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On the impossibility of sustainable growth in a manufacturing based economy

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  • Sang Won Yoon
  • Chang-Ho Yoon

Abstract

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.

Suggested Citation

  • Sang Won Yoon & Chang-Ho Yoon, 2018. "On the impossibility of sustainable growth in a manufacturing based economy," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 31(1), pages 1526-1538, January.
    • Handle: RePEc:taf:reroxx:v:31:y:2018:i:1:p:1526-1538
    DOI: 10.1080/1331677X.2018.1498008
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