Sustainable development: a three-gap model and some simulations for Latin America

The Institute of Economics will hold the next meeting of its Seminar Series on Thursday, January 25, 2024: Gabriel Porcile, from ECLAC, will present the paper "Sustainable development: a three-gap model and some simulations for Latin America".

Abstract:

Sustainable development requires convergence in GDP per capita between center and periphery, a sharp fall in inequality and protecting the environment. In order to model these conditions, three rates of growth are defined: the minimum required to reduce inequality and eradicate poverty (𝑦𝑆); the maximum compatible with external equilibrium (𝑦𝑇); and the maximum compatible with the level of CO2 emissions defined in the Nationally Determined Contributions, NDCs (𝑦𝐿). Estimations of those rates of growth for Latin America suggest that 𝑦𝑆 > 𝑦𝑇 > 𝑦𝐿. It is argued that the combination of industrial and technological policies, along with a major effort at income redistribution, are necessary for having 𝑦𝑆 = 𝑦𝑇 = 𝑦𝐿, which defines a sustainable development path. The paper presents some empirical results and simulations using Latin American data that suggest that this path is viable if countries take advantage of the complementarities between social, industrial and environmental policies. However, strong political economy barriers should be overcome to implement these policies. The paper briefly discusses the type of political coalition needed to advance towards sustainable development.

The seminar will be held in Aula 5, sede centrale.

The seminar can be attended online at the following link.