Technology, Natural Resources and Economic Growth

Not very many years ago a view seemed to be emerging in the economics profession — it was never sufficiently widely held to be called a consensus — that the Ricardian-Malthusian demons were finally being exorcised, at least as far as the future of the industrialised West was concerned. With respect to natural resources in particular, numerous studies suggested that they had been playing a role of declining importance within the favoured circle of industrialised countries. There was of course the compelling evidence of the agricultural sector which, as Kuznets had authoritatively demonstrated, had declined in relative importance in all economies which have experienced long-term economic growth.2 Within agriculture itself, the implicit assumption that there were no good substitutes for land in food production had been belied by a broad range of innovations which sharply raised the productivity of agricultural resources and at the same time made possible the widespread substitution of industrial inputs for the more traditional agricultural labour and land — machinery, commercial fertiliser, new seed varieties, insecticides, irrigation water, etc. As early as 1951 Ted Schultz called attention to the fact that Harrod, in his notable book, Toward a Dynamic Economics, published in 1948, entirely omitted land as an input in the productive process.3