Technological Opportunities and Growth in the Natural Resource Sector

Susanna Lundström ()
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Susanna Lundström: Sida, Postal: SE-105 25 Stockholm, Sweden

No 116, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Both technological and natural resource possibilities seem to evolve in cycles. The “Resource Opportunity Model” in this paper introduces the technological opportunity thinking into natural resource modeling. The natural resource industries’ choice between incremental, complementary innovations, and drastic, breakthrough innovations, will give rise to long-run cycles in the so-called familiar resource stock, which is the amount of natural resources determined by the prevailing paradigm. Incremental innovations will increase the exhaustion of the stock, and drastic innovations will create a new paradigm and, thereby, new technological opportunities and a new stock of familiar resources. Drastic innovations are endogenously affected by the knowledge level and induced either by scarcity of technological opportunities or by scarcity of resources. Generally, increased innovation ability increases the knowledge stock and cumulative income over time, but does not affect the sustainability of the resource stock even though the intensity of the resource cycles increases. However, too low innovation ability might drive the sector into technological stagnation, and resource exhaustion in the long run; and too high innovation ability might drive the sector into extraction stagnation, and resource exhaustion in the short run.

Keywords: Cycles; Economic growth; Induced innovations; Natural resources; Paradigm shifts; Technological opportunities (search for similar items in EconPapers)
JEL-codes: N50 O11 O13 O31 Q30 Q43 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2003-11-14
New Economics Papers: this item is included in nep-ent and nep-tid
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