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Energy, Knowledge and Economic Growth

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  • John Foster

    ()
    (School of Economics, University of Queensland)

Abstract

It is argued that the explosive growth experienced in much of the World since the middle of the 19th Century is due to the exploitation and use of fossil fuels which, in turn, was made possible by capital good innovations that enabled this source of energy to be used effectively. Economic growth, it is argued, has been due to an autocatalytic co-evolution of energy use and the application of new knowledge relating to energy use. A simple ‘evolutionary macroeconomic’ model of economic growth is developed and tested using almost two centuries of British data. The empirical findings strongly support the hypothesis that growth has been due to the presence of a ‘super-radical innovation diffusion process.’ Also, the evidence suggests that large and sustained movements in energy prices have had a very significant long term role to play. The paper concludes with an assessment of the implications of the findings for the future prospects of economic growth in Britain and the possible lessons that can be learned about the future of the global economy.

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Bibliographic Info

Paper provided by School of Economics, University of Queensland, Australia in its series Energy Economics and Management Group Working Papers with number 3-2013.

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Date of creation: Mar 2013
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Handle: RePEc:qld:uqeemg:3-2013

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Keywords: Energy; Knowledge; Evolution;

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  1. Oded Galor & Stelios Michalopoulos, 2011. "Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits," NBER Working Papers 17075, National Bureau of Economic Research, Inc.
  2. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
  3. Jakob Madsen & James Ang & Rajabrata Banerjee, 2010. "Four centuries of British economic growth: the roles of technology and population," Journal of Economic Growth, Springer, vol. 15(4), pages 263-290, December.
  4. Nunn, Nathan & Qian, Nancy, 2009. "The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment," CEPR Discussion Papers 7364, C.E.P.R. Discussion Papers.
  5. David I. Stern and Astrid Kander, 2012. "The Role of Energy in the Industrial Revolution and Modern Economic Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
  6. John Foster & Phillip Wild, 1999. "Detecting self-organisational change in economic processes exhibiting logistic growth," Journal of Evolutionary Economics, Springer, vol. 9(1), pages 109-133.
  7. John Foster & J. Stan Metcalfe, 2011. "Economic Emergence: an Evolutionary Economic Perspective," Papers on Economics and Evolution 2011-12, Max Planck Institute of Economics, Evolutionary Economics Group.
  8. Foster, John & Wild, Phillip, 1999. "Econometric Modelling in the Presence of Evolutionary Change," Cambridge Journal of Economics, Oxford University Press, vol. 23(6), pages 749-70, November.
  9. Pittel, Karen & Rübbelke, Dirk T. G., . "Energy supply and the sustainability of endogenous growth," Chapters in Economics, University of Munich, Department of Economics.
  10. Harley, C. Knick, 1982. "British Industrialization Before 1841: Evidence of Slower Growth During the Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 42(02), pages 267-289, June.
  11. Nicholas Crafts, 2005. "The First Industrial Revolution: Resolving the Slow Growth/Rapid Industrialization Paradox," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 525-534, 04/05.
  12. Bluhm, Richard & Szirmai, Adam, 2012. "Institutions and long-run growth performance: An analytic literature review of the institutional determinants of economic growth," MERIT Working Papers 033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  13. Thomas, Ryland & Hills, Sally & Dimsdale, Nicholas, 2010. "The UK recession in context — what do three centuries of data tell us?," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 277-291.
  14. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, October.
  15. Freeman, Chris & Louca, Francisco, 2002. "As Time Goes By: From the Industrial Revolutions to the Information Revolution," OUP Catalogue, Oxford University Press, number 9780199251056.
  16. Angus Maddison, 2008. "The West and the Rest in the World Economy: 1000–2030," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(4), pages 75-100, October.
  17. Kurt Dopfer & John Foster & Jason Potts, 2004. "Micro-meso-macro," Journal of Evolutionary Economics, Springer, vol. 14(3), pages 263-279, 07.
  18. 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.
  19. John Foster, 2005. "From simplistic to complex systems in economics," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 873-892, November.
  20. Jakob B. Madsen & James B. Ang & Rajabrata Banerjee, 2010. "Four Centuries of British Economic Growth: The Roles of Technology and Population," Development Research Unit Working Paper Series 03-10, Monash University, Department of Economics.
  21. John Foster, 2011. "Evolutionary macroeconomics: a research agenda," Journal of Evolutionary Economics, Springer, vol. 21(1), pages 5-28, February.
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