Lessons in Sustainable Development from Malaysia and Indonesia

S. Hsu, N. Perry

• Publisher: Palgrave Pivot
• Year: 2014
• Print ISBN: 9781137353078
• eBook ISBN: 9781137347916
• Topic: Politics & International Relations
• Subtopic: International Business
• Index: Politics & International Relations

Sustainable Development in Malaysia and Indonesia examines a range of topics pertaining to sustainable development in the two countries. While Indonesia and Malaysia are geographically close, Indonesia lags behind Malaysia in terms of well-being, with a lack of social services, and economic indicators, as GDP per capita is lower than that in Malaysia. Environmental problems are similar, since both possess large amounts of biodiversity and natural resources. Hsu and Perry provide a concise overview of sustainable development in the nations, make policy recommendations for each country, and discuss sustainable development experiments in both countries.

1

Theoretical Framework

Abstract:  In Chapter 1, we discuss the theoretical framework we laid out in the first book of this series (Lessons in Sustainable Development from China and Taiwan), which used several components of sustainable development—geography, well-being, economy, and environment. We draw out an economic model of this theoretical framework.

Hsu, Sara and Nathan Perry. Lessons in Sustainable Development from Malaysia and Indonesia. New York: Palgrave Macmillan, 2014. DOI: 10.1057/9781137347916.0006.

The theoretical framework we laid out in the first book of this series used several components of sustainable development—geography, well-being, economy, and environment. These are all aspects that are explored in detail for Malaysia and Indonesia later in this book.

Our theory states that geography, as an initial factor that is not easily changed, influences well-being and economic structure, through the presence or absence of natural resources, ease or difficulty of transportation, and access to the outside world. The economic structure in turn impacts environmental sustainability and well-being through the way it modifies land, air, water, and resources during production and consumption. Well-being and environmental sustainability mutually affect one another—those with higher levels of well-being have the opportunity to (but do not necessarily) improve the environment, while higher levels of environmental sustainability improve well-being. Human policies also shape, and are shaped by, sustainable development.

Rationale for using this model was discussed in the second volume of this series, Lessons in Sustainable Development for Japan and South Korea. Below, we draw out the model for this theory.

Using the nation state as the object of examination, we consider each component of sustainable development in turn.

We reduce geography to a set of carbon (a) and noncarbon (e) elements. Both are able to produce energy through various production processes (whether it is coal that is used to fire a machine or rice that is used to fuel human energy) and can be measured by the amount of energy they create.

We include both carbon and noncarbon elements of geography and human labor into the economic process. Production produces both goods (p • l) and also carbon (w_a) and noncarbon (w_e) waste as outputs. Carbon waste is some proportion of carbon inputs into production, while noncarbon waste is some given proportion of noncarbon inputs into production. We assume that households will pay for pollution w_a and w_e.

FIGURE 1.1   Components of sustainable development

Source:  the authors.

We use a microeconomic model, because at this level we are able to specify inputs and their contributions to production and consumption. We take a, e, p (price vector), and c (cost vector) as exogenous variables; l, w_a and w_e as endogenous variables and b, g, d, a, «, w and u as parameters. The production function is a constant return to scale version of the Cobb-Douglas function, for ease of use. The model follows.

All that we need is a function for well-being, since we have three unknowns, and three equations (two constraints are included with the utility equation). Society’s utility function is defined as:

such that

Utility depends therefore on income and natural resources, minus the cost of pollution or waste and goods, which households must pay for. Households purchase some proportion (up to 100%) of what is produced by firms, as in the production function (the implied output function is: p  •  (a^β  •  e^γ  •  l^{(1–β–γ)}). This is in line with our model, that well-being is based on geography (natural resources in this model), economy, and environment (pollution or waste in this model).

Assuming that profits and government revenues are zero in the long run and that p, c = 1, β = γ, and that θ, ɛ, φ = 1, we take the derivative of the utility equation with respect to l to obtain:

The amount of labor used therefore depends on the amount of natural resources used, both renewable and nonrenewable. Labor is generally increasing in a and e, although if 1/(2β) is odd and the first term is smaller than the second term, labor will be decreasing.

If we combine (4) into the definition of w_e, we can obtain:

Similarly, we can find w_a which is:

For both (5) and (6), the equation may be increasing or decreasing depending on the values of a, e, and β. Both w_e and w_a are dependent on the amount of natural resources used and recycled.

In treating these equations as a system, we assume that the functions are representative of the aggregate economy, that is, the utility function is the aggregate of all consumers. We can see that the solutions depend on how natural resources are utilized—how much of the renewable and nonrenewable resources are used. The solutions also depend on the parameters. In reality, the simplifying assumptions would not hold true. Price, cost, and use of resources in consumption, as well as in waste creation, matter, will make the final equations more complex, neither clearly increasing nor decreasing, but rather dependent on the exogenous variables and parameters.

These basic equations provide a framework for our thinking about Malaysia and Indonesia; consumers make an income, get utility from natural resources, and pay for goods and environmental pollution (this can be thought of in terms of income taxes). All of these contribute to, or detract from, individual well-being. We can use this as food for thought, in the chapter that follows.

2

Sustainable Development in Malaysia and Indonesia

Abstract: In this chapter, we discuss sustainable development in Malaysia and Indonesia in terms of geography, well-being, economic structure, and environmental sustainability.

Hsu, Sara and Nathan Perry. Lessons in Sustainable Development from Malaysia and Indonesia. New York: Palgrave Macmillan, 2014. DOI: 10.1057/9781137347916.0007.

Malaysia is a country with abundant natural resources and immense biodiversity. This makes Malaysia’s emphasis on sustainable development important not just to them, but to the rest of the world as well. The country of Malaysia consists of peninsular Malaysia and the northern part of the island of Borneo, and is considered a tropical environment. Malaysia’s economic growth (GDP per capita is higher than that of China) coupled with its important natural environment have forced the Malaysian government to attempt to form its development policies in a sustainable manner.

Malaysia and sustainable development

Environment

Air pollution

Malaysian air quality has become a widely recognized problem and one that has been growing worse for 50 years. The flow of rural farmers moving into urban areas has increased air pollution because of the increase in traffic in cities. Biomass burning, including the elimination and burning of peat lands for the creation of palm tree farms and the demand for palm tree oil, has significantly increased air pollution and decreased the ability fo...

Table of contents

• Cover
• Title
• Introduction
• 1  Theoretical Framework
• 2  Sustainable Development in Malaysia and Indonesia
• 3  Sustainable Development Programs and Experiments
• 4  Directions for Future Study
• Conclusion
• References
• Index