[REPORT] Is Green Development an Oxymoron or Is It a Sign to Rethink the Global Productive Matrix?

[REPORT] Is Green Development an Oxymoron or Is It a Sign to Rethink the Global Productive Matrix?

Joaquin Gomez Amato
Green Development
Source: Christian V. via Unspash

In this world, a species can only thrive when everything around it thrives as well.

David Attenborough, English naturalist.

Nowadays, there is a large and widespread political and academic debate around the importance of leading a global ecological transition and hence redesigning the current global production system. The green agenda is progressively gaining more political capital and, although sometimes struggling to achieve positive results, has varying agendas in different countries. The spread of COVID-19 and its prominent, multidimensional consequences reveal the deeply “intermestic trait of the global system” (Creus and Actis, 2020) and how domestic behaviour is linked with international consequences.

Moreover, the virus has reopened the “globalist of the risk” (Beck 1992, Actis and Malacalza 2020) of economic, financial, health systems, and, in most cases, the weakness of multilateral channels to mitigate these issues. The outbreak of the virus and its intermestic magnitude of impacts should alert us to the current link between the economy and the environment, as well as inspire new ways of understanding economic growth and paths of development. From a historical perspective, the global economy has grown substantially. There has been a large increase in labour productivity, life expectation, as well as a notable decrease in extreme poverty (89% in 1800 to 10% today) at the expense of environmental degradation.

Recently, the Intergovernmental Panel on Climate Change (IPCC) has approved and published the Last Report of Physical Bases which highlights that the “human influence on global warming is ‘unequivocal” (IPCC, 2021). In the same line and according to Our World in Data estimations, there is a strong relationship between the increase of global GDP, the total amounts of CO2 emissions, and the population growth (see Graphic 1). We can attribute the historic decoupling of population growth and CO2 emissions to the CO2 and intensification of energy usage that has been growing steadily since 1960.

Although there are currently some transnational green initiatives, such as the potential construction of a transnational carbon dioxide emission that has been sent by the European Council to the European Parliament, the 2030 ODS initiative (Sustainable Development Goals) launched by UNESCO, the United Nations Environment Program and the CND ( Specific National Contributions) inside the Paris´s Agreement, the current environmental conditions arise because of the lack of successful international programs or political intentions. As a result, these global initiatives may or may not have positive impacts on mitigating social-environment consequences.

The empirical experience exposes a strong decoupling of political praxis and environmental and systemic impact studies. According to CEPAL (2020), the NDCs (Nationally Determined Contributions) are “too far to achieve” (CEPAL, 2020) and the 25th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 25) released a statement “assert[ing] that the high-income countries’ efforts are not sufficient to meet the needs of today’s world” (CEPAL, 2020). There are several academic and rigorous studies of impacts (IPCC, 2021, CEPAL, 2020) that declare that the environmental problem is already an issue that must be mitigated consistently and in a multidisciplinary manner.  For example, according to the Last Global Risk Report of World Economic Forum (2021), expose how since 2017, the Top Risk Index is linked to environmental issues. Extreme weather, biodiversity loss, and natural disasters are some of the materializations of the current environmental crisis and the per-capita CO2 emissions have increased fivefold from Our World in Data estimations. These practical materializations are also having negative social-economic impacts, alerted for example by “The Environment Outlook to 2050”. For example, the United Nations study on Economics and Ecosystems and Biodiversity estimate that the reduction of forests will generate an economic loss of up to $5 trillion per year, and if global water demand increases as expected (by 55%), industrial consumption will be 400% higher than it is today, which will mean that 40% of the world’s population will live in water-scarce areas.

Is it possible to build a sustainable global policy with concrete objectives? Is there enough space and resources to build this initiative without economic growth? Being a problem of planetary scale, should we establish a distinction of responsibilities among low-income, middle-income, and high-income countries? Is there enough space to think of a sustainable natural-resources basket in Latin America? Is growth completely separate from development?

This report seeks to create an analytical framework and establish a tentative answer to these questions. First, the report analyzes how the new techno-productive stage should incentivize the whole social scheme to implement public policies and articulate the new systems of global production in a sustainable way. This article will provide important background regarding how to fully understand “the accelerate[d] process of techno-productive change” (Zapata 2021) is an inflexion point of a new stage of capitalism. The “valorization of knowledge” (Sztulwark and Míguez 2012) has materialized worldwide and has great potential in having positive impacts on production, productivity, and sustainability. The second part will look for some potential components of the Latin American green agenda (e.g., the production of ion-lithium batteries and earmark institutional and financial resources to bioeconomic developments progressively). There are several important agendas that could be considered for incentives, including for example a progressive change of energetic mix with eolic, photovoltaic, nuclear energy, and green hydrogen. Finally, the report explores possible green actions in terms of the general economic and social outlook of Latin America.

TECNO-PRODUCTIVE PARADIGMS: A Useful Approach to Rethink the International Ecological Economy

Due to the expansion of the trade and financial sectors, there has been a debate within international political economy about globalization, its impacts, and its historical stages.

The technical discussions and current financial and trade systems show a significant leap forward since the emergency of Information Communication Technologies (ICT) during the 1970s and 1980s, which was a point of inflexion inside the productive architecture. To fully understand globalization, we should process and comprehend globalization “as the decisive strategy of capital as a solution to the crisis of Fordism, that is to say, that the radical liberalization of the transit of goods, services, money, and capital must create the conditions to create a renewed systemic rationalization” (Hirsch 1996 ). Extensive capitalist development has also had positive sides, such as the tight linkage between the build of state-nations and the markets. As a consequence, future political analyses do not need consider the market and the state as autonomous units of analysis, but rather as faces of the same coin. The neo-Schumpeterian perspective of international trade and services represents a useful theoretical framework to study the ruptures and continuities of capitalism and the vital importance of identifying different and critical technologic points of inflexions in order to have a full image of capitalism.

Source: Photo by Ph B on Unsplash

According to Carlota Perez (2004), the evolution of the capitalist system should be understood as being in a techno-productive stage. Far from wanting to explain the specificities of each paradigm, and in order to be schematic and clear analytically, only the last two paradigms will be observed. The emergence of ICTs during the 1970s and 1980s and the current technological breakthroughs (nanotechnology, bio-economy, AI, etc.) exposes how “knowledge as intangible capital, networked structures, intensive decentralized integration, and the intensive use of information around the intensive use of information are bursting with special emphasis on production processes” (Sztulwark and Míguez 2011, 16). From a neo-Schumpeterian perspective, we can think about the openness as a “crisis of the accumulative production system” in a time where reproduction of standardized goods produced with mechanical technologies from a new techno-productive cycle of accumulation of global capitalism. Taking a closer look at the current structural organization of GVCs (Global Chains of Value), one can observe that the most important periods within the chain are in the pre/post-production stages. Both stages are where the greatest intensity of technology is needed to carry out product differentiation. Here, it is important to clarify that in the last three paradigms, the technology was prominent, but in the production stage, a variety of ways were discovered to improve it. The current paradigm shows how gross productivity resides in the knowledge curve developed during the first and last stages of development.

In addition, the post-industrial and informational perspective asserts that “a historical rupture in terms of the natural change of the accumulative process” (Sztulwark and Míguez 2012). Therefore, the pre- and post-production stages imply an intense-technological instance to differentiating agents by their capabilities and innovative capabilities and behaviors in a world of changing techno-productive paradigms. The current crisis of industrial capitalism that was highly associated with the differentiation of production is that cognitive capitalism moves the heart of industrial capitalism (the innovation of production) to the innovation and differentiation of the product via high knowledge incorporation and highly decentralized-connected network structures.

Here, the desire to mitigate the environmental impact is how to produce better, more sustainable products with more intensive green technologies. Therefore, the current socio-political context and the emergency of the green agenda are already portraying the importance of the intensive use of technology, the R&D (Research and Development) investments, the importance to build solid national innovations systems, and the central role of the state. The historic-vigorous population growth during the last two hundred years should alert us to the negative impacts of how we have been producing and consuming. Understanding the global economy and its historical trajectory in terms of techno-productive cycles and the emergency of ecological transition, the use intensive of technology will bring positive impacts to mitigate some of the current situations. In addition, the most important aspects of the economic system are continued innovation, strengthening the public-private network, and being able to generate greater efficiency in production, yields, and positive externalities.

The technology and knowledge understood as strategic capital are the current vectors of the global economy. The great power asymmetry within the state-nation system has already represented a political challenge in the Global South in terms of historic technological lag. The present discussion implies, directly and indirectly, that global relations of power and asymmetry between the developing and industrialized countries regard the stock of hard and soft power to mobilize resources. Should the same responsibility be given to China and the United States - which are currently the largest emitters of CO2 in the world (more than 40% percent of the global CO2 emissions) - as is given to Latin America and the Caribbean region which account for 7.8% (CEPAL, 2020)?

This disparity of resources and power demonstrates the great difficulty that lowest and middle-income countries have when implementing green policies. In the Global South, Latin America particularly, research indicates that green public policies should be seen as an important step in integrating more from the current Global Chains of Value.

LATIN AMERICA'S GREEN STRATEGIC TRADE POLICY? Opportunities and Limits

Since COVID-19 arrived in Latin America and the Caribbean, it has exposed not only the “acceleration of preexisting tendencies more than abrupt changes or transformations of the history” (Haass, 2019) but also the lack of capacity to overcome the high levels of sensitivity and vulnerability. Both concepts were formulated by Joseph Nye and Robert Keohane (1971) to expose the differences between the rate of the impact of a specific situation and the capability to mobilize resources to mitigate socio-economic impacts. The notion of sensitivity is clear when we look up some official estimations. According to CEPAL (2020), the last six years of GDP growth (2014-2019) were the worst on record in the last 120 years. In terms of social cohesion, the results have been extremely poor. The same organization calculated that “the number of people in extreme poverty would reach 78 million (8 million more than in 2019) and the number of people in poverty would reach 209 million (22 million more than in 2019), and the inequality in the distribution of income would have increased, with an increase of 2.9% in the Gini index" (ECLAC, 2021a).

The vulnerability or “the lack capacity to overcome and respond from an impact” (Nye and Keohane, 1988) is markedly expressive. If we observe the Latin-American experience since the COVID-19 outbreak, we can see how, although “32 Latin-American governments have launched emergency transferences and cover 49% of the whole population” (CEPAL 2020, 24), “[t]he region has almost 19 percent of all confirmed cases and 28 percent of total deaths having 8 percent of the world’s population" (Merke and Stuenkel, 2021; 7). In other terms, the lack of governments that deploy the recourses in a proper, strategic way marks a dark future horizon in the whole region. One of the most worrisome tendencies is Latin America's technological lag. If we study comparative perspectives and cross the level of human development and technological capabilities as we see in the image below, we can see that there is a strong correlation explaining that the greater the number of technological capabilities in a country, the better its projection of human development.

Carlota Perez – Technological revolutions and techno-economic paradigms –  My thoughts on emerging technology
Source: Carlota Perez (2004)

In a way, the region's technological lag is extremely clear when we observe that the whole region has only 1.7% of global patent applications according to the last World Intellectual Property Report (2019) and that it significantly lacks linkages between public and private associations. To sum up, the extreme lack of technological expenditure in patents and R&D has remained a very asymmetric trend between countries and regions (WIPO, 2019) and also expose how among “the lower middle income and low-income Top 5 innovation economies there is no Latin American country” (WIPO 2019).    

Taking some indicators collected and produced by Andres Malamud and Luis L. Schenoni, we can see how between 1930 and 2020, “[t]he regional relevance according to national capacities, diplomatic ties and volume of trade has consistently decreased during the period” (2021). In this difficult context, the space to create productive public policies is too narrow when the macroeconomics indices, health issues, and socio-economic problems have increased exponentially during the last time. In light of this, it would be advisable any productive policy be accompanied by economic vigorous growth, solid institutional framework, and socio-political consensus in order to collect, finance, and build towards such objectives.

Despite the Latin American hindrance and the narrow policy space to implement a green agenda, it is important to highlight that the main focus of Latin American governments should be on how to articulate a green agenda as a vector, or economic growth, in spite of the regional differential in responsibility for the ecological disasters such as climate change – among others. The positive correlation between technological capabilities and human development is central. According to numerous academic sources (CEPAL 2020, Mascarenhas and Gutman 2021), Latin America has noteworthy strategic and critical resources to introduce the new global green value supply chains and fit together in this paradigm technologies of the likes of ion-lithium batteries, solar power, and eolic energy. Despite the structural and external-domestic constriction, the future of Latin America should be understood how Panith and Guidin (2015) frame it:

There is nothing like a crisis to clarify things.

GREEN ECONOMY AND LITHIUM: A Well-Known Techno-Economic Paradigm and Potential Agenda in Latin America

Source: Photo by John Cameron on Unsplash

The final important, prominent potential vector of economic development is the "green" economic paradigm. This sector will open two important discussions throughout Latin America: how to appease “the asymmetry between our intensive and complex (in added value) import basket and our agro-export profile” (CEPAL, 2021; 181) and how to formulate a green development path to articulate more deeply with important commercial partners such as the gradually emerging but growingly important green perspective partner: the European Union.

Inside the bio-economy milieu, this approach is conducive to multiple important technological advances with strong projections indicating that it could be key in the Latin American process of structural change. According to Van der Duin and den Hartog (2019), the large bio-economy developments offer for example “the food preservation technologies with intensive use of nanotechnology breakthroughs to keep the food fresh and improve the way of packaging; the smart farming data and synthetic biology that seek to produce sophisticated ingredients or components and substances, even without the need to use the ground and design of crops adapted to climate change” (CEPAL, 2021; 179) and other important breakthroughs.

The current economic and productive global system and its rupture moments should be understood as a potential opportunity for Latin American countries. The comparative historical perspective methodology represents a useful empirical tool to comprehend how technological advances are already the current economic vector of the whole system. In light of the present analysis, it appears that Latin America's productive policy should be reconsidered in its relationship to the lack of investment in R&D, poor interconnections in both the public and private sector, and the notion that there reportedly are explicit political desires to project a long-term, competitive, sustainable development model in line with global and domestic trends.


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[REPORT] Is Green Develop…

by Joaquin Gomez Amato time to read: 3 min
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