From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy

Wei Jin and ZhongXiang Zhang
Additional contact information
Wei Jin: School of Public Policy, Zhejiang University, Hangzhou, China

No 2014.100, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Whether China continues its current energy-intensive growth path or adopts a sustainable development prospect has significant implication for energy and climate governance. Building on a Ramsey-Cass-Koopmans growth model incorporating the mechanism of endogenous technological change and its interaction with fossil energy use and economic growth, this paper contributes to an economic exposition of China’s potential transition from an energy-intensive to an innovation-led growth path. We find that in China’s initial growth period the small amount of capital stock creates higher dynamic benefits of capital investment and incentives of capital stock accumulation rather than R&D-related innovation. Accumulation of energy-consuming capital stock along this non-innovation-led growth path thus leads to an intensive use of fossil energy - an energy-intensive growth pattern. To avoid this undesirable outcome, China’s social planner should consider locating a transition point to an innovation-led balanced growth path (BGP). When the growth dynamics reaches that transition point, China’s economy would embark on investment in physical capital and R&D simultaneously, and make a transition into the innovation-led BGP along which consumption, capital investment, and R&D have a balanced share. Also in this innovation-led BGP, consumption, physical capital stock, and knowledge stock all grow, fossil energy uses decline.

Keywords: Technological Innovation; Energy Consumption; Economic Growth Model (search for similar items in EconPapers)
JEL-codes: F18 O13 O31 O33 O44 Q43 Q48 Q55 Q58 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-ene, nep-gro, nep-ino and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2014-100.pdf (application/pdf)

Related works:
Working Paper: From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2014.100

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).