Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10475410 | Journal of Environmental Economics and Management | 2005 | 16 Pages |
Abstract
The limits to economic growth due to resource scarcity can be alleviated only by the development of backstop substitutes. This paper combines resource-based economic growth with R&D to reduce the cost of backstop technologies. Characterizing the entire dynamics of optimal growth and R&D processes, we find that an economy's growth prospects depend on its type, as determined by its production technology and learning ability, and by its knowledge-capital endowment. A wide variety of growth patterns emerges, ranging from cases in which an economy that without R&D eventually stagnates (converges to a steady state) is diverted by R&D onto a path of sustained growth, to cases in which R&D is not warranted. Resource scarcity is shown to encourage R&D due to the increased reliance on the backstop technology.
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Authors
Yacov Tsur, Amos Zemel,