Two Thoughts on Natural Resource and Emissions

Economic growth of any nation largely depends on the pool of natural resources, and the pattern, at which those natural resources are utilized in the process of economic growth. If the pattern is a very systematic one and is regulated by the governments of that nation, then attainment of sustainable economic growth can never be a big problem for those nations. However, it has been seen in most of the cases that the consumption pattern is not at all systematic, and in turn, the economic growth of those nations turns out to be unsustainable. Natural resources are deemed as Public Goods and that is the reason, the citizens do not impose legitimate value on those resources. They share the fate of any other public property, despite the rules and regulations being set by the governments in order to protect them.

Economists across the world have observed this phenomenon for several years, and they have come up with two hypotheses in order to put forth their thoughts and concerns. Those two hypotheses are as per the following:

• First is the Environmental Kuznets Curve hypothesis. This hypothesis talks about an inverted U-shaped association between economic development (measured by per capita income) and environmental degradation (measured in per capita terms). According to this hypothesis, when a nation is at a least development stage, they try to consume their natural resources to the full extent in order to achieve the economic growth, as at that point, that is the only major amount of capital freely available to them. At this stage, environmental degradation grows with per capita income. For a developing nation, when the per capita income attains a certain stage, certain environmental awareness arises among the citizens, which lead towards gradual reduction of environmental degradation. That per capita income is referred to as the Turnaround point of the curve. For the developing nations, the awareness is higher than that of the developing nations and they have proper environmental protection regulations at place, and therefore they can achieve the least possible environmental degradation.
  
  
• Second is Resource Curse hypothesis. It has been seen that a country with a huge pool of natural resources grows less than a country having less amount of the same. They try to export those resources to other nation in order to appreciate their exchange rate, and on the other hand, the corporate houses in those nations lack innovational capabilities, which can add to lower growth in their national income.
  
  

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