Ram, Justine
(2012)
Distribution and sustainable development in a natural resource-based economy.
PhD thesis, London School of Economics and Political Science.
Abstract
There is still some ambiguity about what is sustainable development. From an economic point of view it involves maintaining a stock of assets for posterity that is equal to or greater than the stock of assets of the current generation. This is the basis of the capital approach to sustainable development. To measure how sustainable an economy is, based on the capital basis of sustainable development, multilateral institutions such as the
World Bank use wealth accounting combined with the genuine savings approach to measure how well economies are saving for the future, net of current asset depreciation.
These measures are useful for telling policy makers how their policies are contributing to
sustainability and whether their economies are on a sustainable development path.
Although these measures tell which assets are being depleted and the level of savings
required, they do not tell why inadequate savings or inadequate investments might be
occurring and how these assets are distributed among income groups within the economy.
These measures are also not linked explicitly with the development prospects of the
country and the needs of the current generation. This thesis attempts to assess if
distributional outcomes affect how much countries save and therefore whether this has
any impact on sustainability. To examine the impact of distribution on sustainability, a
case study of Trinidad and Tobago (T&T) is conducted. T&T has had a negative genuine
savings rate for most of the last two decades, primarily due to the excessive exploitation
of its natural resources (oil and natural gas) without sufficient savings or reinvestment of
the revenues from these resources. Has the distribution of these resource rents had any
impact on saving outcomes? An attempt is made to answer these questions by assessing
how government expenditure is distributed and who benefits most from the exploitation
of the natural resources. The analyses contained within the thesis show that expenditure
on energy subsidies, the distribution of human capital and the overall distributions of
rents are all regressively distributed.
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