Climate Change and Green Growth: A Perspective of the Division of Labor

• Date: 01 September 2014
• Author: Yongsheng Zhang
• Published date: 01 September 2014
• DOI: http://doi.org/10.1111/j.1749-124X.2014.12086.x

93

China & World Economy / 93–116, Vol. 22, No. 5, 2014

©2014 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Climate Change and Green Growth:

A Perspective of the Division of Labor

Yongsheng Zhang*

Abstract

This paper presents a new research agenda on climate change and green growth from the

perspective of the division of labor in classical economics. The paper covers three major

dimensions of green growth (i.e. carbon emissions, environmental protection and material

resources use) and some related important topics, as well as the fresh policy implications of

the new research agenda, Typical marginal analysis in a given structure of the division of

labor suggests that “green” action is a burden to economic development. Therefore, climate

negotiation has become a burden-sharing game and has reached a stalemate. New thinking

is badly needed to rescue these negotiations and to drive a shift to a new “green growth”

paradigm. The proposed new research agenda represents an effort to create a new narrative

on climate change and green growth. Because the new research agenda can theoretically

predict the possibility that a more competitive structure of the division of labor could be

triggered by “green” policy, it has promising policy implications for various important

challenges facing us in the 21st century.

Key words: climate change, division of labor, green growth, specialization

JEL codes: B52, O13, Q54, Q58

I. Introduction

Since the Industrial Revolution 200 years ago, the relationship between man and nature has

entered an era of Anthropocene, in which human activities have started to play a dominant

role in the evolution of nature. The development paradigm established since the Industrial

*Yongsheng Zhang, Senior Research Fellow, Development Research Center of the State Council of

China, Beijing, China. Email: zys@drc.gov.cn. The author is grateful to his co-authors of the joint

papers cited in this paper and to the colleagues at the Development Research Center of the State Council

of China working on the new research line on climate change and green growth. Invaluable comments

and suggestions from a referee, and R. Garnaut, C. Jaeger, Y. K. Ng, J. Sachs, L. G. Song, Van Der Leeuw,

S. J. Liu, H. L. Shi, S. T. Yao and D. S. Zhang are deeply appreciated.

94 Yongsheng Zhang / 93–116, Vol. 22, No. 5, 2014

©2014 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Revolution has been based on high carbon emissions, high environmental depletion and

high material resource use. Although it has brought unprecedented material affluence to

around 40 percent of the world’s population, primarily represented by the industrialized

and emerging economies, the development paradigm has, unfortunately, caused serious

environmental crises. Because the human activities undertaken under this paradigm are

driving the Earth system beyond its safe operating space, it cannot bring globally-shared

prosperity to the whole population of the planet (see Rockstroem et al., 2009). Furthermore,

given the global limits on emissions, resources and environmental services, the continuation

of the paradigm will inevitably trigger conflicts between poor and rich countries, especially

as nine billion people, mostly in developing countries by 2050, pursue Westernized living,

characterized by overconsumption.

To avoid catastrophic consequences and to enable globally-shared prosperity to emerge,

the only solution is to shift from the old development paradigm to a green growth paradigm.

Although to date no standard definition of green growth has emerged (Huberty et al.,

2011), green growth can be considered to comprise three dimensions: low carbon emissions,

a low environmental footprint and low material resource use (World Bank/ DRC, 2012). The

forthcoming United Nations Sustainable Development Goals (SDG) that will supercede the

Millennium Development Goals (MDG) in 2015 precisely reflect the situation. Different

from MDG that focus on developing countries, the SDG emphasize the urgency for all

countries, including both developed and developing countries, to shift to a sustainable

development paradigm (Sachs, 2013).

Nonetheless, conventional studies on climate change and green growth are incapable

of providing sufficient theoretical support for solving the current crises and transitioning

to green growth. Take climate change as an example. Because most of the existing studies

are conducted in a typical marginal analysis framework dealing with resource allocation

within a given structure of division of labor, the most exciting story in fighting climate

change, that is, that carbon mitigation might trigger organizational changes and drive the

local economy to a more competitive division of labor, is missing. Consequently, the

tremendous local benefit from mitigation cannot be fully predicted by theory, and the

global mitigation negotiations have become a zero-sum game of burden-sharing, sharing

the insufficient global carbon space. Without a global transition to green growth, it is

unlikely that the world will reach any substantial international agreement on climate change.

Recognizing the inadequacy of conventional analysis, efforts have been made in various

ways to show that a shift to green growth could be of self-interest for local economies. For

instance, the World Bank (2006), the UNEP (2011) and Hallegatte et al. (2012) apply the