which
took place in 18th to 19th century)
• Had different stages of technological
development such as steam engine, railways,
automobile, exploration and invention of
different type pf chemical formulas, development
of machines, equipment and lastly ICT
• World War II gave a major spur to countless
technologies, including semiconductors, radar,
digital communications, computers, coding, and
others.

11. • The whole world is depending on energy for
its development and sustenance. That has put
an unbearable pressure again on the natural
resources
• About 200 years ago the earth had only about
1 billion humans
• By February 2022 is around 7.9 billion
• Now every 15 years another billion is added

12. • The needs of such increasing humans have to
be met by the same physical and biotic
environment where there is no growth at all
• Supplying and goods and services to satisfy
human needs could not be done by simple
operations
• The humans organised and mobilsed capital
and expert skill to provide such needs

13. • As such giant corporations were established to
expand the agriculture and industrial
production
• Universities and other research and
development institutes of technology were
focused on supporting this effort
• The production made was distributed with
expert marketing divisions of such
corporations

14. • Production concept was embraced and the large
scale corporations thought that they could earn
profits if they could produce goods at lower cost
and made it available widely for the consumers to
buy
• Consumer oriented society was created by the
marketers
• Western countries took the initial leadership and
now newly emerged economic giants like Japan,
Korea, China and India are also in the big picture.

15. • In this process the marketers not only satisfied
the needs of the consumers but they created
more needs among the consumers as their
orientation was to earn profits
• All that was developed by exploiting the
nature at an unprecedented scale

16. • Mainly in developing agriculture, natural Forest
were cleared without any regard to the bio
diversity and new varieties of crops were
introduced, chemical fertilizers were used
extensively to feed the ever increasing population
and their innumerable needs
• In developing the industrial production, mining of
minerals, fossil fuels and many other raw
materials were extracted hardly giving due
regard to preserving resources for future
generations

17. • With this socio economic model humans needed
more land to settle and develop infrastructure
(The governments developed infra structure to
facilitate the system including big defense forces
and mechanisms)
• Humans gathered around industrial zones and
capital cities and urbanisation took place at a
rapid rate
• Cities became production centers of goods and
services and rural areas became the suppliers of
raw materials

18. • The powerful companies and their affiliates
earned huge profits and men worked under their
factories and business, were part of their “input”
into production called ‘ human resources’
• In this process, not only natural resources were
exploited but also the human resources
• The model itself had its own disadvantages and
many times world experienced turbulent times of
companies and economies falling apart

19. Where we stand now?
• By end of Feb 2022 the world population was
7.9 billion
• It is over nine times the 800 million people
estimated to have lived in 1750, at the start of
the Industrial revolution
• It continues to rise and about 75 million is
added every year

20. • Humanity provides an ever-growing target for constantly
evolving viruses – a large biomass which has become
too uniform (physiologically, institutionally,
technologically and socially), exposed, densely packed
and highly interlinked (people, goods and services).
• Infective opportunities are exacerbated by rapid
transmission and poor disease suppression
• In particular, the distorted environmental-social interface
is regularly giving rise to harmful pathogens (like Ebola,
H1N1, SARS, Mers-Cov, and now COVID-19) that have
originated everywhere, jumping from animals to humans
• (GPMB, 2019; UNEP and ILRI,2020).

21. • They have posed ever-increasing global health
risks, and worse infections could follow.
• Most key epidemic risk factors (WHO, 2018) are
environment-related:
– Crowded disaster-prone human settlements
increasingly encroaching on animal habitats
– Antibiotics overuse in humans and animals that
increases microbial resistance, hazardous agricultural
practices, and climate change

22. By 2020 Largest economies
• Top Ten Countries by Nominal GDP at Current U.S. Dollar Exchange Rates
• In Trillions
• Country Nominal GDP PPP Adjusted Annual Growth (%) GDP Per Capita (thousands)
• United States $20.89 $20.89 -3.6% $63,413.5
• China $14.72 $24.27 2.3% $10,434.8
• Japan $5.06 $5.25 -4.6% $40,193.3
• Germany $3.85 $4.52 -4.6% $46,208.4
• United Kingdom$2.76 $3.08 -9.7% $41,124.5
• India $2.66 $8.97 -7.3% $1,927.7
• France $2.63 $3.15 -7.9% $39,030.4
• Italy $1.89 $2.49 -8.9% $31,714.2
• Canada $1.64 $1.83 -5.3% $43,258.2
• South Korea $1.64 $2.24 -0.9% $31,631.5

23. • Official value of world economy around USD
90 Trillion
( Unofficial or black economy where incomes are
not declared for tax purposes, illegal activities,
also count to another 1/3 of the world
economy)
• Sri Lanka 2017 GDP USD 94 Billion (official)
• Global percentage 94 x 100 = 00.10%
94000

24. Revenue of multinationals
Company Industry Revenue – U$
Billion
Country employees
Walmart General
Merchandise
485 USA 2,300,00
Sate Grid Utilities 315 China 926,000
Sinopec Petroleum 267 China 713,288
China National Petroleum 262 China 1,512.048
Toyota Motor Vehicle 254 Japan 364,445
Volkswagen Automotive 240 Germany 626,715
Royal Dutch
Shell
Petroleum 240 Netherland 89,000
Berkshire
Hathaway
Conglomerate 223 USA 367,000
Apple Consumer
Electronics
215 USA 116,000

25. World Population Growth 10000 BCE
to 2000 CE

26. Closer look at world population growth –
see the sharp increase after 1800

27. Growth of world economy – observe
the sharp increase after 1800

28. WorldPopulation Growth World Economic Growth

29. Population growth rate will fall but total
population is increasing

30. • World is growing rapidly but in highly unequal in
distribution of income
• This inequality is seen within countries as well as
among countries
• As such we find a world of fabulous wealth and
abject poverty
• Billions of people will live much longer than
previous generations but about 1 billion people
just struggle to live as they find it difficult to have
food, water, shelter , sanitation and basic health
care

31. World income level- Inequality among
countries - 2014

32. Inequality of income distribution within countries in 2014
Gini Index 0= perfect equality 1 = whole income in in one
person. More towards one, inequality is high

33. Measurements of economic growth
• GPD= Total income of the population at
current exchange rates
• PPP= Purchasing Power Parity . How much of
goods and services could be purchased
• HDI = Human Development Index ( taking per
capita income, education and life expectancy)
• IHDI= Inequality adjusted HDI (the IHDI is the
actual level of human development)

34. 0.900–0.949
0.850–0.899 US, Japan,Euo
0.800–0.849
0.750–0.799
0.700–0.749 ( Sri lanka)
0.650–0.699
0.600–0.649
0.550–0.599
0.500–0.549
0.450–0.499 Afrrica
0.400–0.449
0.350–0.399
Data
World map indicating the Human Development Index (based on 2015 and 2016 data, published on 21 March 2017).

35. The economic dilemma
• This model of economy not only unequal but
also threatening the survival of the earth
itself.
• Gigantic economy is creating a gigantic
environmental crisis.
• A species that depend on the beneficence of
the nature are doing a very poor job in
protecting it

36. Important for survival
• We must ensure that economic growth is
environmentally sustainable
• The economic progress should not undermine the
earths life support systems of biodiversity, soil
productivity, safe climate and productive oceans
• If we do not combine economic growth with
social inclusion and environmental sustainability,
the economic gains will be short lived
• Social instability and rising frequency of
environmental catastrophes will out weigh the
economic development made

37. Environmental Threats
• Environment threat is rising all over on several
frontiers
• We are changing the earths climate, the
availability of fresh water, the oceans chemistry
and the habitats of other species
• These impacts functioning of key natural
processors such as cycle of water, nitrogen and
carbon upon which life depends
• We have changed this within the last 250 years in
an unprecedented manner in the span of
humanity’s 10000 years of civilisation

38. Planetarey boundaries- Blue line is the
limit – (Rockstrome Et al 2009)

39. • On the other hand, in addition to normal
economic activity the human conflicts and
fear of others attacking another have paved
the way to develop devastating armaments
such as
– Nuclear
– Bilological
– And other known and unknown Weapons of Mass
Destruction

40. • Nine countries together possess around
15,000 nuclear weapons.
• The United States and Russia maintain roughly
1,800 of their nuclear weapons on high-alert
status – ready to be launched within minutes
of a warning.
• Most are many times more powerful than the
atomic bombs dropped on Japan in 1945.

41. • A single nuclear warhead, if detonated on a large
city, could kill millions of people, with the effects
persisting for decades.
• UK, France, China, India, Pakistan, Israel and
North Korea are reported to have nuclear arsenal
• Current annual global military expenditures
are around $2 trillion (Sipri, 2020). (Only
about $100 billion ( 5%) of this amount per
year is devoted to global poverty reduction)

42. Three categories of people are looking
for economic improvement
• The poor are looking to find food, safe water,
health care and shelter for mere survival
• Those above the poverty line are looking for
improved prosperity for their children
• Those in the high income category are
expecting even higher levels of wellbeing

43. • Although there were no drastic changes took
place in the economic model, an intellectual
dialogue was commenced on the sustainability of
the model.
• The world opened its eyes with the publication of
Barry Commons book “ The Closing Circle” where
he argued the modern technology is essentially
flawed and it cannot indefinitely satisfy the
growing needs of humans as resources are
limited.

44. • The publication of the seminal book “ The
limits of growth” by eminent panel of
scientists in 1972
• The publication of influential book titled “
Small is beautiful; Economics as if people
mattered” by Joseph Schumacher in 1972
• The publication of “ Towards a steady State
Economy: by Herman Dally

45. • Brought about new thinking on the relationship
of limited natural resources and the moderns
large scale production systems are unsustainable
as resources will deplete
• Joseph Schumacher referred Buddhist Economic
philosophy in his book and highlighted the fact
the humankind ought to be obtain the maximum
amount of well being with the minimum amount
of consumption.

46. Sustainability and Business
• In 2015, sustainable development was recognised as the
principle objective of humanity through the universal
acceptance of the United Nations 2030 Agenda and 17
sustainable development goals (SDG) by all countries
(UN, 2015)
• Businesses should realign their strategies to facilitate
global transformation of complex, interlinked socio-
economic and ecological systems, and build a more
resilient and sustainable future.
• Through the strategic planning process, value is to be created:
value for consumers, value for the organisation, and, importantly,
value for society at large (AMA 2007).

47. Sustainable Marketing and
Responsibility of the Businesses
• Sustainable marketing is simply marketers working together to
foster marketing activities and strategies that promote environmental
wellbeing, social equity, and economic development in a manner
that enhances the business
• Sustainable marketing could be achieved by corporations
by embedding that to their Corporate Social Responsibility.
• “CSR is the continuing commitment by business to behave
ethically and contribute to economic development while
improving the quality of life of the workforce and their
families as well as of the local community and society at
large” - World Business Council for Sustainable
Development.

49. To be continued
• Sustainable Development Goals(SDG-2030)
will be described in detail in the next
presentation
• Then we need to discuss the challenges faced
by the world in attaining SDGS and the
responsibility of marketers as partners of SDGs
• ( ref: Prof Jeffery Sachs. Check youtube)