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Economics of technological change and the natural environment: how effective are innovations as a remedy for resource scarcity?

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Abstract

The paper aims to substantiate the importance of endogenous innovations when evaluating the compatibility of natural resource use and economic development. It explains that technological change has the potential to compensate for natural resource scarcity, diminishing returns to capital, poor input substitution, and material balance restrictions, but is limited by various restrictions like fading returns to innovative investments and rising research costs. It also shows how innovative activities are fostered by accurate price signals and research-favouring sectoral change. The simultaneous effects of increasing technical knowledge, decreasing resource inputs, and increasing world population largely determine the chances of long-run sustainable development. Consequently, future research has to be directed at a more thorough understanding of the mechanisms driving innovations in the presence of natural resource scarcity.

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Bibliographic Info

Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 03/27.

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Length: 23 pages
Date of creation: Jun 2003
Date of revision: Jun 2004
Handle: RePEc:eth:wpswif:03-27

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Keywords: endogenous technological change; environment; natural resources; sustainability;

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References

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Citations

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Cited by:
  1. Busch, Timo & Hoffmann, Volker H., 2007. "Emerging carbon constraints for corporate risk management," Ecological Economics, Elsevier, vol. 62(3-4), pages 518-528, May.
  2. Janine De Fence & Nick Hanley & Karen Turner, 2009. "Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?," Working Papers 0908, University of Strathclyde Business School, Department of Economics.
  3. Ricci, Francesco, 2007. "Channels of transmission of environmental policy to economic growth: A survey of the theory," Ecological Economics, Elsevier, vol. 60(4), pages 688-699, February.
  4. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
  5. Jakub, GROWIEC & Ingmar, SCHUMACHER, 2006. "On Technical Change in the Elasticities of Resource Inputs," Discussion Papers (ECON - Département des Sciences Economiques) 2006031, Université catholique de Louvain, Département des Sciences Economiques.
  6. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, 08.
  7. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany.
  8. Boons, Frank & Wagner, Marcus, 2009. "Assessing the relationship between economic and ecological performance: Distinguishing system levels and the role of innovation," Ecological Economics, Elsevier, vol. 68(7), pages 1908-1914, May.
  9. Nick Hanley & Karen Turner, 2009. "How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?," Working Papers 0915, University of Strathclyde Business School, Department of Economics.
  10. Fagnart, Jean-François & Germain, Marc, 2011. "Quantitative versus qualitative growth with recyclable resource," Ecological Economics, Elsevier, vol. 70(5), pages 929-941, March.
  11. Ediger, Volkan S. & Hosgor, Enes & Surmeli, A. Nesen & Tatlidil, Huseyin, 2007. "Fossil fuel sustainability index: An application of resource management," Energy Policy, Elsevier, vol. 35(5), pages 2969-2977, May.
  12. Costantini, Valeria & Crespi, Francesco, 2007. "Environmental regulation and the export dynamics of energy technologies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200708, University of Turin.
  13. Martin de Wit & Matthew Kuperus Heun & Douglas J Crookes, 2013. "An overview of salient factors, relationships and values to support integrated energy-economic systems dynamic modelling," Working Papers 02/2013, Stellenbosch University, Department of Economics.
  14. Kim, Jung Eun, 2014. "Energy security and climate change: How oil endowment influences alternative vehicle innovation," Energy Policy, Elsevier, vol. 66(C), pages 400-410.
  15. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  16. Uehara, Takuro, 2013. "Ecological threshold and ecological economic threshold: Implications from an ecological economic model with adaptation," Ecological Economics, Elsevier, vol. 93(C), pages 374-384.

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