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A Human Capital Based Growth Model with Environment and Corruption

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  • Daisuke Ikazaki

Abstract

In this paper, we present a simple overlapping-generations model with human capital, pollution, and political corruption to consider problems related to sustainable growth. In many growth models that incorporate the environment, it is assumed that there exists an altruistic government that enforces the environmental policy to maximize the utility of households or social welfare. The conditions for sustainable growth are derived based on this assumption. However, the assumption that the government implements appropriate policies might be overly optimistic. Bribes, political donations, and corruption might taint and skew government policy. This paper also considers politico-economic problems. We assume that environmental policy is determined endogenously through a process of bargaining between the government and the firm (or interest group). Corruption relaxes environmental standards, lowers the long-run growth rate, and might cause economic stagnation. The long-run growth rate might become negative if the economy is rife with corruption. Copyright Ikazaki; licensee Springer 2014

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  • Daisuke Ikazaki, 2014. "A Human Capital Based Growth Model with Environment and Corruption," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 3(1), pages 1-13, December.
    • Handle: RePEc:spr:jecstr:v:3:y:2014:i:1:p:1-13:10.1186/s40008-014-0010-3
    DOI: 10.1186/s40008-014-0010-3
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    More about this item

    Keywords

    Political corruption; Sustainable growth; Human capital; Environment; O44; P48; Q20;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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