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The structural shift to green services: A two-sector growth model with public capital and open-access resources

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  • Campiglio, Emanuele

Abstract

An expansion of economic activities with low impact on ecological resources is a crucial component of the transition to a low-carbon society. “Green” structural change is analysed here through a model with a “progressive” manufacturing sector and a “stagnant” service sector. The latter represents an increasingly demanded class of services characterised by high intensity of labour, low productivity growth and reduced impact on resources. A stock of public capital enhances productivity growth in the manufacturing sector, whose output negatively affects an environmental asset entering households’ welfare function. Along the balanced growth path a substitution process between “dirty” consumption and the open-access asset takes place, leading to a stagnation in welfare despite the positive growth rate. Structural change towards green service occurs along the transition to the BGP any time the public-to-private capital ratio is above its long-run level, and is associated with a decrease in consumption growth, a reduction in working hours and a decline in the environmental degradation rate. A numerical example illustrates that the overall positive effect on households’ welfare can be positive. Finally, it is shown how infrastructure policies can have non-trivial consequences on long-run growth, welfare and environmental sustainability.

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  • Campiglio, Emanuele, 2014. "The structural shift to green services: A two-sector growth model with public capital and open-access resources," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 148-161.
  • Handle: RePEc:eee:streco:v:30:y:2014:i:c:p:148-161
    DOI: 10.1016/j.strueco.2014.05.003
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    3. Ciarli, Tommaso & Savona, Maria, 2019. "Modelling the Evolution of Economic Structure and Climate Change: A Review," Ecological Economics, Elsevier, vol. 158(C), pages 51-64.
    4. Germain, Marc, 2020. "Limits to growth and structural change," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 204-221.
    5. Marc Germain, 2020. "Limits to growth and structural change," Post-Print hal-03129992, HAL.

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    More about this item

    Keywords

    Structural change; Green services; Low-carbon economy; Public capital;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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