Scarce Natural Resources, Recycling, Innovation and Growth

This thesis uses neoclassical growth models toevaluate what effect the limited availability of nonrenewable resources has onthe economy's (world's) growth potential. Markus Merz concludes that recyclingmay serve as a mid-term solution to continued growth, but technologicalprogress is needed in the long-run. The theoretical analysis starts with thewell-known Dasgupta-Heal model and considers the effect of recycling andtechnological progress on the resource constraints; resource-augmenting andbackstop technology are analyzed. After a thorough analysis of the models it isconcluded that the ultimate solution to long-term economic growth is a backstoptechnology.