Seminar

Natural Resources, R&D and Economic Grouth

Thanh Le (University of Queensland, Australia)

September 22, 2014, 11:00–12:30

Toulouse

Room MS 001

Environment Economics Seminar

Abstract

This paper studies the long-run economic impact of natural resources by constructing a Schumpeterian endogenous growth model that incorporates an upstream resource intensive sector. Natural resources are extracted, processed and utilized to produce intermediate capital goods which are essential inputs for producing a final consumption good. R&D activities are targeted at improving the quality of existing intermediate products. In this context, we characterize balanced growth paths and examine the issues of sustainability and long-run growth associated with these equilibrium solution trajectories. The analysis is conducted through the comparison of the two natural resource types: renewable versus non-renewable. It is shown that negative growth is possible, however, only applied to an economy that is endowed with non-renewable resources. To escape from stagnant growth, it is essential to have a strong innovative sector. This paper also identifies conditions under which growth is larger with renewable resources than with their non-renewable counterparts and vice versa.