Growth and sustainability “beyond GDP”: an empirical analysis of the Dasgupta model

Abstract

Investigating the interlinkages between the natural environment and the sustainability of economic growth has recently become a central topic of scientific and political enquiry. The article presents an analysis of the relationship between changes in wealth, including natural capital, and economic growth, i.e. income, framed in the wealth perspective of sustainability “beyond GDP”, using GDP and GNI as traditional indicators of income, as well as Adjusted Net National Income (ANNI), considered a sustainability indicator. The economic model behind the regression analysis is the production function of the recently introduced Dasgupta model, a version of the Solow-Swan model, extended with the natural capital component. The research confirms the effect of the changes in natural capital on economic growth. It also highlight the importance of the valuation of natural capital assets, as well as the consistent use of data.