Di Maria, Corrado and Valente, Simone (2006): The Direction of Technical Change in Capital-Resource Economies.
Preview |
PDF
MPRA_paper_1040.pdf Download (324kB) | Preview |
Abstract
We analyze a multi-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative profitability of factor-specific innovations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that convergence to balanced growth implies zero capital-augmenting innovations: in the long run, the economy exhibits purely resource-augmenting technical change. This result provides sound microfoundations for the broad class of models of exogenous/endogenous growth where resource-augmenting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability.
Item Type: | MPRA Paper |
---|---|
Institution: | CER ETH Zurich |
Original Title: | The Direction of Technical Change in Capital-Resource Economies |
Language: | English |
Keywords: | Endogenous Growth; Directed Technical Change; Exhaustible Resources; Sustainability |
Subjects: | Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D |
Item ID: | 1040 |
Depositing User: | Simone Valente |
Date Deposited: | 05 Dec 2006 |
Last Modified: | 01 Oct 2019 12:33 |
References: | Acemoglu, D. (1998). Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality. Quarterly Journal of Economics, 113: 1055-1089. Acemoglu, D. (2001). Directed Technical Change. Review of Economic Studies, 69: 781-810. Acemoglu, D. (2003). Labor- and Capital-Augmenting Technical Change. Journal of the European Economic Association, 1: 1-37. Aghion, P., Howitt, P. (1992). A Model of Growth Through Creative Distruction. Econometrica, 60 (2): 323-351. Aghion, P., Howitt, P. (1998). Endogenous Growth Theory. MIT Press : Cambridge (MA). Amigues, J.P., Grimaud, A., Moreaux, M. (2004). Optimal endogenous sustainability with an exhaustible resource through dedicated R&D. LEERNA Working Paper 04.17.154. Andre, F., Smulders, S. (2005). Energy Use, Endogenous Technical Change and Economic Growth. Mimeo, CentER-Tilburg University. Barbier, E.B. (1999). Endogenous Growth and Natural Resource Scarcity. Environmental and Resource Economics, 14: 51-74. Bretschger, L., Smulders, S. (2004). Sustainability and substitution of exhaustible natural resources. How prices affect long-term R&D-investments. Economics Working Paper Series 03/26, June, ETH Zurich. Bretschger (2005). Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?. Ecological Economics, 54: 148-163. Dasgupta, P., Heal, G. (1974). The Optimal Depletion of Exhaustible Resources. Review of Economic Studies, Symposium on the Economics of Exhaustible Resources: 3–28. Di Maria, C., Smulders, S. (2004). Trade Pessimists vs Technology Optimists: Induced Technical Change and Pollution Havens. Advances in Economic Analysis & Policy, 4 (2), Article 7. Di Maria, C., van der Werf, E. (2005). Carbon Leakage Revisited: Unilateral Climate Policy under Directed Technical Change. CentER Discussion Paper Series No. 2005-68, May, Tilburg University. Drandakis, E., Phelps, E. (1965). A Model of Induced Invention, Growth and Distribution. Economic Journal, CXXVI: 823-840. Gaitan, B., Roe, T. (2005). Natural Resource Abundance and Economic Growth in a Two-CountryWorld. Economic Development Center, Bulletin Number 05-1, University of Minnesota. Grimaud, A., Rougé, L. (2003). Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies. Journal of Environmental Economics and Management, 45: 433-453. Grossman, G., Helpman, E. (1991). Innovation and Growth in the Global Economy, MIT Press: Cambridge (MA). Groth, C., Schou, P. (2002). Can Non-renewable Resources Alleviate the Knife-edge Character of Endogenous Growth? Oxford Economic Papers 54, 386-411. Hicks, J.R. (1932). The Theory of Wages. London: Macmillan. Hotelling, H. (1931). The Economics of Exhaustible Resources. Journal of Political Economy, 39 (2): 137-175. Kennedy, C. (1964). Induced Bias in Innovation and the Theory of Distribution. Economic Journal, LXXIV : 541-547. Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, IIC: S71-S102. Sholz, C., Ziemes, G. (1999). Exhaustible Resources, Monopolistic Competition, and Endogenous Growht. Environmental and Resource Economics, 13: 169-185. Solow, R. (1974). Intergenerational Equity and Exhaustible Resources. Review of Economic Studies, Symposium on the Economics of Exhaustible Resources: 29–46. Stiglitz, J. (1974). Growth with Exhaustible Natural Resources: Efficient and Optimal Growth Paths. Review of Economic Studies, Symposium on the Economics of Exhaustible Resources: 123–137. Valente, S. (2005). Sustainable Development, Renewable Resources and Technological Progress. Environmental and Resource Economics, 30 (1): 115-125. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/1040 |