9781137445353 01 prexxii€¦ · 1.3.1 Summary11 1.3.2 Further reading 12 1.3.3 Assignments12 1.3.4...

v

cONtENtS

List of Figures xii

List of Tables xiv

List of Boxes xv

Acknowledgments xviii

Preface: Using this Book xx

Part I: FoundatIons oF EconomIcs, GovErnancE and socIEty 1

1 The World Economy: trends and Indicators 3 Overview and learning objectives 3 1.1 Worldwide economic growth in the last century 3

1.1.1 Growth in China and the law of increasing and decreasing economic growth 5

1.2 Welfare, well-being and sustainable development 7 1.2.1 Distribution of welfare and well-being worldwide 7 1.2.2 Future of the economy 9

1.3 Learning tools 11 1.3.1 Summary 11 1.3.2 Further reading 12 1.3.3 Assignments 12 1.3.4 Self-test questions 12

2 market Economies and Governments 13 Overview and learning objectives 13 2.1 Definitions and basic concepts 14 2.2 Welfare and the market economy 15

2.2.1 The forward march of the market economy 15 2.2.2 Liberalism and the market economy 16 2.2.3 The market economy and citizens’ well-being 17

2.3 Neoclassical free-market framework 17 2.3.1 Gross national product 18 2.3.2 Freedom and equality for market participants 19 2.3.3 Invisible hand 20 2.3.4 Market discipline 20 2.3.5 Money streams to profit 20 2.3.6 Comparative advantages 21

Copyrighted material – 9781137445353


vi Contents

2.4 Limitations of market regulation through supply and demand 23 2.4.1 Perfect information 24 2.4.2 Forms of monopoly 25 2.4.3 Long- and short-term pricing 26 2.4.4 Unbalanced growth 27

2.5 How the market economy affects prosperity, well-being and environment 29 2.5.1 Collective goods 29 2.5.2 Goods with an incorrect price 30 2.5.3 Redistribution of prosperity 31 2.5.4 The free market: Prosperity, well-being and environment 32

2.6 Economic and financial crises 32 2.6.1 Crisis and economics schools 32 2.6.2 Financial crisis 35 2.6.3 Central banks and liquidity crisis 36

2.7 Case Study: The US sub-prime crisis 36 2.8 Learning tools 38

2.8.1 Summary 38 2.8.2 Further reading 38 2.8.3 Assignments 38 2.8.4 Self-test questions 39

3 Good Governance 40 Overview and learning objectives 40 3.1 Starting points for good governance 42

3.1.1 Introduction 42 3.1.2 The Enlightenment and liberalism 42 3.1.3 Democracy 43 3.1.4 Human rights 45 3.1.5 Trias politica 46

3.2 Good governance of a state 46 3.2.1 Introduction 46 3.2.2 The definition of good governance 47 3.2.3 The extent of government involvement 49 3.2.4 Areas of government involvement 50

3.3 Case Study: Governance in Mozambique 58 3.3.1 Introduction 58 3.3.2 History of Mozambique 59 3.3.3 The Republic of Mozambique 60 3.3.4 Good governance in perspective 63


4 Life in modern society 67 Overview and learning objectives 67 4.1 Nature 68



Contents vii

4.1.1 Homo economicus (‘calculated self-interest’) 69 4.1.2 Status 69 4.1.3 Aggression 70 4.1.4 Respect for authority 72 4.1.5 Exploratory impulse 74 4.1.6 Empathy 74 4.1.7 Feelings of fairness (justice) 76 4.1.8 Conformism 76 4.1.9 Kin selection 77 4.1.10 ‘Nature’ and the human brain 78 4.1.11 Nature and contemporary society 80

4.2 Ethics 82 4.2.1 Ethics and society 83 4.2.2 Ethics and the state 84 4.2.3 Ethical starting points 85 4.2.4 Development of ethical systems 89

4.3 Modern society 90 4.3.1 Social capital 90 4.3.2 Social capital and Trompenaars 91 4.3.3 The modern state and sustainable development 92

4.4 Case Study: Tit-for-Tat 93 4.5 Learning tools 95


Part II: sustaInabLE dEvELoPmEnt and GLobaLIzatIon 99

5 sustainable development: Environmental and social aspects 101 Overview and learning objectives 101 5.1 Prosperity, well-being and the environment 102 5.2 Sustainable development 103

5.2.1 Introduction 103 5.2.2 Definition 103 5.2.3 Triple bottom line (triple P) 103 5.2.4 Green growth 104 5.2.5 Planetary boundaries 105 5.2.6 Sustainable development summits and organizations 106 5.2.7 Sustainable Development Goals 106

5.3 Environmental sustainability 108 5.3.1 Introduction 108 5.3.2 Water resources and management 109 5.3.3 Natural resources 113 5.3.4 Ecosystems and biodiversity 117 5.3.5 Use of energy and its impacts 119

5.4 Social sustainability 123



viii Contents

5.5 Case Study: Biofuel’s dilemma: Food or energy 125 5.6 Learning tools 126


6 Governance of sustainability 129 Overview and learning objectives 129 6.1 Factors influencing environment impacts 130

6.1.1 Population 131 6.1.2 Prosperity 132 6.1.3 Technology 138

6.2 Environment and the market economy 139 6.2.1 Tragedy of the commons 140 6.2.2 Incomplete efficiency of the free market 141 6.2.3 Government tools for market regulation 142

6.3 Environment as a government problem 146 6.3.1 Governance of well-being in the long term 147 6.3.2 Circular economy 151

6.4 Case Study: Forest management in Uttranchal, India 152 6.5 Learning tools 153


7 Globalization 157 Overview and learning objectives 157 7.1 Definitions 158

7.1.1 Globalization, economic globalization and globality 158 7.1.2 Competing concepts: Internationalization, liberalization,

universalization 160 7.1.3 The globalization debate: Radicals, sceptics and the pragmatic

perspective 161 7.2 Increase of globalization? 162

7.2.1 Acceptance of the market economy 163 7.2.2 Removal of restrictions to international trade and capital

transfers 166 7.2.3 Innovations in technology 167 7.2.4 Regional partnerships 169 7.2.5 International developments for peace and security 170

7.3 Global economic governance: Supranational public institutions 171 7.3.1 Keynes’s ‘leaky bucket’ model of aggregated demand 172 7.3.2 International Monetary Fund 173 7.3.3 World Bank 174 7.3.4 World Trade Organization 175



Contents ix

7.4 Case Study: Which is the most transnational company? 178 7.5 Learning tools 180


8 The Impact of Globalization on sustainable development 182 Overview and learning objectives 182 8.1 The impact of economic supranational organizations 183

8.1.1 The impact of the IMF 184 8.1.2 The Washington Consensus 184 8.1.3 The augmented and benevolent Washington Consensus 187 8.1.4 The impact of the World Bank 189 8.1.5 World Bank criticisms 189 8.1.6 The impact of the World Trade Organization 191

8.2 Consequences of globalization 197 8.2.1 Globalization and people’s well-being 198 8.2.2 The age of inequality 199 8.2.3 Globalization and financial crisis 204

8.3 Case Study: The World Bank faces competition 206 8.4 Learning tools 207


Part III: busInEss ImPLIcatIons oF ‘GLobaLIzatIon’ and sustaInabILIty 211

9 Innovations in Global supply networks 213 Overview and learning objectives 213 9.1 Increasing international business activity 214 9.2 Products, materials and resources 215

9.2.1 Materials management 215 9.2.2 Scarcity of resources and the need for recycling 216

9.3 Assessment of product life cycles 219 9.3.1 Environmental aspects of products 219 9.3.2 Life cycle assessment (LCA) 219 9.3.3 Social assessment of a product life cycle 221

9.4 Sustainability in supply chains and industrial networks 222 9.4.1 Supply network dynamics 222 9.4.2 Managing the dynamics 223 9.4.3 Supply network responsibility 223

9.5 Innovations towards sustainability 225 9.5.1 Introduction 225 9.5.2 Cradle to Cradle (C2C) 227 9.5.3 Principles of the circular economy 229



x Contents

9.5.4 New business models for sustainability 230 9.5.5 Grassroots innovations 231

9.6 Case Study: Sustainable innovations in the supply network of the fashion/clothing industry 232


10 corporate social responsibility 236 Overview and learning objectives 236 10.1 Corporate social responsibility in the twentieth century 236 10.2 Motives for corporate social responsibility 237

10.2.1 Licence to operate 238 10.2.2 Stakeholders 240 10.2.3 Business regulates itself 241 10.2.4 Government emphasizes values 243

10.3 Definitions and guidelines for corporate social responsibility 243 10.3.1 International Guideline for Corporate

Social Responsibility 244 10.3.2 CSR performance ladder 245 10.3.3 Various CSR-related guidelines, standards, initiatives

and programmes 245 10.3.4 CSR reporting 247

10.4 Implementation of a CSR strategy 248 10.4.1 Choosing a mission 249 10.4.2 The community model 249 10.4.3 Cooperation 253 10.4.4 Transparency 254 10.4.5 Authenticity 255

10.5 Limitations of corporate social responsibility 256 10.5.1 Critical CSR 257 10.5.2 Corporate social responsibility orientation (CSRO) 257

10.6 Case Study: CSR in the mining industry 259 10.7 Learning tools 260


11 Globalization and strategy development 262 Overview and learning objectives 262 11.1 Business opportunities for new economies 263

11.1.1 SMEs go international 264 11.1.2 Principles for the Bottom of the Pyramid 266 11.1.3 Discussions on the Bottom of the Pyramid 269



Contents xi

11.2 Development of an innovative CSR strategy 270 11.2.1 Beyond Greening 270 11.2.2 Drivers for CSR business and manufacturing 271 11.2.3 Developing innovative business strategies 274

11.3 Case Study: Microcredit 282 11.4 Learning tools 284


12 The challenge of Progress towards sustainable development 287 Overview and learning objectives 287 12.1 Spread of managerial innovations in the past 288 12.2 Transition to sustainable development 289

12.2.1 Transition and citizens 292 12.2.2 Transition and government 293 12.2.3 Transition and business 293

12.3 Case Study: Germany’s ‘Renewable Energy Law’ 294 12.4 Learning tools 295


Notes 297

Index 349



3

Learning objectives

At the end of this chapter, readers will be able to:

● Recognize the world economy’s well-being and growth indicators. ● Acknowledge the growth and pivotal role of China in the world economy. ● Understand recent trends in economic growth and well-being. ● Acknowledge reasonable expectations for future trends.

overview and learning objectives

The world economy has undergone radical changes in the last few decades. The end of the Cold War in the late 1980s triggered the acceptance of market economies world-wide. New economic giants such as China and Brazil emerged and changed the balance of economic power, which has been steadily shifting from West to East, and – to a much lesser extent – from North to South. Simultaneously, growing economic internation-alization and globalization increased interdependencies between national economies through cross-border networks of production and consumption. Since 1978, US, UK and global institutions such as the World Trade Organization (WTO) and the International Monetary Fund (IMF) promoted so-called neoliberal economics, aimed at removing barriers to free movements of capital, goods and services across national boundaries. Pressure mounted on developing countries to deregulate business activity, cut welfare spending and dismantle the apparatus of state intervention in the economy.

This chapter provides a glimpse of antecedents of such shifts in trends in policy and their consequences on worldwide welfare and well-being. It takes a look at historical pat-terns of worldwide economic growth and inequality using China, the rising star in the world economy, and Africa, the poorest region of the world, as focal points to explore trends, indicators and reasonable expectations for welfare growth and the direction it is taking. In addition to economic growth figures, a more holistic view of economics is used to understand how the economy affects our well-being: inequality, freedom and envi-ronmental sustainability are as influential to well-being as they are to economic growth.

the WorLd economy: trends and IndIcators

1

1.1 Worldwide economic growth in the last century

This section will provide a basic overview of growth trends in the past century. The most commonly used indicator of growth is gross domestic product (GDP): the total value of goods and services produced by a country in a year. GDP is a measure of a country’s



4 Part I: Foundations of Economics, Governance and Society

‘value added’. It aggregates the yearly value added to the economy of a country by each productive unit residing in it (the value of its output minus the value of goods that are employed in producing it).1

Growth of GDP is dependent on the following:2

1. Population growth.2. Investment ratio (relation between investment and GDP).3. Employee education level.4. Foreign investment and trade.5. Monetary policy.6. Use of resources such as mined materials, energy and land.

Worldwide economic growth experienced a period of continuous expansion after the end of the Second World War (WWII) in 1944. The post-war period from 1945 to 1980 was characterized by the dominance of the welfare state, with a focus on redistribution of wealth through state investment in education, health and infrastructure.3 During WWII (January 1941) US President Franklin D. Roosevelt announced plans to end poverty. His famous ‘Four Freedoms’ speech touched on the minimum living standards necessary for well-being and health.4 World leaders were anxious to fight poverty not only in their own countries but also globally, although possibilities for real coordinated global action began only at the end of the Cold War.5 Figure 1.1 shows results for population index and the GDP per capita of world population. When both indexes are multiplied the result is the increased GDP for world population.6

25002414 = 47,000 billion $

Index Total GDP World

Index Real GDP PerHead (World)

Index World Population

584 = $7,300 per person

413 = 6.4 billion people

2000

1500

1000

500

01900 1950 2000

Figure 1.1 GDP and population 1900–20057

It can be concluded that population indices and GDP per capita have increased dramati-cally and as a result GDP for the world population has risen from 100 to 2414 in only 100 years.

Much has changed in the past 20–30 years. Since 1980, neoliberal policy – discussed in detail in Chapter 8 – increasingly dismantled the allegedly inefficient and overgrown welfare state, reducing welfare budgets and promoting free trade and unrestricted foreign investment as drivers of growth.8 A significant step towards



The World Economy: Trends and Indicators 5

worldwide welfare improvement was the 1990 UN Conference which focused on education for all the world’s children, and this item remained on many agendas throughout the decade. A series of economic social crises in the late 1990s led to mounting criticism of the social impacts of neoliberal policy.9 As a response, the new century gave birth to what Peet (2008) termed as an ‘augmented and benevolent’ neoliberal agenda. This new agenda maintained the focus on free trade and deregula-tion but also accepted the need for social welfare budgets and condoned the external debts of the least developed countries.10 This new approach for liberal as well as more socialism-based economies led to increased funding not only for education, but for health care and poverty relief as well.11 Despite fluctuations, a period of sustained growth ensued until 2007 when the world economy entered into the worst economic downturn and longest lingering recession since 1930.12 The crisis shattered the domi-nance of neoliberal ideas and triggered the partial resurgence of state intervention, some degree of capital control and welfare state policies worldwide.13 Uneven eco-nomic recovery started again in 2009, but ever since the advanced economies have had to deal with sluggish growth, averaging 2% in the US, 1% in Europe and 0.5% in Japan from 2009 to 2013.14 On the other hand, although it was reduced compared to pre-recession figures, emerging countries still enjoyed inertial growth. Growth in Eastern Asia, China and India was on average above 6% during the same period, 4.5% in Africa and 5% in Latin America.15

This dual nature of growth in the world economy today raises questions about the continuity of these trends. Are wealthier economies entering a maturity phase of stag-nant growth or even de-growth? If consumption continues to fall in the West, the world economy is likely to experience a cooling process; will productivity and welfare continue to increase for the world’s poor countries in the future?16 Alarmingly, both relatively stagnant and relatively booming economies share a common feature: the incessant rise of economic inequality, which may prevent long-term welfare and even, as Nobel Prize winner Joseph Stiglitz argues, eventually lead to the collapse of capitalism.17 On the other hand if consumption returns to pre-recession patterns we will also have to ponder the future of our natural resources, the developmental impacts of climate change and inequality, and the success of sustainable development as well as human rights, democ-racy and international trade issues.

1.1.1 Growth in China and the law of increasing and decreasing economic growth

For a better insight into trends in economic growth during the last 30 years, it is instruc-tive to look at China. With more than one billion people, China has been fast outpacing other world economies and its gradual transition to a relatively open market economy provides a unique opportunity to examine the evolution of growth patterns. From 1979 to 2013 average Chinese growth rates were 9.5% of GDP increase per year. In the 1980s GDP growth averaged 8% but rose fast in the 1990s. GDP growth peaked in 2007 at 14.2%, but subsequently fell to 9.6% in 2008 after the global economic crisis hindered Western demand for Chinese products. Despite fluctuations – such as a 10.4% GDP increase in 2010 – the trend continued downwards to 7.1% in 2015.

The pattern of 30 years of growth in China closely responds to the law of increasing and diminishing growth rates. In the early stages of development, low growth percent-ages are the norm, as in the early 1980s in China, because the implementation of new laws and reforms needs considerable time to take effect. After a while, when new policy begins to take effect, growth margins increase. In China between 1983 and 2008,




percentages remained high and stable with no discernible changes. Finally, according to the law of increasing and diminishing growth rates, when desired goals are achieved the growth decreases. This phase of decline is inevitably happening in China.

To ascertain the pattern that China’s growth will follow in the coming years, we can look at the six factors influencing GDP that were outlined on p. 4, Section 1.1.

Expectations for the Chinese job market indicate that workers’ migration to the cities from the country will continue to increase at its present pace. The number of workers for the industrial sector will also grow.18 China has also been enjoying a high level of for-eign investment. In 2005 it had already reached 40%.19 China has a high investment ratio; much higher, for example, than Germany, whose investment ratio declined between 1960 and 2002 from 27% to 19%.20 In fact, between 2007 and 2008 developed countries recorded a sharp decline in foreign investment of around 29% but developing and transition economies showed an increase in total investment of around 37% and 17% respectively. However, China experienced a continued decrease in foreign direct invest-ment (FDI) levels from 2009 onwards. In 2013 only, FDI in China dropped by 18%.21 The Chinese are also working to develop their educational skills. Since 1999, the number of students completing Masters Degrees has increased yearly by 30%.22 China’s member-ship of the WTO led to relaxed restrictions on imports and exports which stimulated further growth helped by China’s monetary policy which increased the competitive-ness of Chinese exports.23 By 2007 the yuan exchange rate was undervalued by 27.5% according to a study by the Peterson Institute commissioned by the US Congress.24 However, the value of the yuan is tied to the US dollar by Chinese law (the yuan cannot move more than 2% a day against the US dollar). Therefore, with an increasingly strong dollar, by 2014 the yuan appreciated by more than 30% compared to 2008 values. By 2015 the yuan was the world’s second most overvalued currency after the US dollar.25 The Chinese government corrected the situation with small devaluations in August 2015. Although only amounting to 4.5% depreciation, the devaluation triggered three things: panic within global markets, hysteria within the media and fears of currency wars within political circles. The global overreaction – a clear sign of the pivotal role of China in the world economy – stunned Chinese leaders, who assured world leaders that there would be no further currency adjustments.26

Production of Chinese raw materials is also enjoying a boom, with the mining industry producing more than ever before. Aluminium production, for example, increased by 60% between 2005 and 2006 and steel production is also on the increase with a 30% rise in 2015.27 Energy is also profiting due to the immense Chinese coal reserves, but this is becoming less popular because of the hazardous CO2 emissions produced during coal mining.

Despite positive figures, many economists feel that China is headed for a decrease in growth in the coming years which correlates with the law of diminishing returns. Less traction is expected for individual investments, schooling and migration and there is increasing pressure on the Chinese to revaluate the yuan which would have an immediate effect on exports. Decreases in growth are also expected for land, water, raw materials and energy and these should stabilize or even go into negative figures. The mining and traditional energy sectors will almost certainly have less growth with decreasing yields and it will be imperative that China finds new environmentally friendly energy and raw material sources. Productive growth will diminish but still remain above Western levels. Expectations for the future are a 5%–7% yearly rise, which is still more than the 1%–2% growth figures predicted for the West.28, 29, 30 See Box 1.1 for some thoughts on how China’s growth curve is reflected in its opening of new museums.




Box 1.1 Modern Chinese museums and the growth curve31

Growth is a ‘natural’ process and can be easily visualized using a curve. The trick is to determine the critical point of entry on the curve and to take into consideration the linear or exponential factors. For China, increased exponential growth can be shown in many areas. The beginning of China’s opening to the West was marked 30 years ago, with culture developing as fast as the economy. Before the 2008 Beijing Olympic Games, 100 new museums were opened and by 2015 another 900 were expected, with at least one museum for every city in the People’s Republic of China.

A new era of openness and freedom is slowly taking hold as long as there is no embarrassing public criticism of the ruling party. Chinese society is offering greater diversity for media expression. Experts claim that the increased demand for information has rendered state control ineffective in some areas and public service broadcasting does not follow a clear uniform policy.32 The censor has scissors at the ready but at the same time people are striving for quality, independence and impartiality.33 The Internet is also offering increased options for gathering news and information.34 Chinese bloggers are now an integral part of the social fabric and have assumed the role of criticasters for non-politically tinted messages as well as sup-porting central government policy in the battle against red tape and corruption.35

1.2 Welfare, well-being and sustainable development

In order to see the results of development it is necessary to look at different indicators of welfare. The growth of GDP on its own is not a solid indicator of economic progress and well-being.36 Well-being refers to an experience of a ‘good life’ which also depends on input from income distribution, environmental protection, health care and education, among other factors. This section will examine the different indicators that are used to create an image of welfare and well-being that not only apply to today’s world but also look ahead to the future.

1.2.1 Distribution of welfare and well-being worldwide

Income gap between rich and poor countriesThe income gap between rich and poor countries has increased steadily through the centuries but came to a halt in 1992 in the West. In 1700 the comparison was roughly equal because Western society was relatively as poor as its Eastern counterparts. The awakening of Eastern Asia, and now also Africa to a certain extent, has brought more income inequality which can be represented by what is called the Gini coefficient. The Gini coefficient ranges from 0, representing perfect equality, to 1, representing perfect inequality. If the wealthiest 1% of residents in a country have 100% of the income, the Gini coefficient approaches 1. If everybody has the same income, the Gini coefficient approaches 0. We see that the gap increased from 0.48 to 0.67 from 1700 until 1992.37 From 1992 to 2008 there was a decrease, and the value of the coefficient in 2008 was 0.62. However, new research from Joseph Stiglitz has argued that these figures are misleading because fast-developing Asian economies are included in the group of poor countries. His calculations of the income gap between poorest countries (excluding East Asia) and wealthiest countries show that income inequalities between the two groups have been steadily increasing.38 Additionally, Gini coefficients have been criticized because




of the complexity of their calculations and because the index is heavily influenced by the proportion of middle-income citizens. The higher the percentage of middle-income citizens, the lower Gini is. This makes Gini a weak indicator of extreme poverty and the differences between the poorest and the richest residents. An alternative indicator of inequality is gaining international consensus: the Palma ratio, named after its creator, the Chilean economist Gabriel Palma. Palma ratios are easy to calculate and very effective for conveying extreme inequality. Palma ratios are calculated as the aggregated income of the richest 10% divided by the aggregated income of the poorest 40%.39

Income differences within countries Scores for income inequality vary from country to country. From 1970 to 1985 this inequality decreased on average but increased afterwards due to several large countries’ shift to a market economy. China, Russia and India experienced this first-hand but so did developing countries with a strong export trade or dependence in natural resources investment.40 Inequality, in turn, also increased in countries with a long-standing market economy. The income increase has been particularly pronounced in the US and to a lesser extent in most European countries.41 Chapter 8 will explore in more detail the causes and consequences of inequality.

0.3

0

0.4

0.5

1975 1982 1989 1996 2003 2010

China

India

Holland

Tanzania

Russia

0.23

0.25

0.31

0.34

0.36

0.37

0.410.41

0.45

0.470.47

Figure 1.2 Gini coefficient, China, India,42 Holland,43 Tanzania44 and Russia45

Box 1.2 Well-being worldwide: United Nations Millennium Development Goals

After the Cold War, fighting poverty became a major goal of the United Nations (UN). After years of ideological trench warfare between capitalism and commu-nism, new ideas emerged putting the state in a favourable light, and allowing it to intervene in the market in a friendlier and more sociable manner. The process towards global welfare received a strong boost in 2001 when the leaders of

(Continued)




1.2.2 Future of the economy

Though there is a disagreement among economists, Piketty (2013) has presented inequality theory in a unified way by integrating it with income, economic growth and income distribution between capital and labour. Simply put, in a free market economy the rent of capital (profit) grows much faster than the rent of labour (salary) and there-fore the owners of capital such as firms’ owners and investors receive a higher share of growth than workers. Piketty’s work predicts future exponential growth of inequality if preventive measures are not implemented globally.49 Statistical evidence suggests that inequality hinders long-term growth, fuels violent conflict and triggers migrations.50 Therefore, among the crucial economic conundrums confronting private sector–led

185 countries signed up to the UN Millennium Development Goals (MDGs), a set of quantifiable targets to improve welfare and well-being in developing countries.

The eight goals were established following the Millennium Summit of the UN in 2000, following the adoption of the UN Millennium Declaration. All UN member states at the time and many international organizations, such as the World Bank, committed to help achieve them by 2015.

In order to develop a concrete action plan to achieve the MDGs and to reverse the grinding poverty, hunger and disease affecting billions of people, the Millennium Project was commissioned by the UN Secretary-General in 2002. In 2005, the independent advisory body, headed by Professor Jeffrey Sachs, presented its final recommendations to the Secretary-General in a practical plan for achievement.46

The Millennium Development Goals

1. To reduce extreme poverty and hunger2. To achieve universal primary education3. To promote gender equality and empower women4. To reduce child mortality 5. To improve maternal health 6. To combat HIV/AIDS, malaria 7. To ensure environmental sustainability 8. To develop a global partnership for development

In 2012 the UN Secretary-General established the UN System Task Team on the Post-2015 UN Development Agenda, bringing together more than 60 UN agencies and international organizations to focus and work on sustainable development. A yearly report kept track of how the involved countries were getting on and substantial improvements have been noted in almost every goal. The exception is goal 7 – ‘To ensure environmental sustainability’ – where some targets improved, such as access to drinkable water, but other targets drastically worsened: pollution, emissions and extinction of species increased.47

Moreover, progress has been uneven between countries, with only one country – Brazil – achieving all targets. The only goal where targets were globally achieved was goal 1, the aim to reduce extreme poverty by half. In 1990 almost 42% of people were classified as living in conditions of extreme poverty and in 2010 this percentage dropped to 22%.48

In 2015, the MDGs were replaced by a new set of indicators: the Sustainable Development Goals (SDGs), which will be discussed in Chapter 5.




development and requiring collective action is how foreign investment in developing countries may increase growth but also increase income inequality, a key global chal-lenge for the next decades.51 The situation is particularly acute in natural resource economies such as those in African countries which might otherwise be flourishing according to macroeconomic indicators. Poverty alleviation from an investment in natural resources appears to get concentrated within certain strata of society and further increases inequalities between the genders despite various corporate efforts of linking such investment to development outcomes.52 (See also Chapter 8’s discussion on globalization and inequality.)

Moreover, worldwide welfare and distribution of income are not the only develop-ment indicators to be examined. Two centuries of increased productivity have given Europe and other parts of the world a dramatic improvement in welfare and well-being but at the same time environmental concerns have begun to assume more prominence. Scientists, politicians, policy makers and concerned citizens have pointed out the down-side of unchecked consumption. Recycling, renewable energy, clean air policy, toxic emissions and water purification have all become agenda points for international envi-ronment meetings. Politics, science and pressure groups have become more involved and reached an important goal with the United Nations’ 1987 publication of Our Common Future. This work, also known as the Brundtland Report, coined the definition of ‘sustainable development’ (SD) as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.

SD acknowledges that control of our natural resources should be an essential part of policy making. A one-sided focus on short-term welfare growth can lead to irrevocable pollution and serious depletion of raw materials. Scientists and citizens alike are becoming seriously concerned about the future. SD discussions – analysed in detail in Chapter 6 – often point to the limited amount of fossil fuels, CO2 emissions and global warming, much of which has been created by humans themselves.53 The current economic system is coming under increased pressure. Many naturally obtained goods are traded for unre-alistically low prices resulting in the fact that natural resources are mined or acquired with little regard for reuse or regeneration of the sources from which they were taken. To avoid a future welfare disaster scenario, economies will have to be equipped with the power to use natural resources in a responsible way. Humans should use their knowledge and creativity in an economy with new, smarter rules (more details in Chapters 9 and 11). For the future, it is not an option to create wealth based solely on fossil fuels. Indeed, as we will see in Chapters 5 and 12, some argue that in the future economic growth will be neither desirable nor achievable and the world economy will either collapse dramati-cally amid social and economic disruption or experience a transitional period of gradual de-growth until a sustainable economic system, in balance with nature, is reached.

Box 1.3 Africa in the global economy

The failure of a substantial number of African countries to achieve MDGs is a poignant reminder that Africa is still lagging far behind the rest of the developing world in too many development indicators, despite substantial decrease in mater-nal mortality rates and the number of people dying of AIDS-related diseases.54 Foreign investment in Africa has been growing and continues to be dominated by natural resource firms.55 Since more than 80% of Africa’s mineral potential may be still untapped, mining can be a key source of revenue for the continent and can

(Continued)




help to guide its human development initiatives.56 Increased FDI in mineral-rich countries did help to bring about economic growth in terms of macroeconomic indicators, but the key challenge it brought alongside it was rising inequality.57 Inequalities in income and health increased in the majority of Africa’s resource-rich countries.58 Based on conventional Gini measures, Africa is the world’s second most inequitable region after Latin America; sub-Saharan Africa houses six of the ten countries with the largest income inequality in the world, some of the world’s highest values of extreme inequality as captured by Palma ratios,59 and the bottom 11 countries in the inequality-adjusted Human Development Index.

Inequality is not a new phenomenon in Africa. Even after the colonial regimes were replaced, power was passed into the hands of the elite few who did not reform the structures put in place during colonial times and failed to redistribute the assets in a fair manner.60 Natural resource endowment seems to exacerbate this structural bias against less privileged groups of society.61 One of the reasons is that the benefits obtained from foreign investment are not being transmitted widely throughout the population: mining sites and factories sometimes become privileged enclaves reinforcing inter-regional and inter-ethnical inequalities, and in turn fuelling conflict and migration.62 Mining, farming, manufacturing and service companies from all nationalities have also been accused of creating environmental damage and violation of human rights, while sector-specific pay structures have been linked to increases in income inequality.63 Bonsu (2014) argues that colonial-ism and its trappings were reborn through foreign investment; colonialism now assuming the contemporary form of neoliberalism that maintains the racial and economic imperialism that sustained colonial exploits.64

1.3 Learning tools

1.3.1 Summary

● This chapter looked at current trends in economic growth and well-being. ● Growth is measured using gross domestic product (GDP). ● Growth follows the law of increasing and diminishing returns. It is low in early

stages of development, then it increases faster and eventually declines. This pattern can be seen in the Chinese economy.

● China’s growth has stabilized at around 7% per year since 2012 and it is not expected to increase further in the short term.

● Growth on its own is not a solid indicator of development and welfare. GDP is only a monetary figure and needs to be supported with information relating to how money is earned, how it is spent and what percentage of the population is benefited by growth. Income inequality is measured using Gini coefficients. Extreme inequality is measured using Palma ratios. Welfare inequality is measured with the inequality-adjusted Human Development Index.

● Inequality within countries has been increasing in the last decades. Inequality between countries decreased overall, but the gap between the poorest and richest countries widened.

● Sustainable development (SD) views welfare as the coexistence of economic pros-perity, equity, well-being and environmental protection. It is not only concerned with the present situation but is also directed towards welfare in the long term.

(Continued)




1.3.2 Further reading

Mahbubani, K. (2008). The New Asian Hemisphere: The Irresistible Shift of Global Power to the East (pp. 144–150). New York, NY: Public Affairs.

Stiglitz, J. (2012). The Price of Inequality: How Today’s Divided Society Endangers Our Future. London: Penguin.

1.3.3 Assignments

Compare and contrast worldwide patterns of growth in the period 2003–2013. Identify groups of countries with similar growth patterns. Your essay should investi-gate differences between linear and exponential growth.

In the last five years, Tanzania, Canada and Russia have achieved contrasting levels of economic growth and inequality. Discuss to what extent differences can be linked to different patterns of population growth and investment ratios (rela-tions between investment and GDP; employee education level; limits to free trade; monetary policy; and use of resources such as mined materials, energy and land).

Discuss to what extent continuous decrease in worldwide growth will result in decreased welfare and well-being.

Critically discuss the weaknesses and strengths of MDGs to improve worldwide welfare. Why do you think only one out of the eight goals was fully achieved? Justify your answer with theory and examples.

1.3.4 Self-test questions

1. Explain the law of diminishing returns.2. What are Gini coefficients? What is the meaning of a high Gini value?3. Give examples of countries with low and high Gini coefficients.4. What causes inequality?5. What indicators would you use to assess well-being?6. Is well-being improving globally?

Assignment 1.1 Growth patterns

Assignment 1.2 Inequality

Assignment 1.3 Well-being and growth

Assignment 1.3 MDGs

Self-test Questions



349

Index

1

1990 UN Conference 5

A

Abolition of slavery 152Abuse of power 42, 58, 68, 73Access to water 110, 112Accountability 48, 245Active industrial policy 57Activist state

functions 50tasks 57

Administrative innovations 287Africa 58, 47, 164, 169, 175

in global economy 10Agenda 21106Aggregate demand 34, 164, 172, 174Aggression 70

control 75Lucifer effect 72spiralling violence 72

Agricultureeco-system 117

Allocation 20investment capital 20of resources 14, 18, 25, 41

Alternatives to GDP 135Analyzing management industrial

supply networks 222ANC 61Animal spirit 27, 92Anthropocentrists 109Antibiotics 139Anti-globalization movement 191APS 16Aral Sea 111Argentina 33

Artificialmarket 145monopoly 25needs 270

Asch, Solomon 76Augmented and Benevolent

Washington Consensus 187Augmented Washington

Consensus 187effectiveness 188HIPC initiative 187MDRI 188

Austrian economics 15Authenticity 255Authority 72

sensitive 72Autocatalysts 116Average propensity to save 16Axioms of economy 147

B

Bads 31Bail-outs 173Balance of payments 54, 173Bank crisis 35Basic sanitation 112Bayer 242Berlin Wall

fall 23Beyond greening 270Binding measurements 144Biodiversity 117–119, 123Biofuel 120, 125

ethanol 120Biomass 125Black economic elite 58Blue Ocean 274Bottom of the Pyramid 266, 271

critics 269integral approach 269principles 267

Brain system 75, 80Braungart, Michael/McDonough,

William 227Breakthrough

innovation 270Brent Spar 238Bretton Woods

Conference 171Institutions 171Systems 184

BrundtlandCommission 123Report 103, 123, 134

Bubble 27internet 27

Bureaucracy 19Business

attract investment capital 164business model 278Business Model Canvas 278, 279business models 273developing countries 264external trends strategy 271Initiative 246location factors 214privatization 164studies 237sustainability 230

Buttresses of society 149

C

C2C product 228Capacity building 167

technology 169Capacity to consume 267



350 Index

Capitalaccumulation 16movements 158transfer 166

Capital Account Liberalization 204Consequences 204

Capitalism 16Carbon

credits 145Dioxide 121market 145

Carnation Revolution 60Carroll, Archie 257Cartons or returnable glass

bottles 220Cement factory Burundi 175Central banks

liquidity crisis 36Changing conditions 24China

family planning 131growth GDP 5

ChlorofluorocarbonCFCs 138

Choice of criteria LCA 220Choosing a mission 249Christians fed to Lions 86Circles of Sustainability 124Circular Economy 151, 229Citizen and consumer 239Citizens

transition 292Citizenship 243Civil Society 47, 48, 149Clean Clothes Campaign 246Climate Change 118, 121

consequences 122Climate Treaty 140Clothing industry 232Club of Rome 133CNN effect 170Code of conduct 225Cold war

end 170Collateral Debt Obligations 204Colonialism 288Colony 60Command economy 14, 17,

25, 60Commandments and

prohibitions 142

Common goods 141Communication technologies 167Communism

fall 63Community

development 123, 226ethics 95model 249resilience 123

Companyfocal 223

Comparative advantages 21, 176Competitive advantage

improper 144Competitive currency

devaluations 173Compulsion for application 138Confidence

economic 35Conflict 11, 57, 68, 143, 170, 197Conformity 76

Experiment 76neurology 77society 76

Consensus orientation 48Consequence Ethics 85

CO2 question 86Consumer

to business 273to consumer 273

Controlcapital inflows 165of privatized companies 165

Convention on Biological Diversity 119

Cooperation 253Coordinated market economies 163Coordinating private activity 57Co-partnership 264Corporates responsibilities

economic, responsibilities, legal, ethical, philanthropic 257

Cotton lease 230Countervailing power 46, 67, 149Cradle to Cradle 227, 272

certification 272criticism 228

Creation of a market 144Creative destruction 28, 270Credit crisis 2008241Crisis 35

Argentina crisis 32bank crisis 35creates opportunities 63currency crisis 35debt crisis 35financial crisis 35liquidity crisis 35solvency crisis 35US subprime crisis 36

CSR 236, 243business strategy 248critical 257critical success factors 249guidelines of OECD 244Performance Ladder 245pyramid 257reporting 247strategy drivers 271transition 294

CSR strategydrivers 271

CSRO 257Currency

crisis 35pegged to dollar 33

Customer segments 279Customs union 169

D

Darwin, Charles 74, 182de Waal, Frans 75Debt crisis 35Decoupling 257Deep integration 183Defence, law and order 51Degrowth movement 102Dematerialization/decoupling 257Democracy 43, 92

deliberative 45direct 45electoral 43in crisis 44meritocracy 147middle-class 44

Democratic market economy 63

Desso 228Dicken, Peter 50Direct stakeholders 237, 239Discrimination 78



Index 351

Discussion axioms of economy 135

Distinctive value proposition 274Divisions macro-economic policy 52Doha Round, 194

compulsory license 195deadlock 195minimize agricultural subsidies 194national emergency exception 194parallel import 194TRIP 194

Downcycling 227Down-stream responsibility 223Drivers

CSR strategy 271DSM

changes strategy 271Dutch War of Independence 43

E

Earth Summit 2002 106Ecocentrism 109Eco-effectiveness 228Eco-efficiency 228Ecological footprint 116Economic

crisis 32globalization 158systems 14

Economic growthBrundtland 134Green Growth 135

Economy 14of Scale 25, 264, 268

Eco-system 117Education developing countries 30Effectiveness and efficiency 48Egypt 289Ehrlich, Paul R.130Ehrlich’s Formula 130Electoral democracy 43Ellen MacArthur Foundation 229Elliot, Jane 78Emotional piracy 89Empathy 74

limbic system 75Employees

uneducated 269Empowerment

client 269

Enabling environment 257Enlightened self-interest 237Enlightenment 42, 67, 287Environment

market economy 139products 219

Environment impactEnvironmental Kuznet

Curve 133Environmental

and social consequences 186concerns 102indicators 117labels 245management systems 246performance of products 219Problem Solving 133

Equity 48Established interests

overcome 151Ethical

behaviour and nature 80starting points 85

Ethics 67, 83banking 70consequence 85emotions 89fallible man 88intentionalism 88mirror neurons 89principle 87religion 83state 84tribal 83virtue 88

EU-Ecolabel 246Eutrophication 110, 114Exchange rates 173Expansion of scope 276Expansionary policy 174Experiment

car/pedestrian 91conformity 76Elliot, Jane 78fairness monkeys 76marshmallow 69Milgram 72social birds 75Stanford Prison 71uninhibited good 79us versus them 78

Exploratory impulse 74safe surroundings 74

Extent of state functions 50External costs 30, 142Externalities 30, 142, 177

tax 144

F

Factors supply network responsibility 224

Factor-seeking FDI 166Fair Wear Foundation 246Family planning 131Fashion industry 232Favourable investment climate 42FDI 183

arguments for and against free FDI 196

Feudalism 16Fiduciary System 54Financial

crisis 35, 204incentives 142industry 50

Fiscal Policy 172Fixed exchange system 184Flat-screen displays 116Floating exchange rates 184Floods 112Focal company 223Food versus fuel debate 125Footloose business 215Footprint 116Foreign Direct Investment 166, 183Forest Stewardship Council 118Forests 152Forward logistics 216Fossil fuel era 121Fossil fuels 119Foucault, Michel 40Four Freedoms 4Free market 14, 15

dysfunction 140, 141economy 14

Free rider problem 29Freedom

market participants 19of expression 43speech/religion 84

Frelimo 60



352 Index

Friedman, Milton 34Fukushima Nuclear Disaster 120Functionality 269Future orientated strategy 248

G

GDP 3alternative 135China 5prosperity 132

Gene diversity and birds 75General Motors 248Germany

integral chain management schools 225

renewable energy 294Gift economy 135Gini Co-efficient 7Global economy

concepts 160positions 161

Global Governance 161, 171Global Green Growth Institute 105Global Reporting

Initiative 247Global village 157Globality 157, 159Globalization 157, 158, 183

acceleration 163competing concepts 160contagion 205contemporary 162debate 161definition 158dissemination of crisis 205drivers 163, 166, 167financial crisis 204foreign direct investment 195impacts 182increase 162, 204, 206indicators 157, 166inequality 197innovation 167internationalization 204main actors 183pragmatics 161, 162, 180radicals 161, 180sceptics 161, 180trade 158

transnational companies 161wellbeing 197

Glyphosate 242Good Governance 40, 47Governance indicators

World Bank 41Government

budgeting 55extent 50intervention economy 15neoliberal 46responsibilities 270

Grassrootsinnovation 231movements 182

Great depression 172Green Growth 104Green Key 246Green Revolution 130, 242Green Supply Chain

Management 226Greenhouse gasses 122Greening 226

beyond 270tax system 143

Greenpeace 238Greenwashing 256GRI 247Gross National Product 18Growth

degrowth 103depression 173Green Growth 104, 135unbalanced 27

Growth Curve 7

H

Happinessfactors 130income paradox 136Index 136

Happy Planet Index 137Hart, Stuart 276Hecksher-Ohlin trade theory 192Hesitant fox 148HIPC initiative 187Hirst & Thompson 160, 161, 162, 166Homo economicus 27, 68, 69, 76, 92,

162

government measures 69Homo sapiens 79Household water 110Human

behaviour 67development 123

Human Resource Management 249, 250, 251

Human Rights 45, 288movement 46

Human value approach 272Human Value Management 249, 251Hybrid

innovation 284solar fruit dryer 266

I

IBMreverse logistics 217

IBRD 174IDA 174Identity 255Identity forming 255

Douwe Egberts 255IMF 33, 49, 171

critics 191, 192decision-making 191expansionary policy 174human face 187increase membership 173lender of last resort 205monitoring countries 174, 191moral hazard 188, 205surveillance role 188three decades 205

Impacts 220Imperfect information

overcoming 56Income 19

19th century 18redistribution 31

Income gap countries 7Increase

international trade 162Incubation 276Independent institutions 147Indian era of protectionism 164Indicators

development 7, 8, 9, 124



Index 353

environment 107, 117globalization 166governance 40, 64growth 3inequality 7, 31planetary boundaries 105prosperity 29, 129transnationalization 178wellbeing 7

Industrialnetwork approach 222policy 57

Industryfashion/clothing 213mining 241

Inequalitybetween countries 199, 201capitalism and inequality 202Gini coefficient 7globalization and inequality 200inevitability 203Kuznet Curve 199Palma Ratio 8Piketty, Thomas 202within countries 199worldwide 198

Information asymmetries 35Institutionalizing

human nature aspects 288countervailing power 46, 149, 288empathy 81exploratory impulse 81homo economicus 81human behaviour 80Human Rights 288participation 80sense of justice 81sustainable development 287

Integral chain management 225

Intellectual property 177 Intention perspective of virtue

ethics 88–89business 89trust 89

IntermediateState Functions 50State Tasks 55

InternationalCourt of Justice 150

Criminal Court 170Guideline CSR 244peace and security 170small and medium enterprises 264trade 165

International buttresses 150environment 150

Internationalization 160, 183globalization 203globalization vs

internationalization 160, 161, 178, 183

impacts on inequality 186, 195, 199

multinationals 160trade 158, 160, 166 201

Interventionist government 42

Intra-firm cross-border trade 166Investment climate 42

favourable 42Invisible hand 15, 20IPCC 122, 123Irrigation 110ISO

14000 24614040 22126000 244, 257

J

Japan 120, 197Judicial sentiment 76Justice

globalization and global justice 203International Court of Justice 170

K

Kant, Immanuel 43, 87Key partners 280Keynes, John Maynard 27, 172Keynesian

economics 163, 164, 172view 34

Kim, Chan & Maubrogne, Renee 274Kin selection 77Klein, Naomi 182Krugman, Paul 49

Kumaon region 152, 153Kuznet Curve 133, 134, 199

Environmental Kuznet Curve 133, 134

Inequality Kuznet Curve 199Kyoto Protocol 106, 140

L

Labelling Phillip II a tyrant 43Labour

participation 18productivity 18

Lack of transparency price-quality 24Land-grabbing interventions 62Law

of increasing and diminishing growth rates 5

of large numbers 146Layard, Richard 135LCA 213Leaky bucket 172Leap downward 267Learning curve 265Legislation 17, 25, 46, 67, 140, 151

national and international 140, 151transition 293

Lender of last resort 34, 173, 205Levels of state involvement 50Liberal market economies 163Liberalism 16, 42

neoliberal policy 4, 188Liberalization, 20, 49, 160, 163

China 164critics 185, 203globalization 183, 201end twentieth century 49

Licenseto operate 238, 240to produce 239to sell 239

Life Cycle Assessment 219Life cycle of the product 219Lilburne, John 16Limbic system 75, 80Limitations of CSR 257Linear economy 151, 154Liquidity crisis 35, 36Living Planet Report 2014 118Locke, John 16, 42



354 Index

Logistic technologies 163, 169Long term

governance 147Long waves theory 200

M

Macro-economic policy 52divisions 52

Malthus 182MAMA DIOP 266Mandatory nobility 242Market discipline 20Market economy 13, 40, 163

environment 139imperfections 15, 41, 129meritocracy 147mixed openness 165sustainability 146

Market linked business 214Market-seeking FDI 167Marshmallow Experiment 69Marx, Karl 14, 17, 182Marxist ideology

rejection 61Materials management 215MDRI 188Merit

bads 31goods 31

Meritocracy 147Micro multinationals 164Microcredit 282Milgram Experiment 73Millennium Development Goals 8,9,

103Minimal state functions 51, 55Mining industry 259Minsky, Hyman 34Missing market 145Mobile phones 116Modern society 67Modern state

long term policy 92, Monetarist view 34Monetary and Fiscal Policy 172Monetary Policy 53, 172Money

streams to profit 20supply 34, 53

Monopoly 25

on violence 47Monsanto 242Montesquieu, Charles-Louis 46Montreal Protocol 139Most favoured nation status 176Mothering 273Movement of people 159Mozambique 58Multi stakeholders initiative 246Multinational companies 161

differences with transnational companies 160, 178, 197

supranational governance 195Multiplier effects 172Myth of decoupling 290

N

Narrative perspective of virtue ethics 88

Natural monopoly 25Nature 67,68, 79

and nurture 75Neoclassical

economics 15view 34

Neo-Keynesian 34, 50, 57, 206Neoliberal

Capitalism 163governance 40policy 4, 33, 49, 165, 184

Neoliberalization 163, 165, 183Washington Consensus 49

New cortex 80Niche market 274Nike 225No limitations to economic

growth 228Noblesse oblige 242Non-discrimination clause 176, 191Non-renewable resources 114Non-tariff barriers 176Nonzero 82

sum 145Nurture 68

O

Off-grid technologies 262Oil peak 26Opportunity cost 14

Organic cotton 230Orwell, George 149Osterwalder, Alexander 278Our Common Future 10, 103Outdated concept of territorial

expansion 170Outsourcing services 168Ownership 142, 143

P

Palma ratio 8Participation 48, 90

and productivity 52Particularism 83Peepoople 281People, planet, profit 103Personal beliefs

non-interference 84Philips 236Phosphates 114Piketty, Thomas 9, 202Pillars of Washington Consensus 185Planetary boundaries 105, 109Pluralism 149Pollution

CO2 121phosphates 114water 110

Population 131Population bomb 130Porter Hypothesis 293Portfolio investment 166Poverty trap 175, 187Power of the state 50Pragmatics 162Prahalad 266Pre-conditions

freedom/respect 87Prefrontal cortex 75Price

long term 26Pricing

incorrect 30system 164

Principle ethics 87Procedural barriers 176Procurement and CSR 225Pro-cyclicality 204Product Social Impact

Assessment 221



Index 355

Profitindividual maximization 140

Progresstechnology 139

Proletariat 17Property rights 17, 51

claims 143Doha Round 194WTO and TRIPS 177, 192

Prosperity 104downside 102measurement 132without growth 135

Protest groups 292Providing social insurance 56Public goods 29, 171Public health 19th century 52Public health, equal rights, poor

relief 52

Q

Quasi-public goods 29

R

Radical technologies 291Radicals 161Rainforest 117Rare-earth elements 115Rational

choice 14, 31decision making 148

Rationality 42Reciprocal exchange 273Recycle

materials 216phosphate 114

Redefine the value proposition 274Redesign of supply

chain 272Redistribution

capital 58Regional partnerships 169Release of CO2 121Renamo 61Renewable

energyGermany 294resources 114sources 120

Renewed research fields 277Reptile brain 80Reputation management 256Resources

energy 119mineral 114, 124non-renewable 114renewable 114water 109

Responsibility ECB 54Responsiveness 48Reverse logistics 216Revisionist

economics 15, 41Ricardo, David 21, 176Rio Conference 106Rio+20106Rose growers 264Rule of law 48Rural households 152Russia

governance 49

S

Safety nets 17Savings 18Sceptics 161Schumpeter, Joseph 28Science and Technology

Institutions 231Scientific Management 250Self-fulfilling prophecy 28Self-regulation business 241Sen, Amartya 132Separation

of church and state 84of powers 46

Shallow integration 183Sharia law 84Sharing 272, 273Shell 238Six core characteristics of CSR 244Sloterdijk

different spheres 198Small and medium enterprises 264Smith, Adam 16, 17Social

capital 68, 90, 288car and pedestrian 91cohesion 124, 203

conflict 57contract 43entrepreneurship 265innovation 43license 257sustainability 123technical landscapes 291

Social Accountability SA8000 246Social life cycle analysis 221Society and business 237Socio-technical

regimes 291systems 290

Solow hypothesis 184Solvency crisis 35Sortition 45Source linked business 214Sources

energy 119Special economic zones 164Spread of knowledge and

technology 159Stakeholders 104, 240

inclusiveness 247management 240salience 240

Standards 143Stanford Prison Experiment 71State 47

building 47State-owned enterprises 165Status 69

societal interest 70Stiglitz, Joseph 5, 41, 49Stimulating CSR 243Stolper-Samuelson Theorem 201Stubborn hedgehog 148Subsistence farming 62Super grid 145Supply chain

innovation 269networks 222

Supply networkCSR 224responsibility 225

Supply networks analysiscomplex system approach 222inter-organizational approach 222technological/economical

approach 222Support public opinion 151



356 Index

Supranational governanceBretton Woods 196gap 195

Survival of the fittest 74Sustainability

Circles 124definitions 103, 108, 123economic sustainability 144environmental sustainability 108governance 129material sustainability 124pillars 103practices 248social sustainability 123strong sustainability 129Sustainable Development

Goals 106welfare 32

Sustainabledevelopment 10,103, 268Development Goals 106Development Summits 106market economy 142

T

T Ford 250Tame the rat race 137Tanzania 19Tariff barriers 176Tariffs and quotas, and subsidies 173Tax system 143Taylorism 250Technical barriers 177Technocracy 149Technocrats 148Technology

future 139globalization 167spreadharmfulness 139spreading 139

Temperament 68Territorial

embeddedness 162Thailand 174The End of History

Fukuyama 90The Future We Want 106The Gold Standard 53

The Limits to Growth 113Three management concepts 250Timberland CSR-report 254Tit-for-Tat 93Tobin Tax 204Totalitarianism 149Toyota 248Trade 158

barriers 176block 176comparative advantages 21, 176Hecksher-Ohlin theory 192inequality 201internationalization 195restrictions 165Stolper-Samuelson Theorem 201

Trade dispute settlement body (DSB)177

Trade-offs short and long-term 151Trade-related intellectual property

rightsTRIPS 177

Traditional society 68Tragedy of the Commons 140, 144,

151, 152Transaction costs 168, 215Transactive links 276Transferable assets 166Transformation

vested interests 288Transition 289

business 293citizens 292corporate social responsibility 293democracy 289globalization 290legislation 293multi-level perspective 291sustainable 290technical 291value systems 291

Transnationalization 178index 178

Transnationals 161Transparency 142, 254

information continuity 255United Nations 48

Trias politica 46Tribal ethics 83Triple A status 175

Triple bottom line 103TRIPS 192

criticisms 194Trompenaars 91Tyranny of the majority 46

U

Ubuntu 253Unbalanced growth 27UNFCCC 140Uninhibited good deed 79United Nations 150

Decade on Biodiversity 119Development Programme 150Environment Programme 150features good governance 48member states 9Millennium Declaration 9strengthen 48

Universalism 83, 85Universalization 160Unstable governments 120Up-stream responsibility 223Uruguay round 177US subprime crisis 36Us versus them 79

V

Valueinstrument 243proposition 274, 279, 281synchronization 251

Valuesspreading ideas 292

Virtue ethics 88Voting rights

limited 44

W

Washington Consensus 49, 184, 204

Augmented 187Benevolent 187commandments 185consequences 185fiscal austerity failures 184



Index 357

HIPC initiative 187market liberalization failures 186MDRI 188one size fits all policy 184pillars 185privatization failures 186structural reform 184

Wateragricultural/industrial 111resources 110rights 110treating 111

Weber, Max 16Welfare

and wellbeing 7sustainability 7

Wellbeing 198

Westernization 160Wind power 120Window dressing 256World Bank 40, 174

criticisms 189good governance 47, 190periods 189poverty trap 175problems repayment of loans 189requirements structural

adjustment 189role in wellbeing 189

World population 131diminishing growth 131

World Trade Organization 175criticisms 191decision-making 191

democratic 192Doha Round 194environment 195free versus fair trade 195intellectual property rights 192membership 177pharmaceutical industry 193protectionism tolerance bias 191single undertaking 191TRIPS 177

World Wildlife Fund 118

Z

Zero sum game 82Zero-growth 133Zipcar 275



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