Sustainable development, the Hartwick rule and optimal growth

Kirk Hamilton

doi:10.1007/bf00691576

Sustainable development, the Hartwick rule and optimal growth

Environmental and Resource Economics ◽

10.1007/bf00691576 ◽

1995 ◽

Vol 5 (4) ◽

pp. 393-411 ◽

Cited By ~ 24

Author(s):

Kirk Hamilton

Keyword(s):

Sustainable Development ◽

Optimal Growth ◽

Hartwick Rule

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Sustainability in Asian Countries: Perspectives from Economics

Nature and Culture ◽

10.3167/nc.2015.100105 ◽

2015 ◽

Vol 10 (1) ◽

pp. 81-102

Author(s):

Youngho Chang ◽

Jiesheng Tan ◽

Letian Chen

Keyword(s):

Sustainable Development ◽

Environmental Sustainability ◽

Technological Progress ◽

Natural Capital ◽

Asian Countries ◽

Weak Sustainability ◽

Hartwick Rule ◽

The Status ◽

Environmental Sustainability Index ◽

Selection Of

Studies on sustainable development rely on diverse and seemingly conflicting concepts that yield contrasting results. The root of these conflicting concepts is the lack of agreement on the path toward achieving sustainable development (SD), namely, weak (or economic) versus strong (or ecological) sustainability. This article revisits the Solow-Hartwick model (Solow 1974, 1986; Hartwick 1977, 1978a, 1978b), which suggests that an economy can achieve intergenerational equity by mandating the Hartwick rule of investing the amount of rents from natural capital into renewable capital. It constructs a modified Solow-Hartwick model in which the assumptions of constant population and no technological progress are relaxed and from which it derives a more general form of the Hartwick rule. The modified Solow-Hartwick investment rule presents how weak sustainability can be attained and explains how the residual Hotelling rents (or proceeds from natural resources) could be utilized in order to achieve strong sustainability. In this article, we apply the modified Solow-Hartwick investment rule to a selection of developing and developed Asian economies to assess their sustainability. We then compare our results with two existing measures of sustainability, the genuine savings (GS) model and the Environmental Sustainability Index (ESI), both of which frequently present contradicting evaluations on the status of sustainability.

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