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Inclusive wealth, total factor productivity, and sustainability: an empirical analysis

Author

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  • Masayuki Sato

    (Kobe University)

  • Kenta Tanaka

    (Musashi University)

  • Shunsuke Managi

    (Kyushu University)

Abstract

Sustainability can be assessed by non-declining inclusive wealth, which refers to man-made capital, human capital, natural capital, and all other types of capital that are sources of human well-being. As the previous studies—including Arrow et al. (J Econ Perspect 18(3):147–172, 2004) and the Inclusive Wealth Report (2012 and 2014)—suggest, total factor productivity (TFP) is one determinant of inclusive wealth, because it is related to the resource allocation mechanism. TFP is one important component of sustainability. When considering the contribution of TFP toward inclusive wealth, attention needs to be paid to the improvement in the usage of human and natural capital as well as the traditional man-made capital. However, in the previous studies, only man-made capital and labor force have been considered. This study extends current measures of sustainability by capturing the efficient utilization of natural resources, giving us inclusive wealth-based TFP. Therefore, in contrast to conventional TFP measures, we consider both human and natural capital in addition to man-made capital. We examine 43 countries and find that a new indicator which asserts countries previously considered sustainable by earlier studies such as Arrow et al. (J Econ Perspect 18(3):147–172, 2004) as no longer sustainable.

Suggested Citation

  • Masayuki Sato & Kenta Tanaka & Shunsuke Managi, 2018. "Inclusive wealth, total factor productivity, and sustainability: an empirical analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 741-757, October.
    • Handle: RePEc:spr:envpol:v:20:y:2018:i:4:d:10.1007_s10018-018-0213-1
    DOI: 10.1007/s10018-018-0213-1
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    2. Halkos, George & Managi, Shunsuke, 2023. "New developments in the disciplines of environmental and resource economics," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 513-522.
    3. George Halkos & Mike G. Tsionas, 2019. "Accounting for Heterogeneity in Environmental Performance Using Data Envelopment Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 54(3), pages 1005-1025, October.
    4. Zhuohui Yu & Shiping Mao & Qingning Lin, 2022. "Has China’s Carbon Emissions Trading Pilot Policy Improved Agricultural Green Total Factor Productivity?," Agriculture, MDPI, vol. 12(9), pages 1-21, September.
    5. Dong, Jiayun & Liang, Wenyuan & Liu, Weiping & Liu, Jinlong & Managi, Shunsuke, 2020. "Does forestland possession enhance households’ access to credit?—Examining China’s forestland mortgage policy," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 78-87.

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    More about this item

    Keywords

    Sustainable development; Inclusive wealth; Malmquist index; Efficiency; Total factor productivity;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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