Abstract
The limits to economic growth due to resource scarcity can be alleviated only by the development of backstop substitutes. This paper combines resource-based economic growth with R&D to reduce the cost of backstop technologies. Characterizing the entire dynamics of optimal growth and R&D processes, we find that an economy's growth prospects depend on its type, as determined by its production technology and learning ability, and by its knowledge-capital endowment. A wide variety of growth patterns emerges, ranging from cases in which an economy that without R&D eventually stagnates (converges to a steady state) is diverted by R&D onto a path of sustained growth, to cases in which R&D is not warranted. Resource scarcity is shown to encourage R&D due to the increased reliance on the backstop technology.
Original language | English |
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Pages (from-to) | 484-499 |
Number of pages | 16 |
Journal | Journal of Environmental Economics and Management |
Volume | 49 |
Issue number | 3 |
DOIs | |
State | Published - 1 Jan 2005 |
Keywords
- Backstop technology
- Economic growth
- Non-renewable resources
- R&D
- Scarcity
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law