China’s Pursuit of Environmentally Sustainable Development: Harnessing the New Engine of Technological Innovation

Wei Jin and ZhongXiang Zhang
Additional contact information
Wei Jin: School of Economics, UNSW Business School, The University of New South Wales and School of Public Policy and Management, Zhejiang University

No 2016.24, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Whether China continues its business-as-usual investment-driven, environment-polluting growth pattern or adopts an investment and innovation-driven, environmentally sustainable development holds important implications for both national and global environmental governance. Building on a Ramsey-Cass-Koopmans growth model that features endogenous technological change induced by R&D and knowledge stock accumulation, this paper presents an exposition, both analytically and numerically, of the mechanism underlining China’s economic transition from an investment-driven, pollution-intensive to an investment and innovation-driven, environmentally sustainable growth path. We show that if R&D technological innovation is incorporated into China’s growth mechanism, then at some tipping point in time when marginal welfare gain of R&D for knowledge accumulation becomes equalized with that of investment for physical asset deployment, China’s economy will launch capital investment and R&D simultaneously and make a transition to a sustainable growth path along which consumption, capital investment, and R&D have a balanced share of 5: 4: 1, consumption, capital stock, and knowledge stock all grow at a rate of 4.9%, and environmental quality improves at a rate of 2.5%. In contrast, if R&D technological innovation is not harnessed as a new growth engine, then China’s economy will follow its business-as-usual investment-driven growth path along which standalone accumulation of dirty physical capital stock will lead to an more than 200-fold increase in environmental pollution.

Keywords: Endogenous Technological Change; Sustainable Development; Economic Growth Model; China’s Economic Transition (search for similar items in EconPapers)
JEL-codes: F18 O13 O31 O33 O44 Q43 Q48 Q55 Q58 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env, nep-ino, nep-tid and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2016-024.pdf (application/pdf)

Related works:
Working Paper: China’s pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation (2016)
Working Paper: China’s Pursuit of Environmentally Sustainable Development: Harnessing the New Engine of Technological Innovation (2016)
Working Paper: China's pursuit of environmentally sustainable development: Harnessing the new engine of technological innovation (2016)
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:2016.24

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 ).