China’s Pursuit of Environmentally Sustainable Development: Harnessing the New Engine of Technological Innovation

Arbeitspapier

Whether China continues its business-as-usual investment-driven, environment-polluting growth pattern or adopts an investment and innovation-driven, environmentally sustainable development holds important implications for both national and global environmental governance. Building on a Ramsey-Cass-Koopmans growth model that features endogenous technological change induced by R&D and knowledge stock accumulation, this paper presents an exposition, both analytically and numerically, of the mechanism underlining China’s economic transition from an investment-driven, pollution-intensive to an investment and innovation-driven, environmentally sustainable growth path. We show that if R&D technological innovation is incorporated into China’s growth mechanism, then at some tipping point in time when marginal welfare gain of R&D for knowledge accumulation becomes equalized with that of investment for physical asset deployment, China’s economy will launch capital investment and R&D simultaneously and make a transition to a sustainable growth path along which consumption, capital investment, and R&D have a balanced share of 5: 4: 1, consumption, capital stock, and knowledge stock all grow at a rate of 4.9%, and environmental quality improves at a rate of 2.5%. In contrast, if R&D technological innovation is not harnessed as a new growth engine, then China’s economy will follow its business-as-usual investment-driven growth path along which standalone accumulation of dirty physical capital stock will lead to an more than 200-fold increase in environmental pollution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 24.2016

Classification and Topics

• Classification: Wirtschaft ; Environmental Economics: Technological Innovation ; Environmental Economics: Government Policy ; Energy and the Macroeconomy ; Energy: Government Policy ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Innovation and Invention: Processes and Incentives ; Technological Change: Choices and Consequences; Diffusion Processes ; Environment and Growth ; Trade and Environment
• Subject: Endogenous Technological Change ; Sustainable Development ; Economic Growth Model ; China’s Economic Transition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jin, Wei ; Zhang, ZhongXiang
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/142298
• Last update: 10.03.2025, 11:46 AM CET