Despite short-term downturns and setbacks, the long-term trend in economic output over the last
200 years has been unambiguously upwards. It has led to rising levels of employment and income,
and remains a key factor in generating the necessary level of investment, both public and private,
in technology and infrastructure to facilitate the shift to a low carbon and resource efficient growth
path. Economic growth has also provided developing countries the opportunity to improve the
quality of life of their citizens, and to rise to meet the environmental challenges they face.
Investment, aid and demand for imports from advanced economies all have an important role in
supporting economic growth and development across the world.
Economic growth involves the combination of different types of capital to produce goods and
services. These include:
• produced capital, such as machinery, buildings and roads;
• human capital, such as skills and knowledge;
• natural capital, for example, raw materials we extract from the earth, carbon sequestration
services provided by forests and soils; and
• social capital, including institutions and ties within communities.
Natural capital is different from other types of capital for a number of reasons. Some elements of
natural capital have critical thresholds beyond which sudden and dramatic changes may occur;
some have finite limits; changes to natural capital are potentially irreversible; and impacts extend
across many generations. Therefore, while natural capital is used to generate growth, it needs to be
used sustainably and efficiently in order to secure growth in the long run. This is most obvious in the
context of non-renewable resources such as oil and minerals, but the rate of consumption of
renewable resources such as forests and fisheries and of ecosystem services such as biodiversity and
carbon sequestration must also be considered relative to their rate of recharge and replenishment
and any critical thresholds they exhibit.
Despite short-term downturns and setbacks, the long-term trend in economic output over the last200 years has been unambiguously upwards. It has led to rising levels of employment and income,and remains a key factor in generating the necessary level of investment, both public and private,in technology and infrastructure to facilitate the shift to a low carbon and resource efficient growthpath. Economic growth has also provided developing countries the opportunity to improve thequality of life of their citizens, and to rise to meet the environmental challenges they face.Investment, aid and demand for imports from advanced economies all have an important role insupporting economic growth and development across the world.Economic growth involves the combination of different types of capital to produce goods andservices. These include:• produced capital, such as machinery, buildings and roads;• human capital, such as skills and knowledge;• natural capital, for example, raw materials we extract from the earth, carbon sequestrationservices provided by forests and soils; and• social capital, including institutions and ties within communities.Natural capital is different from other types of capital for a number of reasons. Some elements ofnatural capital have critical thresholds beyond which sudden and dramatic changes may occur;some have finite limits; changes to natural capital are potentially irreversible; and impacts extendacross many generations. Therefore, while natural capital is used to generate growth, it needs to beused sustainably and efficiently in order to secure growth in the long run. This is most obvious in thecontext of non-renewable resources such as oil and minerals, but the rate of consumption ofrenewable resources such as forests and fisheries and of ecosystem services such as biodiversity andcarbon sequestration must also be considered relative to their rate of recharge and replenishmentand any critical thresholds they exhibit.
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