Di Maria, Corrado and Valente, Simone (2006): The Direction of Technical Change in Capital-Resource Economies.
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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|
|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, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences; Diffusion Processes
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D
|Depositing User:||Simone Valente|
|Date Deposited:||05. Dec 2006|
|Last Modified:||13. Feb 2013 02:01|
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