Question

write a concise research proposal on "green investment and poverty reduction in developing countries"

Each student should read at least three research papers.

The Structure of the Research Proposal:
a. Title
b. Introduction
c. Literature Review
d. Conclusion
e. References

Answer 1

Title

Green Economy for Sustainable Development and Poverty Eradication

"green investment and poverty reduction in developing countries"

1. Introduction

Climate change is one of the most powerful reminders that our economic growth has already surpassed the ecological

carrying capacity of the earth. The increase in greenhouse gas emissions resulted from burning fossil fuels in the form of

coal, oil and gas for electricity production is the evidence of climate change process.

1.1 Green Economy

There are some myths about green economy such as inescapable trade-off between environmental sustainability and

economic progress; green economy is a luxury only wealthy countries can afford and it restrains development as well as perpetuates poverty in developing countries.

United Nations Environment Programme (UNEP) defines a green economy as one that results in improved human
well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest
expression, a green economy is low-carbon, resource efficient and socially inclusive (UNEP, 2011).

There are some myths about green economy such as inescapable trade-off between environmental sustainability and
economic progress; green economy is a luxury only wealthy countries can afford and it restrains development as well as
perpetuates poverty in developing countries.
However, UNEP’s report asserts that a green economy is not generally a drag on growth. UNEP’s macroeconomic
model projects that a green economy would, after a few transition years, deliver more growth, reduce poverty, and
generate more jobs than would a business as usual, brown economy.
In a green economy, growth in income and employment is driven by public and private investments that reduce
carbon emissions enhance energy efficiency and lessen environmental degradation. As economic growth and
investments become less dependent on liquidating environmental assets and sacrificing environmental quality, countries can attain more sustainable economic development.

2. Literature Review

There are some previous studies regarding the relationship between green economy and growth.• Porter’s Hypothesis (Michael Porter, 1991): Well-designed environmental policies can induce efficiency and
encourage innovations that can outweigh the cost of the policy.
• Environmental Policies and Productivity Growth (Tomasz KoĨluk and Vera Zipperer, 2013): The study shows
empirical evidence on the link between environmental policy stringency and productivity growth and the
various channels through which such effects can take place. The results are ambiguous, in particular as many
of the studies are fragile and context-specific, impeding the generalization of conclusions.
• Consequences of Climate Change Damages for Economic Growth (Dellink, et. al.,2014): The effect of climate
change impacts on annual global GDP is projected to increase over time, leading to a global GDP loss of 0.7%
to 2.5% by 2060 for the most likely equilibrium climate sensitivity range.
• Green Growth Challenge in Mexico (Carla Valdivia de Richter, 2013): Costs of environmental degradation
were estimated at approximately 5% of GDP in 2011, primarily from the health impact of air pollution, while
overexploitation of natural resources – such as water – threatens their sustainability.
• Greening Growth in Luxembourg (Nicola Brandt, 2013): Strong economic growth of Luxembourg has impact
towards environmental pressures. This is mainly a result of a growing population and a rapid increase in
transport, which is dominated by the car.
• Does civil environmental protection force the growth of China's industrial green productivity? (Yabin Zhang,
PeizhenJin, Di Feng,2015): The increase in the civil environmental protection effect promotes the industrial
green technology innovation, while the rent-seeking activities have a significant negative effect on green
productivity.
2.1 Linkages between Economic Growth and Environmental Performance
The relationship between economic growth and the environmental is controversial. Traditional economic theory views
that there are generally accepted trade-off between the economic growth and environmental quality. Since the early
1990s, however, it has been suggested that the relationship between income and pollution is not linear but more like an
inverted U curve or so called Environmental Kuznet Curve (EKC).
Figure 3. Environmental Kuznet Curve
The EKC depicts that empirical pattern that at relatively low levels of income per capita, pollution initially increases as
income rises, but after reaching a certain threshold, pollution decreases with rising income. Grossman and Kreuger and
the World Bank made the pioneering studies which brought the EKC to public attention.
The possible explanation is that when GDP increases, the greater scale of production leads directly to more
pollution, but at a higher level of income per capita, the demand for health and environmental quality rises with income
which compels governments to take the necessary measures of resource allocation and regulation to improve pollution
control. As a response, the private sector also adopts cleaner production methods.

Conclusion
The results show that green economy has negative impact towards economic growth but has positive impact towards
income per capita. The main dimensions of GGEI that significantly affecting the economy output are market and
investment as well as environment and natural capital. In addition, green economy does not have a significant effect
towards unemployment but it decrease poverty level.
This research provide temporary conclusion for us based on the result. As economic growth and investments
become less dependent on liquidating environmental assets and sacrificing environmental quality, countries can attain
more sustainable economic development. Both public and private sectors are recommended to continuously support and
adopt green economy in the future for sustainability and poverty eradication. For further research, the methodology can
be improved by differentiating developing and developed countries as well as adding an instrumental variable to
overcome the endogeneity issue to get the more accurate results.

References
Albrizio, Silvia,Enrico Botta, Tomasz KoĨluk, Vera Zipperer. (2014). Do Environmental Policies Matter for Productivity Growth?: Insights
from New Cross-Country Measures of Environmental Policies. OECD Economics Department Working Papers 1176, OECD
Publising.
Brandt, Nicola. (2013) Greening Growth in Luxembourg. OECD Economics Department Working Papers 1063, OECD Publising.
Dellink, Rob, Elisa Lanzi, Jean Chateau, Francesco Bosello, Ramiro Parrado, Kelly de Bruin. (2004). Consequences of Climate Change
Damages for Economic Growth: A Dynamic Quantitative Assesment. OECD Economics Department Working Papers.
De Ritcher, Carla Valdivia. Green Growth Challenges and the Need for An Energy Reform in Mexico. OECD Economics Department
Working Papers 1095, OECD Publising.
Porter, Michael E. and Claas van der Linde. (1995). Toward a New Conception of the Environment-Competitiveness Relationship.

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