Economic Growth

Why competitiveness doesn’t have to cost the earth

Roberto Crotti
Economist, World Economic Forum
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Last June, a UN task force in charge of developing the Sustainable Development Goals (SDGs) released a zero draft. While the final framework is expected to be adopted by the UN in 2015, the latest draft shows how the SDGs are incorporating and upscaling many of the older Millennium Development Goals (MDGs).

At the centre of this political process is a more encompassing vision of sustainable development: “Poverty eradication, changing unsustainable patterns of production and consumption and protecting and managing the natural resource base of economic and social development are overarching objectives of, and essential requirements for, sustainable development.”

The international community is changing its understanding of sustainability from one where trade-offs with economic development need to be made, to one that sees economic progress as essential to securing social inclusion and environmental protection.

The fact that the MDGs have evolved into the SDGs is in itself significant. It not only simplifies the negotiating process, but, more importantly, it enforces the idea that there can be no sustainability without development.

This approach is very much in line with the World Economic Forum’s work on sustainable competitiveness, which, since The Global Competitiveness Report 2011–2012, suggests that economic performance and environmental and social sustainability are linked.

In this view, sustainable competitiveness is defined as the set of institutions, policies and factors that help maintain a country’s productivity over the longer term while ensuring social and environmental sustainability. It highlights the fact that competitiveness is key to achieving sustainability, both environmental and societal.

The new SDG draft is closer to the sustainable competitiveness framework than it used to be because most of its 17 goals are prerequisites for job creation and long-term sustainable growth. Indeed, five of the proposed SDGs are directly captured by pillars of the Global Competitiveness Index (GCI):

  • Goal 3, on the importance of the health and well-being of all people, is covered by the GCI’s health pillar (Pillar 4)
  • Goal 4, which is about quality education and lifelong learning opportunities, is covered by the two GCI pillars that relate to primary education and higher education (Pillar 4 and Pillar 5)
  • Goal 8, on sustainable and inclusive economic growth and full, productive and decent work for all, is partially measured by the GCI pillar on labour market efficiency (Pillar 7)
  • Goal 9, on the need for sustainable infrastructure and industrialization to foster innovation, relates to the GCI pillars on infrastructure and innovation (Pillar 2 and Pillar 12)
  • Goal 16, on peaceful and inclusive societies, access to justice and effective institutions, is covered by the GCI pillar on institutions (Pillar 1)

Three more of the SDGs – related to water and sanitation access, the reduction of inequalities within and among countries, and the need to protect terrestrial ecosystems – are covered by the sustainability-adjusted GCI.

The SDGs are broader and – according to some – even more ambitious than the MDGs that came before them. From a financial perspective alone, the cost of achieving the goals will be significantly higher than for the MDGs. According to estimates from the Organisation for Economic Co-operation and Development, the finance gap – the amount of investment necessary to achieve the MDGs by 2015 – was approximately $120 billion a year. A recent report from the United Nations Conference on Trade and Development estimated that the finance gap for the SDGs will be nearly $2.5 trillion per year.

According to some analysts, the SDGs should have been narrower and more pragmatic. This would have made them more achievable. But the goals should be ambitious. After all, they are meant to represent the highest aspirations for human development. If in implementing the SDGs we can focus on factors that stimulate economic growth, we can create a virtuous cycle, allowing countries to grow economically and lift their citizens out of poverty, enhancing sustainable competitiveness.

Read the Global Competitiveness Report 2014-15.

See how well different countries perform on our latest Global Competitiveness Index:

Author: Roberto Crotti, Quantitative Economist, Global Competitiveness and Risk, World Economic Forum, and Cecilia Serin, Senior Associate, Global Competitiveness and Risk, World Economic Forum.

Image: A wind turbine is seen in the Landes de Couesme wind farm near La Gacilly, western France, April 26, 2014. REUTERS/Stephane Mahe

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