EZRA MISHAN’S COST OF ECONOMIC GROWTH: EVIDENCE FROM THE ENTROPY OF ENVIRONMENTAL CAPITAL

Dodo J. Thampapillai ()
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Dodo J. Thampapillai: Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore 259772, Singapore

The Singapore Economic Review (SER), 2016, vol. 61, issue 03, 1-10

Abstract: Ezra Mishan’s (1967) famous articulation of the costs of economic growth included amongst others the rearrangement and loss of nature. This paper builds on this theme by recourse to two important concepts in science, namely the assimilative capacity of nature and the entropy of law of thermodynamics. These concepts enable the formulation of an alternative conceptual framework for the explanation of national income (Y) in terms of factor-utilization. In this framework, environmental capital (KN) is an explicit factor besides manufactured capital (KM) and labor (L). A simple methodology that permits the estimation of the volume of KN utilized is used towards demonstrating that economic growth is an entropic process. Empirical illustration of KN utilization as point-estimates is made for Australia and South Korea.

Keywords: Economic growth; entropy; assimilative capacity; factor-utilization; environmental capital (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1142/S021759081640018X

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