Growth and development

Growth is defined as an increase in some quantity over time. “Sustained growth” is continuous growth over a longer period. As a global trend relevant to Yara’s industry and production, growth is attributed to two main global features: The growth of economies and the growth of populations.

Growth is closely linked to two other megatrends, globalization and urbanization. Economic growth is seen as a driver of globalization, while globalization also opens new opportunities for growth. Population growth spurs urbanization, driving people towards urban areas to seek employment as economic growth creates opportunities there. Larger populations – not least the urban ones – also drive growth through increased demand for goods and services.

The growth of the world’s economy has been substantial over a long period of time, with consistent economic growth in developing countries occurring as well in recent years. Despite the financial crisis that erupted in 2008 and carried over into 2009, economic growth is expected to eventually pick up again in most countries.

Growth is closely connected to the development of societies and nations. It is a commonly held notion that combating poverty requires economic growth – within a globalized system – in addition to other factors like favorable economic policies and heavy investments in education and health. A key conclusion of the Commission on Growth and Development, in its 2008 “The Growth Report: Strategies for Sustained Growth and Inclusive Development,” is that growth is a crucial part of poverty reduction and the improvement of people’s lives, and that poor countries cannot lift large populations out of poverty without growth.

Economic growth

Economic growth, most often measured in terms of gross domestic product (GDP), doesn’t automatically boost social development, though, or provide for an even distribution of wealth. Economists tend to account for growth with a triple formula of technology, capital and skills. Globalization has nurtured foreign investment, often by multinational companies offering modern technology and human capital along with capital and making it possible for today’s developing countries to close much of the gap, and advance their societies at a relatively high speed.

Proponents of economic growth argue that it is a main driver of development in all societies, and particularly in developing countries where growth is necessary to shake off poverty. Growth creates jobs and income for individuals, communities and nations, laying a foundation for sustained economic development and lasting social improvement. In less developed countries, agriculture is considered the very engine of growth, calling for investments in improving productivity.

Although acknowledging the imbalance between diminishing resources and increased extraction, proponents of growth argue that growth economies develop innovative technologies and improved systems – like new energy sources and enhanced energy efficiency – making it possible to sustain economic growth within the broad framework of sustainability.

Opponents of economic growth argue that it puts undue pressure on natural resources and the global and local environment, and – through the extraction of non-renewable resources such as minerals – cannot be sustainable. The depletion of natural resources increases with the growth of populations, and coupled with the living standard that a rising world middle class aspire to, the resources required exceed what are available.

It is also argued that growth encourages the creation of artificial needs with acquired tastes that will drive growth – and the pressure on remaining resources – further. Economic growth also may increase the income gap between rich and poor, adding to inequalities. Indirectly, growth also contributes considerably towards global warming, mainly from the extensive use of fossil fuels.

Population growth

Population growth has been strong worldwide, and will remain so in some parts of the world, especially in less-developed regions like Africa south of the Sahara. Globally, population growth has been declining in recent decades, falling from an annual average growth rate that peaked at 2 percent in the late 1960s to around 1.2 percent at present. It’s expected to fall to approximately 0.4 percent by 2050.

Despite this reduction, world population will continue to grow from today’s 6.7 billion to an estimated 9.2 billion in 2050. Since the late 1960s, population growth in Africa has been the highest, and is expected to remain so, also reflecting – and corroborating – the common assumption, based on historic experience, that economic growth leads to lower population growth.

Population growth is driving economic growth through expanding markets and increasing demands, further jeopardizing global sustainability. The growth also puts pressure on land for human settlement that otherwise would be used for agricultural production. Urbanization as such, fostered by population growth, creates a set of economic and social challenges, including health hazards related to pollution of air and water. Population growth is an economic and social challenge particularly for developing countries that are struggling to provide their citizens with basic services. An expanding population also challenges many countries’ abilities to ensure food supplies, improve health standards or lay a solid economic foundation for development.

Global growth – of economies and populations – has a considerable impact on Yara’s business. A prime driver of the global fertilizer market is the need for improved agricultural productivity (meeting economic sustainability demands) and increased food production (meeting food security demands). Yara’s fertilizer products thus contribute directly to the sustainability of world agriculture, and the production of food, meeting the challenges of a growing population and increased prosperity that spur more consumption.

Growth also opens new business opportunities – given the increased market demand – for Yara’s fertilizer products and agronomic knowledge. Technological development and the transfer of know-how is a crucial factor in economic growth, especially in the less-developed regions of the world. As an industry shaper with a global presence and world-class knowledge to offer, Yara is poised to benefit from global growth – and is ready with solutions to meet the demands created by economic and population growth. Yara is a good example of a multinational company offering updated production technology, an understanding of the global market and an ability to manage international supply chains.