The pace of economic development during seventeenth and eighteenth centuries was static. Development speed gained momentum after the mid of nineteen’s century both in the capitalistic and socialistic world. There were catalytic agents behind this tremendous growth momentum. New institutions such as World Bank and International Monetary Fund helped facilitate the development and many countries attained the developed country status in a short span of time. The fall of Berlin Wall and the dismemberment of the Soviet Union culminated in the philosophy of socialism as development around the world were modelled after the free enterprise system. The rapid automation and information communication technology [ICT] has a tremendous impact on the production method and management, marketing and human resources management.
Economic development is not an unmixed blessing; there are inevitable consequences of development in climate. Again the speed of development after reaching a pike may stagnate in the absence of innovation. Innovation translated in technology is also important in the development process. The Nobel Prize in economics this year is given to US duo for their contribution to climate change and role of technology in acceleration of development. William Nordhaus, a professor of Economics at Yale University was awarded for his contribution of “green growth” models that show how innovation and climate policies can be integrated with long run economic growth. He asked the question of sustainability in his book with James Tobin, Is Growth Obsolete? The importance of various concept green accounting attempts to delineate how environmental degradation can be measured against economic growth. His “Dynamic integrated Climate – Economy Model” developed in 1990s combines theories and empirical results from diverse discipline such as physics, chemistry and economics and now widely used in charting how the economy and climate co- evolve. The model can be used as a policy guideline in calculating carbon taxes uniformly as a remedy for problems caused by greenhouse gas emissions by developed countries.
Paul Romer worked as chief economist at the World Bank till January 2018. Later, he joined at the Stern Scholl of Business in New York University. One of the illustrated economists of our time, Paul Romeris is well known for his model on “endogenous growth theory” which explains how ideas differ among agents and how it thrives in specific conditions. His research demonstrated how economic forces generate willingness to produce ideas and innovations.
The jury on their contribution emphasised that while Nordhaus and Romer “do not deliver conclusive answers… their findings have brought us considerably closer to answering the question of how we can achieve sustained and sustainable global economic growth. They show and they have taught us how the economic situation is dependent on technological development, environmental changes, so they integrate economics with major issues facing mankind.”
Economic analysis is enriched through both the model, one with the interface between climate change and growth and the other is on the innovation and technology. Climate change bears a lot of cataclysmic evil as we observed frequently and the selection of both the laureate deserved commendation from the environmentalist and development workers. United Nations in a report emphasised the danger inherent in denial of the evils of climate change and the urgency of remoulding the society and the world economy to avoid global climatic chaos. Our planet’s surface has already warmed by one degree Celsius. To quote Paul Romer, “ One of the problems with the current situation is that many people think that dealing with protecting the environment will be so costly and so hard that they will ignore the problem and deny it exists.” Now there is the urgency to address the issue and the Prize is the manifestation that “humans are capable of amazing accomplishments when we try to do something.” The Nobel Committee probably foresee that the withdrawal of the United States from the Paris Agreement in 2017 is a stumbling block to raise money to fight climate change and the developing world will pay for the sin of the developed world.
The writer is a Professor of Economics, United International University.