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Incentives for Green Industrialization

Jul 21-2020   



In a commentary echoing the UN’s 2030 Agenda for Sustainable Development, Prof. Justin Lin Yifu calls on private enterprises to embrace social values and drive changes. He’s Honorary Dean of the NSD and Dean of both the Institute of New Structural Economics and the Institute of South-South Cooperation and Development at PKU.

 

The 2030 Agenda consists of 17 development goals such as eradication of poverty and provision of better healthcare, and should be achieved by all countries. Prof. Lin believes the most important means to meet the goals is to provide better job opportunities to the people and realize green industrialization, with private firms playing a critical role in the process.

 

As the Chief Economist of the World Bank, Prof. Lin visited many African countries where people were in dire poverty – not because of no jobs but because of working in low-productivity, low-income traditional farming. Such countries need to climb the ladder of industrialization to get out of poverty and achieve prosperity. However, that might lead to significant increase in energy density and carbon emissions. To break the conundrum requires a new sort of green industrialization.

 

The prerequisite of green industrialization is technological innovation, which relies on the efforts of enterprises. Companies should acquire the understanding that without green industrialization, it will be impossible to provide good employment opportunities in poor countries and ensure their social and political stability.

 

At the same time, a solid incentive mechanism should be put in place to prod companies to develop green technologies. When a firm pollutes, consumers should reject its products. When a firm keeps using outdated technologies, the government should slap it with pollution tax. In comparison, when firms deploy green technologies, they should be rewarded.

 

Green technologies do not belong to the lands of idealism; they are practical, feasible and profitable. Firms, families, consumers and governments are all in this together, says Prof. Lin.

Incentives for Green Industrialization

Jul 21-2020   



In a commentary echoing the UN’s 2030 Agenda for Sustainable Development, Prof. Justin Lin Yifu calls on private enterprises to embrace social values and drive changes. He’s Honorary Dean of the NSD and Dean of both the Institute of New Structural Economics and the Institute of South-South Cooperation and Development at PKU.

 

The 2030 Agenda consists of 17 development goals such as eradication of poverty and provision of better healthcare, and should be achieved by all countries. Prof. Lin believes the most important means to meet the goals is to provide better job opportunities to the people and realize green industrialization, with private firms playing a critical role in the process.

 

As the Chief Economist of the World Bank, Prof. Lin visited many African countries where people were in dire poverty – not because of no jobs but because of working in low-productivity, low-income traditional farming. Such countries need to climb the ladder of industrialization to get out of poverty and achieve prosperity. However, that might lead to significant increase in energy density and carbon emissions. To break the conundrum requires a new sort of green industrialization.

 

The prerequisite of green industrialization is technological innovation, which relies on the efforts of enterprises. Companies should acquire the understanding that without green industrialization, it will be impossible to provide good employment opportunities in poor countries and ensure their social and political stability.

 

At the same time, a solid incentive mechanism should be put in place to prod companies to develop green technologies. When a firm pollutes, consumers should reject its products. When a firm keeps using outdated technologies, the government should slap it with pollution tax. In comparison, when firms deploy green technologies, they should be rewarded.

 

Green technologies do not belong to the lands of idealism; they are practical, feasible and profitable. Firms, families, consumers and governments are all in this together, says Prof. Lin.