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Overcoming Natural Resource Constraints Through R&D

Listed author(s):
  • Jean-Pierre Amigues
  • Ngo Van Long
  • Michel Moreaux

We study the optimal policies of research and development in the context of a resource-exploiting economy. We distinguish two cases: non-renewable resources and renewable resources. In the first case, we show that it is useful to construct an index of scarcity, which is the product of the level of technical know-how and the aggregate stock of resources. Provided that the rate of discount is not too high, there exists a critical level of this index, below which one must maximize the rate of investment in R&D. Starting from this critical level, it is possible to maintain a constant rate of consumption, by substituting knowledge for natural resources. In the case of renewable resources, we show that the optimal policy is to give priority to the production of consumption goods, and the rates of investments in R&D are determined residually. Nous étudions la politique optimale en R&D dans le secteur de ressources naturelles. On distingue deux cas : ressources non renouvelables, et ressources renouvelables. Dans le premier cas, nous montrons qu'il est utile de construire un indice de rareté, qui est le produit du niveau de connaissance scientifique et du stock de ressources. Pourvu que le taux d'escompte ne soit pas trop élevé, il existe un niveau critique de cet indice au-dessous duquel il faut maximiser le taux d'investissement en R&D. À partir de ce niveau critique, on peut atteindre un état stationnaire de consommation en substituant la ressource par la connaissance. Dans le cas de ressources renouvelables, la politique optimale est d'accorder la priorité à la production des biens de consommation, et les investissements en R&D sont déterminés comme résiduels.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2004s-14.

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Length: 35 pages
Date of creation: 01 Mar 2004
Handle: RePEc:cir:cirwor:2004s-14
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  1. Jean-Pierre Amigues & André Grimaud & Michel Moreaux, 2004. "Ressources non-renouvelables, impatience et effort optimal de recherche-développement," Revue d'économie politique, Dalloz, vol. 114(3), pages 393-416.
  2. Bretschger, L. & Smulders, J.A., 2003. "Sustainability and Substitution of Exhaustible Natural Resources : How Resource Prices Affect Long-Term R&D Investments," Discussion Paper 2003-71, Tilburg University, Center for Economic Research.
  3. Smulders, Sjak & de Nooij, Michiel, 2003. "The impact of energy conservation on technology and economic growth," Resource and Energy Economics, Elsevier, vol. 25(1), pages 59-79, February.
  4. Spence, A Michael & Starrett, David, 1975. "Most Rapid Approach Paths in Accumulation Problems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 388-403, June.
  5. Tsur, Yacov & Zemel, Amos, 2001. "The infinite horizon dynamic optimization problem revisited: A simple method to determine equilibrium states," European Journal of Operational Research, Elsevier, vol. 131(3), pages 482-490, June.
  6. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
  7. Jean-Pierre Amigues & Ngo Van Long & Michel Moreaux, 2004. "Ressources renouvelables et non renouvelables, impatience et progrès technique exogène," CIRANO Working Papers 2004s-07, CIRANO.
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