Economics

Fig. MA.E.06; Economics

RESEARCH JUSTIFICATION

The global economic system is a complex network of micro and macro level structures that affect all of society. However, current growth-focused models are increasingly strained. Gains have been uneven, often achieved at environmental cost, and climate-related damages are already slowing growth.

Therefore, what are impacts of current global economic systems on society, their issues and potential alternatives?

Doughnut Economics

Doughnut Economics, developed by economist Kate Raworth (Kate Raworth, Doughnut Economics, 2017) offers a new non-growth-based alternative to traditional economic models. Raworth argues that conventional economics, with its fixation on endless GDP growth, fails to recognise the environmental systems that sustain life and the social foundations required for human wellbeing, therefore driving inequality and ecological damage. Instead, she calls for economies that are regenerative and distributive by design, enabling people and the planet to thrive within their natural limits.

The central “Doughnut” model defines the safe and just space in which humanity can prosper:  

The inner ring: The Social Foundation - represents the basic human needs that no one should fall below, such as access to food, water, energy, education, healthcare, and equality.  

The outer ring: The Ecological Ceiling - marks the environmental limits that must not be exceeded, protecting vital planetary systems such as the climate, oceans, and biodiversity.  

The “Doughnut”: The space between these two boundaries - is where social justice and ecological balance coexist, allowing humanity to prosper without breaching the planet’s life-supporting boundaries. 

To achieve this, Raworth proposes a strategy that recognises the economy’s responsibility to the living world, and promote fairer distribution of wealth and power. In this strategy, success is measured not by growth alone, but by enabling all people to live well within the planet’s ecological limits. In essence, Doughnut Economics invites us to adopt a mindset that prioritises sustainability and collective wellbeing. 

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Fig. MA.E.05; The Proposed 'Doughnut' Model (Kate Raworth)

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The Existing 'Growth-Based' Model (Kate Raworth)

Green Growth

Green growth seeks to foster economic growth and development while ensuring that natural resources and environmental services continue to support human well-being. This idea separates economic growth from environmental degradation, forming the basis of a lot of current political and climate modelling, including Integrated Assessment Models (IAMs) used to plan climate responses. 

This is demonstrated in the Environmental Kuznets Curve (pictured right) where the early years of industrial economies (dirty industry) lead to rising levels of environmental degradation, but then steadily decreases after income reaches a certain threshold. This happens once infrastructure and systems have reached a suitable level of proficiency where there is a public shift towards environmental futures over increased industrialization. (Science Direct, 2013)

Fig. MA.E.03; Kuznets environmental theory

Fig. MA.E.04; Three Sustainable Pillars

Critics of green growth models, such as Jason Hickel and Giorgos Kallis (Jason Hickel & Giorgos Kallis, Is Green Growth Possible?, 2019) argue that this premise may be overly optimistic. They suggest that true sustainability is difficult on a planet with finite resources and question whether growth and environmental protection can genuinely coexist. Hickel and Kallis note that economic growth is largely driven by industries with a large carbon output, making the simultaneous pursuit of environmental restoration and financial growth potentially contradictory.

World Bank

The World Bank’s global economic strategy is rooted in the belief that economic growth, if properly managed, can be both sustainable and inclusive (World Bank, Economic Policy: Strategy, accessed 2025). Central to this approach is the idea that technological change can improve the ecological efficiency, and that governments can accelerate this process through targeted regulations and incentives. This reflects a strong faith in progress and a reliance on top-down, growth-focused solutions. 

Key priorities include:

Fiscal policy: Creating sustainable paths for revenues, expenditure, and deficits, managing fiscal risks, and improving public spending efficiency.

Domestic resource mobilisation: Strengthening tax systems to unlock resources that can support climate action, healthcare, and poverty reduction.

Debt management: Ensuring borrowing is transparent and sustainable, recognising debt as a vital tool for financing development goals when properly managed.

While the strategy emphasises growth and technological solutions, it illustrates the World Bank’s continued reliance on traditional economic models, prioritising progress and efficiency as the primary drivers for solving global challenges.

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Fig. MA.E.01; Exponential economic growth vs Model of Economic Stability

Could we learn to stabilize with what we have?

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Fig. MA.E.02; Economic Circular Flow Model - Illustrates the major exchanges within an economy