UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FROM ECONOMIC GROWTH TO SUSTAINABLE DEVELOPMENT: LESSONS FOR VIETNAM BY NGUYEN THI HONG MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, NOVEMBER 2012 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FROM ECONOMIC GROWTH TO SUSTAINABLE DEVELOPMENT: LESSONS FOR VIETNAM A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN THI HONG Academic Supervisor: ASSOCIATE PROFESSOR DR. PHAM HOANG VAN ASSOCIATE PROFESSOR DR. NGUYEN TRONG HOAI HO CHI MINH CITY, NOVEMBER 2012 TIEU LUAN MOI download : skknchat@gmail.com DECLARATION I would like to declare that this thesis:" From economic growth to sustainable development: Lessons for Vietnam" is original. I ensure that this paper has not been submitted anywhere for the award of any degree.
This thesis was completed with big support from my supervisors. All source of data and information have been fully referenced. NGUYEN THI HONG MDE16 i TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEGDEMENT I would like to express my greatest gratitude to respectful supervisors, Associate Professors – Dr. PHAM HOANG VAN, Baylor University and Dr.
NGUYEN TRONG HOAI, Vice President of UEH. They already helped and supported me many interesting courses, especially valuable advice, guidance and inspiration for me finish this study on time. I also want to express my thanks to all Professor of the MDE Program during the past two years (2009-2011), my friends of MDE16, UEH administrative staff at Economic Development Faculty, who supported many useful documents and materials. I cannot forget the support from my big family all the time I followed this program.
At last but not the least, I am so sorry and would like to share my condolences when Professor KAREL JANSEN - who had great contributions to the program - passed away. That was really a big loss for all of us. NGUYEN THI HONG MDE 16 ii TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT In the scenes of strong economic development all over the world during some decades ago, the new problems that are happening everywhere is the consequence of progress can be attract more concerns of economists. That is the trade-off of economic achievements and the degradation of environment, the exploitation of natural resources, the global warming, the rise of sea level and so on.
The new concept about development - sustainable development - now becomes familiar. It is a new economic approach to express the development which care not only economic growth but also reservation of the natural resources, the environmental pollution, the investment on education. From that point of view, by using data of 90 countries, the author hopes to find out the relationship between sustainable development and other determinants such as GDP growth, export of natural resources and agricultural products, urban population growth, Human Development Index, corruption impact and so on. I strongly believe that the discovery of these relationships can provide some valuable lessons for development progress for developing countries and Vietnam.
Key words: sustainable development, economic growth, adjusted net savings iii TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENT DECLARATION. iii TABLE OF CONTENT. iv LIST OF ABBREVIATIONS. vi LIST OF TABLES.
vii LIST OF FIGURES, GRAPHS .2 Statement of problem .6 Structure of thesis. 6 LITERATURE REVIEW FOR SUSTAINABLE DEVELOPMENT .1 Concepts of economic growth, economic development and sustainable development .2 Approaches of sustainable development .3 Objectives and significance of sustainable development .4 Indicators of sustainable development .5 Linkage of various determinants of sustainable development .6 Benefits and drawbacks of adjusted net savings .8 Empirical studies relating to sustainable development. 32 RESEARCH METHODOLOGY AND DATA COLLECTION. 32 iv TIEU LUAN MOI download : skknchat@gmail.2 Relationship between adjusted net saving and other factors.
55 SUSTAINABLE DEVELOPMENT IN VIETNAM. 58 CONCLUSIONS AND RECOMMENDATIONS .3 Limitations of thesis title. 62 APPENDIX v TIEU LUAN MOI download : skknchat@gmail.com LIST OF ABBREVIATIONS ADB Asian Development Bank IMF International Monetary Bank NGO Non Governmental Organization CO2 Carbon Dioxide CPI Corruption Perception Index ELF Ethno-Linguistic Fractionalization GDP Gross Domestic Product GDPPC Gross Domestic Product per capita GNI Gross National Income HCMC Ho Chi Minh City HDI Human Development Index MPI Ministry of Planning and Investment OECD The Organization for Economic Cooperation and Development OLS Ordinary Least Squares TFP Total Factor Productivity TSLS Two Stage Least Squares UN The United Nations UNCED The United Nations Conference on Environment and Development UNDP The United Nations Development Program WB The World Bank WTO World Trade Organization WCED World Commission on Environment and Development vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 2.1: Expectation the influence of determinants on adjusted net savings .2: Summary of empirical studies relating to sustainable development.2: Covariance and correlation .3: Regression adjusted net savings and GDP growth rates by OLS .4: Regression adjusted net savings and GDP growth rates by TSLS .5: Regression adjusted net savings and GDP per capita by OLS .6: Regression adjusted net savings and GDP per capita by TSLS.7: Regression adjusted net savings on Export of agricultural raw products .8: Regression adjusted net savings on Export of natural resources .9: Regression adjusted net savings with GDP growth rates in developing countries. 55 vii TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES, GRAPHS Figure 2.1: Linkage of various determiants of sudtainable development……………….1: How to calculate adjusted net savings .1: Relationship between Adjusted net savings and GDP growths (1996-2010) .2: Relationship between Adjusted net savings and and GDPPC2010 .3: Relationship between Adjusted net savings and export of agricultural raw products in period 1996-2010 .4: Relationship between Adjusted net saving and and export of natural resources in period 1996-2010 .5: Relationship between Adjusted net savings and GDP growth of developing countries in period 1996-2010.
44 viii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER I INTRODUCTION 1.1 Research background Economic growth affects national wealth or income per capita by increasing its Gross Domestic Production or Gross National Income. Research about economic growth and its influences on environment and society always attract interest from economists all over the world. Moreover, some targets of economic growth are directly to the sustainable use of these natural resources and environmental protection. It means that economic growth is not at all; many countries are saving of their scare natural resources than in some past decades for future generations instead of the exploiting them and not paying any attention to these environmental degradation.
Since the first appearance in the Brundtland report at World Commission on Environment and Development in 1987, the concept of sustainable development has become popular in many countries.1 The relationship between economic growth and sustainable development has consideration from economists. Expressing sustainable development by genuine saving rates or adjusted net savings, many studies found that sustainable development has a consistent relationship with economic growth. Hamilton et al. (1999) measured genuine saving rates of countries both developing and developed countries.
These rates were calculated by combination of different factors as gross savings, fixed capitals, educational expenditures and polluted emissions. They found that genuine saving rates were positive values in high-income countries and negative values in developing countries. Negative rates of genuine savings would lead to declining of well- being.2 1 The United Nations, Report of the World Commission on Environment and Development: Our Common Future, 1987 2 Hamilton C. (1999), “The genuine progress indicator: methodological developments and results from Australia.
1 TIEU LUAN MOI download : skknchat@gmail.com Atkinson et al. (2003) studied the relationship between natural resource abundance and growth rate of GDP per capita. The result shows a negative and significant relationship between natural resource abundance and growth rate of GDP per capita. 3 By measuring genuine saving of Taiwan and United Kingdom- one developed country and one industrial country in Asia, Grace et al.
(2004) found that low annual GDP growth rate of United Kingdom corresponded low rate of genuine saving ratio to GDP. 4 A study of genuine savings by Dietz et al. (2007), genuine saving rates of rich and poor natural resource countries and some factors affecting them. They found that rich resource countries had lower genuine saving rates than poor resource countries.
Moreover, this negative effect will decrease when institutional quality improves. Therefore, economic growth affects significantly to genuine saving rate of a nation. Many other factors such as institutional quality, abundance of resources affected genuine saving rates at different levels. Genuine saving rates depend largely on economic growth rate; developed countries usually have higher genuine saving rates than developing countries.2 Statement of problem Economic growth rates of Vietnam in some decades ago were very impressive, especially after VIETNAM implemented its “Doi Moi” policy in 1986.
Since that time, VIETNAM has followed these new economic strategies, enhancing the market openness with international corporations. VIETNAM has become one of the economy that have high economic growth rates in Asia. Economic growth has given chances to improve standards of living. However, after nearly 30 years of the “Doi moi” stage, VIETNAM is still one of these poorest countries in the world with income per capita was only 723$US in 2010 though the average rate of economic growth in Vietnam was about 7.07% over the period of 1996-2010.
(2003), “Saving, Growth and the Resource Curse Hypothesis. (2004), “Genuine savings measurement and its application to the United Kingdom and Taiwan”, The Developing Economies XVII-1: 3−41.org/data-catalog/world-development-indicators 2 TIEU LUAN MOI download : skknchat@gmail.com Comparing Vietnam with some other countries such as Singapore and the Netherlands in the period from 1996 to 2010, we can see that an annual average growth rate of GDP in Singapore was 5.87%, GDP per capita in 2010 was US$32,641. While the annual average GDP growth of the Netherlands was only 2.2%, GDP per capita in 2010 is US$26,553. Singapore and Netherlands are countries with high income while Vietnam is in a low-middle- income group.
6 The problem of nations with higher economic growth rates but lower income per capita happens all over the world. Is there a paradox in economic growth and development? In this context, a new concept - sustainable development or genuine saving – brings a new look for evaluating the quality of growth or the wealth of a nation. By building on the basis of gross saving and calculating many other factors which connect to fixed capital, education, environment and natural resources, it is more useful and valuable than these traditional indicators. Since 1996, the World Bank has used this indicator under the name “adjusted net saving” in World Development Indicators.
It also presents in the Little Green Data Book from 2000. Exploring the relationship between economic growth and other aspects of life such as society, environment, natural resources, the impact of consumption of current generation with the future generations still has been lacking until now, especially researches about the impact of economic growth on sustainable development in Vietnam.3 Research objectives This paper will analyze the impact of economic growth and other factors on sustainable development, especially sustainable development in Vietnam. It uses data of 90 nations from the World Bank source over the period from 1996 to 2010. These main objectives will be as follows: 1.1 Evaluating the significance of economic growth on sustainable development.org/data-catalog/world-development-indicators 3 TIEU LUAN MOI download : skknchat@gmail.2 Evaluating the effect of export raw agricultural products on sustainable development.3 Evaluating the effect of export natural resources on sustainable development.4 Evaluating the significance of economic growth on sustainable development in developing countries 1.5 Finding valuable lessons for sustainable development in Vietnam.4 Research questions From these above objectives, this paper will find answers to these questions: 1.1 Will faster growth lead to sustainable development? 1.2 Will wealthier economies be more sustainable than poorer economies? 1.