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Useful work and information as drivers of economic growth

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  • Warr, Benjamin
  • Ayres, Robert U.

Abstract

A semi-empirical endogenous growth theory was proposed by the authors in 2005. It is based on a model of the economy as a two-stage materials/energy processing system. Growth is simulated by a two-parameter production function with two traditional factors, labor and capital, and a non-traditional factor, namely ‘useful work’. The non-traditional factor is calculated from primary energy inputs multiplied by an empirically estimated average energy conversion efficiency, which is a function of changing technology over time. This model ‘explains’ past US growth from 1900 through 1973–74 with satisfactory accuracy but it slightly underestimates subsequent growth (i.e. it leaves a small unexplained but increasing residual) for the period after 1975. However, by subdividing capital stock into traditional and ICT components, we are able to extend the theory to explain US economic growth accurately. In this paper we also extend the results to Japan. The revised production function has only three independent parameters. The new model also has implications for future economic growth, energy and environmental policy that differ significantly from the traditional growth theory. These implications are discussed briefly.

Suggested Citation

  • Warr, Benjamin & Ayres, Robert U., 2012. "Useful work and information as drivers of economic growth," Ecological Economics, Elsevier, vol. 73(C), pages 93-102.
  • Handle: RePEc:eee:ecolec:v:73:y:2012:i:c:p:93-102
    DOI: 10.1016/j.ecolecon.2011.09.006
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    1. Siefert, Nicholas S. & Litster, Shawn, 2013. "Exergy and economic analyses of advanced IGCC–CCS and IGFC–CCS power plants," Applied Energy, Elsevier, vol. 107(C), pages 315-328.
    2. Andrea Bigano & Aleksander Śniegocki & Jacopo Zotti, 2016. "Policies for a More Dematerialized EU Economy. Theoretical Underpinnings, Political Context and Expected Feasibility," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-22, July.
    3. repec:gam:jecomi:v:6:y:2018:i:1:p:7-:d:129170 is not listed on IDEAS
    4. repec:eee:energy:v:144:y:2018:i:c:p:915-927 is not listed on IDEAS
    5. repec:eee:ecolec:v:141:y:2017:i:c:p:11-21 is not listed on IDEAS
    6. Jie Li & Robert Ayres, 2008. "Economic Growth and Development: Towards a Catchup Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(1), pages 1-36, May.
    7. García-Olivares, Antonio & Ballabrera-Poy, Joaquim, 2015. "Energy and mineral peaks, and a future steady state economy," Technological Forecasting and Social Change, Elsevier, vol. 90(PB), pages 587-598.
    8. Eric Kemp-Benedict, 2017. "Dematerialization, decoupling, and productivity Change," Working Papers PKWP1709, Post Keynesian Economics Study Group (PKSG).
    9. Victor Court & Pierre-André Jouvet & Frédéric Lantz, 2015. "Endogenous economic growth, EROI, and transition towards renewable energy," Working Papers 1507, Chaire Economie du climat.
    10. 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.
    11. Fix, Blair, 2014. "Rethinking Profit: How Redistribution Drives Growth," Working Papers on Capital as Power 2014/02, Capital As Power - Toward a New Cosmology of Capitalism.
    12. repec:eee:ecolec:v:148:y:2018:i:c:p:103-120 is not listed on IDEAS

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    Keywords

    Economic growth; Production function; Energy; LINEX;

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