Non-Renewable Resources and the Sustainability of the Economic Growth under Bilateral Trade*

This paper analyzes the long-run growth rates of two trading economies, which use a non-renewable natural resource as an essential productive input. One country is the technological leader, whereas its counterpart, the resource harvester, is the technological follower. The resource is also essential in the process of technological innovation carried out in the leading country. Despite of the finiteness of the resource, a sustainable economic growth is proved to be still feasible in both countries based upon innovation flows through international trade, and the continuous increment in the resource productivity. The country with higher ratio of the output elasticities of knowledge and resources will experience the faster growth.