Good Encouraging Green Investments In Africa Essay Example
This paper is a review of the article “Transition to a Green Economy in Africa” by Sandy Dechert. We present an appraisal of the article in view of the relevance and appropriateness of the recent move to introduce green investments in Africa.
The article centers round the recent proposal by the UNEP to convert Africa to a green economy. In this context the three most important terms that we are going to concentrate upon in our review are real GDP, sustainable development, and green investment. We are also going to use a few other terms related to development economics and sustainable development which we are going to introduce through our course of discussion.
Real GDP: The GDP or Gross Domestic Product is the sum total of the value currently produced goods and services in an economy. To understand the actual growth of the economy we have avoid the effect of price fluctuations in our calculation. So we use the real GDP figures which consider the GDP of different years at constant prices.
Sustainable Development: The development of an economy should be in such a way that it conserves resources for the future generations to meet their needs and carry on with the pace of development. This entails the greater usage of renewable resources in a manner such that the resources are replenished in the natural process.
Green Investment: Investment is the addition to the current stock of capital. Green investment refers to the investment that ensures sustainable use of resources.
The continent of Africa has grown at the annual average rate of 5 per cent per annum for the last decade. But this growth has not been reflected in real development of the continent with the majority of the mass still remaining under dire poverty, malnutrition, lack of sanitation, health and deprivation. Africa has contributed far less towards environmental degradation, yet it has suffered the brunt of the development of the rest of the world in terms of resource depletion and desertification. The call of the hour is to pursue development programme in Africa in the sustainable way by utilizing the huge natural wealth of the continent.
Presently, there is a concern all over the world over environmental issues. The new environmental norms have posed a challenge for the developing nations aiming at development through rapid industrialization. In this respect the challenge is more pronounced for Africa where a major portion of the population is under the grip of underdevelopment. The best way of development for Africa is the use of its huge reserves of natural wealth. The use of Africa’s renewable natural resources would lead to an immense increase in its supply potential which will be reflected in the increase in the short-run aggregate supply as shown by the rightward shift in the SAS curve in figure 1. The output in the economy increases from Y0 to Y1 leading to a fall in price from P0 to P1. The aggregate demand increases along the AD curve.
The use of non-conventional energy like solar lighting or hydroelectricity has two major effects. First of all it reduces expenditure on fuel and secondly it reduces the use of exhaustible resources like kerosene and coal. Another important effect is that it reduces the risk of pollution. With the reduction in expenditure on fuel the households can spend more on other essential consumption. The consumption expenditure increases on other goods leading to a rightward shift in the AD curve, as shown in figure 2, which increases the price level from P0 to P1. As a result the supply increases from Y0 to Y1. The output and employment in the economy increase.
It should also be noted here that the initiation cost of non-conventional energy is still quite high. The possible effect of such high initial cost will be to reduce the aggregate demand shown by a leftward shift of the AD curve in figure 3. The result is a low output and income.
The article rightly points out that Africa has immense potential for development by using its renewable resources sustainably. But the author overlooks the fact that the introduction of the non-conventional means of resource usage would entail a huge cost and requires a considerable amount of governmental action and expenditure for a significant period of time before the actual positive results of sustainable development can be reaped.
Dechert, Sandy. "Transition To A Green Economy In Africa." 9 March 2015. cleantechnica.com. <http://cleantechnica.com/2015/03/09/transition-green-economy-africa/>.