Geographical Scope

Geographical scope in ENL is either regional or global, depending on the analyst's perspective and requirements.

In standard economics the geographical unit of analysis is typically the country. Statistics such as GDP (gross domestic product) and trade deficits almost always refer to specific countries, and most economic policies are developed on a national basis.

In ENL the country is construed as a purely political entity, without special economic significance. The framework treats the geographical unit of analysis as either a region or the globe as a whole. If the unit is a region, this can be an area within a country, a country itself, or a collection of territories up to but not including the entire globe.

When the term economy is used in ENL, it refers to the chosen geographical unit.

The most basic application of geographical scope is in relation to ENL’s ethical stance. If regional scope is chosen, "everyone" includes all human beings who reside in the selected region. If global scope is chosen, "everyone" includes all human beings on the planet.

ENL also applies geographical scope to value, cost, and an economy's environmental budgets. Geographical scope thus determines the population over which value and cost are aggregated.

Assume, for example, that the territory chosen for analysis is a bioregion—a biologically unified area such as a seaboard, desert, or valley. To determine the overall performance of this bioregion's economy with respect to well-being, the value gained and the cost incurred by its population are both summed. When cost is subtracted from value, the result is the total well-being achieved.

Because regional scope has been chosen, any value gained and cost incurred outside this bioregion do not affect the estimate. A region is thus an explicit demarcation between "us" and "them" for the purpose of economic calculation.

An environmental budget is defined as the maximum amount of a natural source or sink that an economy can safely appropriate before ecological degradation occurs.

An economy's geographical scope defines the physical area, such as the bioregion just mentioned, that is associated with these natural assets.

An important exception is when a region’s wastes (pollution, garbage, etc.) cross its borders into the world outside. In all such cases the region must take full responsibility for its polluting actions. This topic is covered in ENL's treatment of environmental limits.

Regional scope and global scope are not mutually exclusive. ENL could be used on a regional basis to draw conclusions about a local economy. At the same time it could be applied on a global basis to gain a worldwide perspective on economic activities. It is also possible to analyze overlapping regions, although in such cases political processes will be necessary to resolve conflicting conclusions about objectives and policies.

A key analytical difference between regional and global scope is that trade is possible between regions, but is logically impossible when the economy is construed globally. In the latter case the only possibility is the exchange of goods and services among the world's citizens. Value and cost would then be aggregated globally, and all environmental budgets would be calculated on a worldwide basis.

ENL gives analysts a choice with respect to geographical scope because this provides a high degree of flexibility. Political borders can be respected or ignored depending on the nature of the analytical project. Global scope can be used if the world is fruitfully seen as an economic community, but regional scope can be employed if this unity is not recognized, or if a more restricted area must be directly addressed for other reasons.

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