The Direction of Technical Change in Capital-Resource Economies

Corrado Di Maria and Simone Valente

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze a multi-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative profitability of factor-specific innovations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that convergence to balanced growth implies zero capital-augmenting innovations: in the long run, the economy exhibits purely resource-augmenting technical change. This result provides sound microfoundations for the broad class of models of exogenous/endogenous growth where resource-augmenting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability.

Keywords: Endogenous Growth; Directed Technical Change; Exhaustible Resources; Sustainability (search for similar items in EconPapers)
JEL-codes: O31 O32 O33 Q32 (search for similar items in EconPapers)
Date: 2006-03-07
New Economics Papers: this item is included in nep-agr, nep-dge and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: The Direction of Technical Change in Capital-Resource Economies (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1040

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