The Real Net National Product in Sustainable Development

Abstract

This paper is related to social welfare and sustainability. The real NNP represents the maximized value of flow of goods and services that are produced by the productive assets of the society. It is important to investigate whether the concept of NNP can serve as an indicator of sustainability. In this paper an attempt has been taken to clarify this with theoretical calculations. The instantaneous increases in real NNP over time are an accurate indicator of true welfare improvements. The paper shows that welfare is increasing instantaneously over time if and only if real NNP is increasing instantaneously over time. It is also shown the relation between the Divisia index of real consumption prices and dynamic welfare evaluation. The paper emphasizes on optimal growth and growth without optimality, and is examined sustainability in these two cases.