Natural resources, economic growth and geography

González-Val, Rafael and Pueyo, Fernando (2019): Natural resources, economic growth and geography.

Abstract

Worldwide materials extraction increased by a factor of 8.4 over the course of the 20th century. In the meantime, global GDP and population increased by factors of about 22 and 4, respectively. This reveals that one of the key factors driving the increase in the exploitation of the resources was the growth in world population, although mitigated by the reduction in the intensity in the use of the resources in production. In this paper, we present a model that combines the theory of endogenous growth and the economy of natural resources, but taking into account the geographical distribution of economic activity. Indeed, the New Economic Geography provides insights about two elements that, although speeding up GDP growth, can curb the pressure on natural resources, namely the reduction in transports costs and a boost to pace of innovation.

• Item Type: MPRA Paper
• Language: English
• Keywords: industrial location, endogenous growth, renewable resource, geography
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q20 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity

References

Acemoglu, D., P., Aghion, L. Bursztyn, and D. Hémous, (2012). The Environment and Directed Technical Change. American Economic Review, 102(1): 131–166.

Bolt, J., R. Inklaar, H. de Jong and J. Luiten van Zanden, (2018). Rebasing ‘Maddison’: new income comparisons and the shape of long-run economic development. Maddison Project Database version 2018, Maddison Project Working paper 10.

Brander, J. A., and M. S. Taylor, (1997a). International Trade and Open-Access Renewable Resources: The Small Open Economy Case. The Canadian Journal of Economics / Revue canadienne d'Economique, 30(3): 526–552.

Brander, J. A., and M. S. Taylor, (1997b). International trade between consumer and conservationist countries. Resource and Energy Economics 19: 267–298.

Brander, J. A., and M. S. Taylor, (1998a). Open access renewable resources: Trade and trade policy in a two-country model. Journal of International Economics, 44: 181–209.

Brander, J. A., and M. S. Taylor, (1998b). The simple economics of Easter Island: a Ricardo-Malthus model of renewable resource use. American Economic Review, 88: 119– 138.

Brown, G. M., (2000). Renewable natural resource management and use without markets. Journal of Economic Literature 38: 875–914.

Carson, R. T., (2010). The Environmental Kuznets Curve: Seeking Empirical Regularity and Theoretical Structure. Review of Environmental Economics and Policy, 4(1): 3–23.

Chichilnisky, G., (1994). North-south trade and the global environment. American Economic Review, 84: 851–874.

Copeland, B. R., and M. S. Taylor, (2009). Trade, Tragedy, and the Commons. American Economic Review, 99(3): 725–749.

Cropper, M., and C. Griffiths, (1994). The interaction of population growth and environmental quality. American Economic Review, 84(2): 250–254.

Costello, C., and D. Kaffine, (2018). Natural Resource Federalism: Preferences Versus Connectivity for Patchy Resources. Environmental and Resource Economics, 71(1): 99–126.

Ehrlich, P., and J. Holden, (1971). Impact of population growth. Science, 171: 1212–1217.

Eliasson, L., and S. J. Turnovsky, (2004). Renewable Resources in an Endogenously Growing Economy: Balanced Growth and Transitional Dynamics. Journal of Environmental Economics and Management, 48: 1018–1049.

Ellison, G., and E. L. Glaeser, (1999). The geographic concentration of industry: Does natural advantage explain agglomeration? American Economic Review Papers and Proceedings, 89(2): 311–316.

Fischer-Kowalski, M., F. Krausmann, S. Giljum, S. Lutter, A. Mayer, S. Bringezu, Y. Moriguchi, H. Schütz, H. Schandl, and H. Weisz, (2011). Methodology and Indicators of Economy‐wide Material Flow Accounting. Journal of Industrial Ecology, 15(6): 855–876.

Glaeser, E. L., H. Kallal, J. Scheinkman, and A. Schleifer, (1992). Growth in cities. Journal of Political Economy, 100: 1126–1152.

Grossman, G., and E. Helpman, (1991). Innovation and growth in the world economy. MIT Press, Cambridge, MA.

Helpman, E., and P. Krugman, (1985). Market structure and foreign trade. MIT Press, Cambridge, MA. Henderson, V., A. Kuncoro, and M. Turner, (1995). Industrial development in cities. Journal of Political Economy, 103(5): 1067–1090.

Hirose, K., and K. Yamamoto, (2007). Knowledge spillovers, location of industry, and endogenous growth. Annals of Regional Science, 41: 17–30.

Jacobs, J., (1969). Economy of Cities. Vintage, New York.

Karp, L., S. Sacheti, and J. Zhao, (2001). Common Ground between Free Traders and Environmentalists. International Economic Review, 42: 617–647.

Kim, S., (1995). Expansion of Markets and the Geographic Distribution of Economic Activities: The Trends in U. S. Regional Manufacturing Structure, 1860-1987. The Quarterly Journal of Economics, 110(4): 881–908.

Kim, S., (1999). Regions, resources, and economic geography: sources of U.S. regional comparative advantage, 1880–1987. Regional Science and Urban Economics, 29: 1–32.

Klein, A., and N. Crafts, (2012). Making sense of the manufacturing belt: determinants of U.S. industrial location, 1880-1920. Journal of Economic Geography, 12(4): 775–807.

Krausmann, F., S. Gingrich, N. Eisenmenger, K.‐H. Erb, H. Haberl, and M. Fischer‐Kowalski, (2009). Growth in global materials use, GDP and population during the 20th century. Ecological Economics, 68(10): 2696–2705.

Krugman, P., (1991). Increasing returns and economic geography. Journal of Political Economy, 99: 483–499.

Liu, A. A., and H. Yamagami, (2018). Environmental Policy in the Presence of Induced Technological Change. Environmental and Resource Economics, 71(1): 279–299.

Martin, P., and G.I.P. Ottaviano, (1999). Growing locations: industry location in a model of endogenous growth. European Economic Review, 43: 281–302.

Nordhaus, W. D., (2002). Modeling induced innovation in climate-change policy. In: A. Grubler, N. Nakicenovic and W. D. Nordhaus (eds.), Technological change and the environment. Resources for the Future, Washington, 182–209.

Picard, P. M., and D.-Z. Zeng, (2010). A harmonization of first and second natures. Journal of Regional Science, 50(5): 973–994.

Romer, P., (1990). Endogenous technical change. Journal of Political Economy, 98(5): S71–S102.

Ruta, M., and A. J. Venables, (2012). International Trade in Natural Resources: Practice and Policy. Annual Review of Resource Economics, 4(1): 331–352.

Samuelson, P., (1954). The transfer problem and transport costs, II: analysis of effects of trade impediments. Economic Journal, 64: 264–289.

Takatsuka, H., D.-Z. Zeng, and L. Zhao, (2015). Resource-based cities and the Dutch disease. Resource and Energy Economics, 40: 57–84.

WTO, (2010). World Trade Report 2010: Trade in natural resources. World Trade Organization, Geneva.