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Economic development

Economic development encompasses many factors, including production, finance and the distribution of resources both between regions and across sectors of society. Although the pattern varies conspicuously, there has been a general trend towards more servicebased economies. Product, financial and even labour markets are becoming increasingly integrated and interconnected in a worldwide economy with global commodity chains and financial markets. Similar trends are appearing at a regional level in several parts of the globe. These processes have been spurred on by advances in information technology, international pacts designed to remove trade barriers or liberalize investment flows and the progressive deregulation of national economies. The same advances have also allowed wealth produced by national and transnational mergers to become concentrated in fewer and fewer hands. There has also been an increase in inequality in terms of income and resource use across - and often within - nations. For many nations the problem of inequality is made worse by debt burdens that seriously constrain growth. As transnational enterprises respond to global business opportunities, the traditional prerogatives of the nation-state and the capacity for macro-economic intervention by the state are challenged anew.

'For many nations the problem of inequality is made worse by debt burdens that seriously constrain growth.'

In Markets First, it is assumed that most of the trends noted above persist, if not accelerate. Economic development outweighs social and environmental concerns in most international discussions. Resistance continues but no radical changes in policy result. Recognition that maintenance of environmental and social conditions is important for ensuring economic development slows economic growth down over time, but not very noticeably.

In Security First, trends towards global integration continue for some parts of the economy, yet come to a halt or even go into reverse for others. Over time, more and more activity takes place in the grey or underground economy.

Integration trends persist in Policy First and Sustainability First but they are tempered by the introduction of new policies and institutions to tackle social and environmental concerns. This reflects improved understanding of the crucial roles of human, social and natural capital in determining economic health. Changes in attitudes and behaviour in Sustainability First affect these trends more than in the other scenarios as the whole notion of economic development becomes increasingly subsumed in the broader concept of human development.

The effect of these changes on per capita income varies strongly across regions and scenarios. Average income growth in all regions is lowest in Security First but also very unevenly distributed due to the greater inequality within regions. In the other scenarios, average growth at the global level is similar but there are key differences between and within regions. In Policy First, the more equable distribution of growth makes average incomes of the wealthy grow slightly slower than in Markets First, whereas incomes rise more rapidly among the poor. The most dramatic increases in income growth are seen in Africa, but also in parts of Latin America and the Caribbean, Asia and the Pacific, and West Asia. The convergence in per capita incomes is even greater in Sustainability First, especially as wealthier persons shift their emphasis away from marketoriented production and consumption. However, large differences remain at the end of the 30-year period.