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Growth theory and ‘green growth’

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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, 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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    Cited by:

    1. Wei Jin & ZhongXiang Zhang, 2016. "China’s Pursuit of Environmentally Sustainable Development: Harnessing the New Engine of Technological Innovation," Working Papers 2016.24, Fondazione Eni Enrico Mattei.
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    3. repec:spr:bioerq:v:2:y:2017:i:3:d:10.1007_s41247-017-0026-z is not listed on IDEAS
    4. Zhaohui Chong & Chenglin Qin & Xinyue Ye, 2016. "Environmental Regulation, Economic Network and Sustainable Growth of Urban Agglomerations in China," Sustainability, MDPI, Open Access Journal, vol. 8(5), pages 1-21, May.
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    6. repec:gam:jsusta:v:8:y:2016:i:5:p:467:d:69798 is not listed on IDEAS
    7. 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.
    8. repec:gam:jsusta:v:8:y:2016:i:2:p:153:d:63771 is not listed on IDEAS
    9. 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, Open Access Journal, vol. 8(2), pages 1-20, February.
    10. repec:gam:jsusta:v:9:y:2017:i:7:p:1092-:d:102344 is not listed on IDEAS
    11. repec:eee:ecmode:v:68:y:2018:i:c:p:461-474 is not listed on IDEAS
    12. Saltari, Enrico & Travaglini, Giuseppe, 2016. "Pollution control under emission constraints: Switching between regimes," Energy Economics, Elsevier, vol. 53(C), pages 212-219.
    13. Baofeng Shi & Hufeng Yang & Jing Wang & Jingxu Zhao, 2016. "City Green Economy Evaluation: Empirical Evidence from 15 Sub-Provincial Cities in China," Sustainability, MDPI, Open Access Journal, vol. 8(6), pages 1-39, June.

    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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