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Industrialization and environmental externalities in a Solow-type model

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  • Antoci, Angelo
  • Russu, Paolo
  • Sordi, Serena
  • Ticci, Elisa

Abstract

In this paper we examine the role played by environmental externalities in shaping the dynamics of an economy with two sectors (a farming sector and an industrial one), free inter-sectoral labor mobility and heterogeneous agents (workers/farmers and industrial entrepreneurs). We find that, in the presence of the environmental pressure of the economic activity of the industrial sector, the stability properties of the equilibria and their features in terms of environmental preservation, welfare outcomes and sectoral allocation of labor are sensitive to the level of carrying capacity. We show that an endogenous process of industrialization associated with a reduction in farmers/workers׳ welfare can emerge.

Suggested Citation

  • Antoci, Angelo & Russu, Paolo & Sordi, Serena & Ticci, Elisa, 2014. "Industrialization and environmental externalities in a Solow-type model," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 211-224.
    • Handle: RePEc:eee:dyncon:v:47:y:2014:i:c:p:211-224
    DOI: 10.1016/j.jedc.2014.08.009
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
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    8. Gian Italo Bischi & Carl Chiarella & Laura Gardini (ed.), 2010. "Nonlinear Dynamics in Economics, Finance and Social Sciences," Springer Books, Springer, number 978-3-642-04023-8, January.
    9. Antoci, Angelo & Russu, Paolo & Ticci, Elisa, 2008. "Structural change, economic growth and environmental dynamics with heterogeneous agents," MPRA Paper 13668, University Library of Munich, Germany.
    10. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
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    13. Antoci, Angelo & Russu, Paolo & Ticci, Elisa, 2012. "Environmental externalities and immiserizing structural changes in an economy with heterogeneous agents," Ecological Economics, Elsevier, vol. 81(C), pages 80-91.
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    Cited by:

    1. Jules-Eric Tchapchet Tchouto & Loudi Njoya & Tii Nchofoung & Isaac Ketu, 2024. "Investigating the effects of environmental tax regulations on industrialization in African countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(1), pages 2153-2182, January.
    2. Iannucci, Gianluca & Pereau, Jean-Christophe, 2025. "The dynamics of organic farming conversion in groundwater management," Macroeconomic Dynamics, Cambridge University Press, vol. 29, pages 1-1, January.
    3. Lingfu Kong & Emrah Sofuoğlu & Balogun Daud Ishola & Shujaat Abbas & Qingran Guo & Khurshid Khudoykulov, 2024. "Sustainable development through structural transformation: a pathway to economic, social, and environmental progress," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-34, April.
    4. Antoci, Angelo & Borghesi, Simone & Russu, Paolo & Ticci, Elisa, 2015. "Foreign direct investments, environmental externalities and capital segmentation in a rural economy," Ecological Economics, Elsevier, vol. 116(C), pages 341-353.
    5. Antoci, Angelo & Iannucci, Gianluca & Rocchi, Benedetto & Ticci, Elisa, 2023. "The land allocation game: Externalities and evolutionary competition," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 124-133.
    6. Sadik-Zada, Elkhan Richard & Gatto, Andrea, 2021. "The puzzle of greenhouse gas footprints of oil abundance," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    7. Antoci, Angelo & Galeotti, Marcello & Iannucci, Gianluca & Russu, Paolo, 2015. "Structural change and inter-sectoral mobility in a two-sector economy," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 18-29.
    8. Simone Borghesi & Giorgia Giovannetti & Gianluca Iannucci & Paolo Russu, 2019. "The Dynamics of Foreign Direct Investments in Land and Pollution Accumulation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 135-154, January.
    9. Angelo Antoci & Marcello Galeotti & Serena Sordi, 2016. "Environmental pollution as engine of industrialization," Department of Economics University of Siena 725, Department of Economics, University of Siena.
    10. Gianluca Iannucci & Federico Martellozzo & Filippo Randelli, 2022. "Sustainable development of rural areas: a dynamic model in between tourism exploitation and landscape decline," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 991-1016, July.
    11. Antonios Garas & Sophie Guthmuller & Athanasios Lapatinas, 2021. "The development of nations conditions the disease space," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-35, January.
    12. Li, Gang & Yanase, Akihiko, 2025. "Cross-country heterogeneity in production–environment nexus and international trade," Economic Modelling, Elsevier, vol. 144(C).
    13. Marwil J. Dávila-Fernández & Germana Giombini & Edgar J. Sánchez-Carrera, 2025. "Climateflation and Monetary Policy in an Environmental OLG Growth Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(11), pages 2937-2968, November.
    14. Alessandro Fiori Maccioni, 2018. "Environmental depletion, defensive consumption and negative externalities," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 203-218, November.
    15. Lapatinas, Athanasios & Garas, Antonios & Boleti, Eirini & Kyriakou, Alexandra, 2019. "Economic complexity and environmental performance: Evidence from a world sample," MPRA Paper 92833, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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