Jasmin Cowo

March 14, 2015

BADM 350
Economic growth is necessary: Economic growth versus the environment

Phimphanthavongs article The Impacts of Economic Growth on Environmental

Conditions in Laos (2013) states that economic growth can negatively impact the environment.
He supports this argument by showing the positive correlation between economic growth and
environmental degradation. Phimphanthavongs argues that there has been a high increase in
pollution, impact in climate change, overexploitation of natural resources, and degradation and
loss of wildlife habitat because of economic growth. According to (Phimphanthavong, 2013),
these are the main issues many countries have been facing. The primary goal for developing
countries has been economic growth and sustainabable development. However, he observes that
because most countrys economies are measured solely by GDP, the environment is not taken
into consideration. If a country focuses mainly on economic growth and fails to consider its
impact on the environment, this would negatively affect the environment. Indeed, Economic
Growth is essential for the improvement of standard of living in a country; however, it is the
main cause of environmental degradation and resource depletion.
The scholarly articles main purpose is to educate individuals about the impact of Economic
Growth. It conducts its study in Laos to prove that there is a relationship between Economic
Growth and Environmental Degradation. The authors information is reliable, since Goodstein
(1995) supports his information by saying sustainability can be achieved as long as the
environment is taken into consideration and there is an improvement in technological and
economic development. Sustainability can be defined as the development that meets the needs of

the present generation without compromising the ability of the future generation to meet their
own needs. We must provide the same standard of living from our present generation to our
future generation, which is why the environment must be protected. This paper mainly focuses
on the situation of Laos, and aims to investigate the relationship between economic growth and
its effects on the environment. The research focuses on carbon dioxide emissions per capita to be
a factor for environmental degradation. The increase of carbon dioxide is mainly caused from
burning oil, coal, and natural gas for energy use. Carbon emissions also enter the atmosphere
from burning of wood and other materials from industrial processes such as alcohol factories and
tobacco companies.
In the results and discussion, it shows that the increase of economic activities is assumed
to increase the proportion of environmental degradation. The results prove the authors
hypothesis. When Economic growth increases, environmental degradation also increases. The
environmental condition in Laos is only a minor contributor to climate change at global and
regional levels. However, environmental degradation in relation to the depletion of natural
resources caused by factors such as deforestation may cause a negative impact on the living
conditions of the population. This is due to a high increase in domestic productivity. Economic
growth in Laos is greatly dependent on natural resources. However, according to
(Phimphanthavong, 2013), it all varies according to circumstances such as individual countries
development view, the degree of economic development and trade openness.

While the author argues that economic growth is the reason for environmental
degradation, the author fails to realize that this is not the only factor that impacts environmental
degradation. Infact, there are many causes of environmental degradation. Not only is economic

growth responsible for environmental degradation, but individuals that are fully dependent in
natural resources. For instance, the poor people deplete natural resources and use harmful
methods for survival. In the article, it did mention that slash and burn greatly affects the
environment and it is a harmful way of production, but it did not mention that poor people are
fully depended on natural resources. The article should have also mentioned solutions to this
dilemma, such as providing the poor adequate technology in order to increase economic growth
and decrease environmental degradation. In the study, consumption and income seems to be one
of the main reasons why there is environmental degradation. The more there is production, the
more individuals are able to consume and production increases. However, as mentioned, it does
not take poverty into account because poor people are fully dependent on the environment.
The article also provides various assumptions on how to achieve sustainable
development without greatly affecting the environment. If Laos wants to achieve sustainable
development, then there needs to be a good policy for managing natural resources. Practices such
as slash and burn affect the environment, so the government should place a policy to resettle
residents in locations where agriculture is sustainable. The author also mentioned that economic
growth affects the environment and cannot be repaired once it is harmed. However, according to
Goodstein (1995), Neoclassical Economists believe that created capital acts as a substitute for
natural capital and resource rents must be duly invested into the economy to mitigate rampant
environmental degradation. In other words, the article failed to mention that even though
economic growth causes environmental degradation, the resource rents created through
economic growth is put back into the economy to alleviate environmental degradation.

References

Phimphanthavong, Hatthachan. (2013). The Impacts of Economic Growth on Environmental

Conditions in Laos. International Journal of Business Management & Economic
Research, 4 (5), 766-774.
Goodstein, E. S. (2010). Sustainability: A Neoclassical View. In E. S. Goodstein, Economics and
the Environment. John Wiley & Sons, Inc.