Endogenous growth and environmental policy: are the processes of growth and tertiarisation in developed economies reversible? An evolutionary perspective

The starting point for this article is the idea put forward by Gadrey (2008, 2010) that environmental problems and a policy of addressing them by introducing an environmental tax could trigger economic contraction and downscaling and a shrinking of the service sector in developed economies. The purpose of this article is to test these hypotheses using an evolutionary simulation model. To this end, we use a model of endogenous growth and structural change into which an environmental dimension is incorporated. The results of our simulations certainly reveal structural change within service industries but no change in the distribution of employment between services and manufacturing. Furthermore, we show that the environmentally desirable stagnation of labour productivity in the capital goods sector is compatible with a largely positive growth trend in the economy as a whole, with the development of knowledge-intensive business services apparently able partially to offset the stagnation of productivity in the capital goods sector. We conclude by emphasising the need for environmental innovation in service activities and casting doubt on the long-term effectiveness of an environmental tax in the fight against pollution.