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The Unilateral Implementation of a Sustainable Growth Path with Directed Technical Change

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  • Van den Bijgaart, Inge

Abstract

We determine the core characteristics of a climate coalition’s optimal policies in a dynamic two country directed technical change framework. Unilateral policies alter the structure of production and thereby innovation incentives across countries. Whenever feasible, optimal policies implement sustainable growth by directing global innovation to the nonpolluting sector. If nonparticipants drive global innovation, this requires policies relocating clean production to nonparticipants. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that signed the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.

Suggested Citation

  • Van den Bijgaart, Inge, "undated". "The Unilateral Implementation of a Sustainable Growth Path with Directed Technical Change," Climate Change and Sustainable Development 198543, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:198543
    DOI: 10.22004/ag.econ.198543
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    1. is not listed on IDEAS
    2. Jan Witajewski-Baltvilks & Carolyn Fischer, 2023. "Green Innovation and Economic Growth in a North–South Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(3), pages 615-648, August.
    3. Solodoha, Eliran & Rosenzweig, Stav & Harel, Shai, 2023. "Incentivizing angels to invest in start-ups: Evidence from a natural experiment," Research Policy, Elsevier, vol. 52(1).
    4. Ara Jo & Alena Miftakhova, 2022. "How Constant is Constant Elasticity of Substitution? Endogenous Substitution between Clean and Dirty Energy," CER-ETH Economics working paper series 22/369, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    5. Wiskich, Anthony, 2021. "A comment on innovation with multiple equilibria and "The environment and directed technical change"," Energy Economics, Elsevier, vol. 94(C).
    6. Peter K. Kruse-Andersen, 2019. "Directed Technical Change, Environmental Sustainability, and Population Growth," Discussion Papers 19-12, University of Copenhagen. Department of Economics.
    7. Hillebrand, Elmar & Hillebrand, Marten, 2019. "Optimal climate policies in a dynamic multi-country equilibrium model," Journal of Economic Theory, Elsevier, vol. 179(C), pages 200-239.
    8. Ahlvik, Lassi & van den Bijgaart, Inge, 2024. "Screening green innovation through carbon pricing," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    9. Baccianti, Claudio, 2021. "Essays in economic growth and climate policy," Other publications TiSEM e5415454-40c2-4154-991e-6, Tilburg University, School of Economics and Management.
    10. Lamperti, Francesco & Napoletano, Mauro & Roventini, Andrea, 2020. "Green Transitions And The Prevention Of Environmental Disasters: Market-Based Vs. Command-And-Control Policies," Macroeconomic Dynamics, Cambridge University Press, vol. 24(7), pages 1861-1880, October.
    11. Chiara Ravetti & Tania Theoduloz & Giulia Valacchi, 2020. "Buy Coal or Kick-Start Green Innovation? Energy Policies in an Open Economy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(1), pages 95-126, September.
    12. David Hémous & Morten Olsen, 2021. "Directed Technical Change in Labor and Environmental Economics," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 571-597, August.
    13. Jo, Ara & Miftakhova, Alena, 2024. "How constant is constant elasticity of substitution? Endogenous substitution between clean and dirty energy," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    14. Peter K. Kruse-Andersen, 2016. "Directed Technical Change and Economic Growth Effects of Environmental Policy," Discussion Papers 16-06, University of Copenhagen. Department of Economics.
    15. Oladi, Reza & Caplan, Arthur J. & Gilbert, John, 2018. "Sequestration and the engagement of developing economies in a global carbon market," Resource and Energy Economics, Elsevier, vol. 52(C), pages 50-63.
    16. repec:spo:wpmain:info:hdl:2441/14g286e42n8bl9is6h16b18kes is not listed on IDEAS
    17. Chen, Xiaohong & Mao, Yue & Cheng, Jixin & Wei, Ping & Li, Xiaoming, 2024. "Green financial policy, technological advancement reversal, assessment of emission reduction effects," Energy Economics, Elsevier, vol. 136(C).
    18. Yang, Jun & Yang, Dingjian & Cheng, Jixin, 2024. "The non-rivalry of data, directed technical change and the environment: A theoretical study incorporating data as a production factor," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 417-448.
    19. Ara Jo, 2025. "Substitution Between Clean And Dirty Energy With Biased Technical Change," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(2), pages 883-902, May.
    20. Kruse-Andersen, Peter Kjær, 2023. "Directed technical change, environmental sustainability, and population growth," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    21. Saffet Akdag & Hakan Yildirim & Andrew Adewale Alola, 2025. "Comparative benefits of environmental protection expenditures and environmental taxes in driving environmental quality of the European countries," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 2188-2203, August.
    22. Kruse-Andersen, Peter K., 2025. "Directed technical change and economic growth effects of environmental policy," Energy Economics, Elsevier, vol. 147(C).
    23. Wiskich, Anthony, 2024. "A carbon tax versus clean subsidies: Optimal and suboptimal policies for the clean transition," Energy Economics, Elsevier, vol. 132(C).

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    Keywords

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    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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