Growth theory and 'green growth'

S. Smulders, M. Toman, C.A.A.M. Withagen

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

The relatively new and still amorphous concept of 'green growth' can be understood as a call for balancing longer-term investments in sustaining environmental wealth with nearer-term income growth to reduce poverty. We draw on a large body of economic theory available for providing insights on such balancing of income growth and environmental sustainability. We show that there is no a priori assurance of substantial positive spillovers from environmental policies to income growth, or for a monotonic transition to a 'green steady state' along an optimal path. The greenness of an optimal growth path can depend heavily on initial conditions, with a variety of different adjustments occurring concurrently along an optimal path. Factor-augmenting technical-change targeting at offsetting resource depletion is critical to sustaining long-term growth within natural limits on the availability of natural resources and environmental services.
Original languageEnglish
Pages (from-to)423-446
JournalOxford Review of Economic Policy
Volume30
Issue number3
DOIs
Publication statusPublished - 2014

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