On the impossibility of sustainable growth in a manufacturing based economy

This paper investigates a possibility of sustainable growth in a multi-output endogenous growth framework where the capital accumulation takes place mainly through the production of the dirty manufactured goods. It is shown that in a closed economy, economic growth is not environmentally sustainable, even under an optimal pollution tax unless the consumption elasticity of substitution between clean and dirty goods approaches infinity as in a small open economy which exports dirty goods. There exists a minimal threshold level of the ratio of clean to dirty capital that ensures sustainable growth in a closed economy.

5 citations (Crossref) [2023-10-31] Citation Key Alias: ISI:000452031100001, lens.org/075-157-855-078-986 tex.eissn: [object Object] tex.unique-id: [object Object]