Academic journal article International Journal of Business and Information

Determining Factors toward a Sustainable Development Path in Selected ASEAN Countries and Japan - Evidence from Panel Data Analysis

Academic journal article International Journal of Business and Information

Determining Factors toward a Sustainable Development Path in Selected ASEAN Countries and Japan - Evidence from Panel Data Analysis

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1.INTRODUCTION

In a traditional economic growth model developed by [12] , national savings rate is perceived as one of the main contributors to increasing the output of an economy. In other words, the existence of a high national savings rate is crucial to stimulate investment that leads to an increase in the production of goods and services. Savings in an economy, moving from the private sector into banks and financial institutions, are to be channeled for investments made by firms. These investments are then converted into capital assets for producing goods and services. Hence, the level of output in an economy would eventually show the progress of economic growth.

For decades, achieving economic growth has been a major target of nations worldwide. Recently, however, macroeconomic focus on economic growth has moved to a new concept and dimension - to sustainable development. The term sustainable development extends to what has been achieved after economic growth, the essentiality of "greening" the national income accounts. The interesting features of depreciation or depletion of natural capital are included in the aggregate indicators of net national output.

Since the conception of sustainable development a few decades ago, most governments around the world have adopted it as their national objective. It has been prominently highlighted by policymakers in both developed and developing countries. Sustainable development aims to provide a high quality of life for present and future generations, without exceeding the environment's ability to recycle wastes, provide resources, and support a rich diversity of life. It also aims to meet current needs while leaving future generations as many options as possible for resource use and development.

1.1.From Economic Growth to Sustainable Development

For more than half a century, gross domestic product (GDP) has monopolized the objective of economic growth and served as its core measure, but lately its use as a major reference for socioeconomic policies has come into question. Since it no longer seems consistent to maintain growth as a sole economic goal, continuing to use GDP as a major reference has been debated. Economists and researchers from other social sciences have long recognized the potential pitfalls of macro-economic policies focused on stimulating economic growth, as well as the problems involved in using GDP as a measure of well-being or economic welfare. It is no surprise, therefore, that, since the early 1970s, alternative measures for policy-making have emerged and been promoted. Over the last few years, development of these measures has gained momentum both politically and academically. Difficulties in measuring GDP as an indicator of social welfare or genuine development progress have also been cited. Using GDP as a measure of social welfare has not been a consensus notion in economics. To the contrary, optimal growth theory proposes models that explicitly use a theoretical (usually intertemporal) notion of social welfare that is not identical to a GDP type of criterion. Subjective well-being studies further show that absolute individual income is not a suitable proxy for individual welfare. Relative income and various income-independent factors also affect individual welfare or happiness.

1.2.The Concept of Sustainable Development

The term sustainable development is generally developed from the concept of "conservation," which was initially mentioned in [8]. According to that study, sustainable use is a means that species and ecosystems should be using at levels and in ways that could be renewable, for all practical purposes, indefinitely. A society's dependence on resources would affect the importance of ensuring sustainable use of the ecosystem and species. Hence, sustainable use of resources is crucial for a subsistence society. The greater the diversity and flexibility of an economy, the less the need for it to use certain resources sustainably. …

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