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Growth theory and ‘green growth’

Author

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  • Sjak Smulders
  • Michael Toman
  • Cees Withagen

Abstract

The relatively new and still amorphous concept of ‘green growth’ can be understood as a call for balancing longer-term investments in sustaining environmental wealth with nearer-term income growth to reduce poverty. We draw on a large body of economic theory available for providing insights on such balancing of income growth and environmental sustainability. We show that there is no a priori assurance of substantial positive spillovers from environmental policies to income growth, or for a monotonic transition to a ‘green steady state’ along an optimal path. The greenness of an optimal growth path can depend heavily on initial conditions, with a variety of different adjustments occurring concurrently along an optimal path. Factor-augmenting technical-change targeting at offsetting resource depletion is critical to sustaining long-term growth within natural limits on the availability of natural resources and environmental services.

Suggested Citation

  • Sjak Smulders & Michael Toman & Cees Withagen, 2014. "Growth theory and ‘green growth’," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(3), pages 423-446.
    • Handle: RePEc:oup:oxford:v:30:y:2014:i:3:p:423-446.
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    File URL: http://hdl.handle.net/10.1093/oxrep/gru027
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    Citations

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    Cited by:

    1. Wei Jin & ZhongXiang Zhang, 2016. "China's pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation," CCEP Working Papers 1601, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    2. Johannes Pfeiffer, 2017. "Fossil Resources and Climate Change – The Green Paradox and Resource Market Power Revisited in General Equilibrium," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 77.
    3. John Sherwood & Anthony Ditta & Becky Haney & Loren Haarsma & Michael Carbajales-Dale, 2017. "Resource Criticality in Modern Economies: Agent-Based Model Demonstrates Vulnerabilities from Technological Interdependence," Biophysical Economics and Resource Quality, Springer, vol. 2(3), pages 1-22, September.
    4. Zhaohui Chong & Chenglin Qin & Xinyue Ye, 2016. "Environmental Regulation, Economic Network and Sustainable Growth of Urban Agglomerations in China," Sustainability, MDPI, vol. 8(5), pages 1-21, May.
    5. Bretschger, Lucas, 2017. "Climate policy and economic growth," Resource and Energy Economics, Elsevier, vol. 49(C), pages 1-15.
    6. Quaas, Martin F. & Bröcker, Johannes, 2016. "Substitutability and the social cost of carbon in a solvable growth model with irreversible climate change," Economics Working Papers 2016-09, Christian-Albrechts-University of Kiel, Department of Economics.
    7. Jean‐François Fagnart & Marc Germain & Bruno Van der Linden, 2023. "Working time reduction and employment in a finite world," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 170-207, January.
    8. Chaofan Chen & Jing Han & Peilei Fan, 2016. "Measuring the Level of Industrial Green Development and Exploring Its Influencing Factors: Empirical Evidence from China’s 30 Provinces," Sustainability, MDPI, vol. 8(2), pages 1-20, February.
    9. Eckehard Rosenbaum, 2017. "Green Growth—Magic Bullet or Damp Squib?," Sustainability, MDPI, vol. 9(7), pages 1-18, June.
    10. Saltari, Enrico & Travaglini, Giuseppe, 2016. "Pollution control under emission constraints: Switching between regimes," Energy Economics, Elsevier, vol. 53(C), pages 212-219.
    11. Mealy, Penny & Teytelboym, Alexander, 2022. "Economic complexity and the green economy," Research Policy, Elsevier, vol. 51(8).
    12. Guy Meunier & Jean-Pierre Ponssard, 2021. "Designing Conditional Schemes for Green Industrial Policy under Different Information Structures," CESifo Working Paper Series 8881, CESifo.
    13. Capasso, Marco & Hansen, Teis & Heiberg, Jonas & Klitkou, Antje & Steen, Markus, 2019. "Green growth – A synthesis of scientific findings," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 390-402.
    14. Salvador Pueyo, 2019. "Limits to green growth and the dynamics of innovation," Papers 1904.09586, arXiv.org, revised May 2019.
    15. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2023. "When is frugality optimal?," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 65-75.
    16. Siedschlag, Iulia & Meneto, Stefano & Tong Koecklin, Manuel, 2019. "Determinants of green innovations: Firm-level evidence," Papers WP643, Economic and Social Research Institute (ESRI).
    17. Chuku Chuku & Victor Ajayi, 2022. "Working Paper 363 - Growing Green: Enablers and Barriers for Africa," Working Paper Series 2489, African Development Bank.
    18. Elena Cigu & Mihai-Bogdan Petrișor & Alina-Cristina Nuță & Florian-Marcel Nuță & Ionel Bostan, 2020. "The Nexus between Financial Regulation and Green Sustainable Economy," Sustainability, MDPI, vol. 12(21), pages 1-15, October.
    19. Eriksson, Clas, 2018. "Phasing out a polluting input in a growth model with directed technological change," Economic Modelling, Elsevier, vol. 68(C), pages 461-474.
    20. Baofeng Shi & Hufeng Yang & Jing Wang & Jingxu Zhao, 2016. "City Green Economy Evaluation: Empirical Evidence from 15 Sub-Provincial Cities in China," Sustainability, MDPI, vol. 8(6), pages 1-39, June.
    21. Mignamissi, Dieudonné, 2020. "Pollution emission and institutions nexus in Africa," MPRA Paper 99017, University Library of Munich, Germany.

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