Economics of technological change and the natural environment: how effective are innovations as a remedy for resource scarcity?

Lucas Bretschger

No 03/27, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: The paper aims to substantiate the importance of endogenous innovations when evaluating the compatibility of natural resource use and economic development. It explains that technological change has the potential to compensate for natural resource scarcity, diminishing returns to capital, poor input substitution, and material balance restrictions, but is limited by various restrictions like fading returns to innovative investments and rising research costs. It also shows how innovative activities are fostered by accurate price signals and research-favouring sectoral change. The simultaneous effects of increasing technical knowledge, decreasing resource inputs, and increasing world population largely determine the chances of long-run sustainable development. Consequently, future research has to be directed at a more thorough understanding of the mechanisms driving innovations in the presence of natural resource scarcity.

Keywords: endogenous technological change; environment; natural resources; sustainability (search for similar items in EconPapers)
JEL-codes: O33 O41 Q20 Q30 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2003-06, Revised 2004-06
New Economics Papers: this item is included in nep-agr, nep-env and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity? (2005)
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