Question

Explain the concept of socio-economic aspects of sustainable development

Answer 1

Economic aspects

The modern concept underlying economic sustainability seeks to maximize the flow of income that could be generated while at least maintaining the stock of assets (or capital Economic efficiency plays a key role in ensuring optimal consumption and production.) which yield this income. Fisher had defined capital as “a stock of instruments existing at an instant of time”, and income as “a stream of services flowing from this stock of wealth”. Hicks argued that people’s maximum sustainable consumption is “the amount that they can consume without impoverishing themselves”.

Social aspects

Social development usually refers to improvements in both individual well-being and the overall social welfare, that result from increases in social capital – typically, the accumulation of capacity for individuals and groups of people to work together to achieve shared objectives. Social capital is the resource which people draw upon in pursuit of their aspirations and is developed through networks and connectedness, membership of more formalized groups and relationships of trust, reciprocity, and exchanges. The institutional component of social capital refers mainly to the formal laws as well as traditional or informal understandings that govern behavior, while the organizational component is embodied in the entities (both individuals and social groups) which operate within these institutional arrangements. For our purposes we assume that human capital (e.g., education, skills, etc.), and cultural capital (e.g., social relationships and customs) are also included within social capital although fine distinctions do exist.

Recent research has emphasized the role of institutions in explaining differences among nations in terms of economic growth or stagnation – i.e., how behavioral norms govern social conduct, which ultimately determines economic behavior.