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Global economic sustainability indicator 161 simply compares the sectoral export import ratio with the aggregate export import ratio (Comtrade data base of the United Nations and World Development Indicators/WDI are used in the subsequent calculations). As regards as adjustment dynamics, it is clear that a static view of the economy and world ecological system is not adequate; rather Schumpeterian innovation perspective is required. 2.1 Growth and exhaustible natural resources Natural resources, pollution and other environmental issues are not considered in the classical growth model of Solow. Many economists—from Malthus (1798) to Hotelling (1931) and Bretschger (2009)—have argued that the scarcity of land and natural resources, respectively, could be an obstacle in obtaining sustainable growth. Nordhaus (1974) described the impossibility of an infinite and long-term economic growth based on exhaustible energy; he has basically emphasized that nonrenewable resources are critical long-run challenges, along with three other aspects: & Limitations of resources: certain key resources are non-renewable and substitution through alternative exhaustible resources is often complex; & Environmental effects—the use of resources causes emissions or effluents and dealing with those is costly; & There will be rising prices of the exhaustible energy resources. With connection to this, back-stop technologies or innovations have a crucial role for the long-term economic perspective and for the optimal energy price level. The effect of a back-stop technology 1 on the resources price path can be presented in a straightforward way (Fig. 1): A standard insight—on the assumption of a perfect competition and a linear demand curve—is that the price will rise in the long run due to rising extraction costs. With the use of a new technology (lower marginal costs bc1) one will have a lower price until the exhaustion of a new substitute. It would, however, be inefficient not to use up new resources completely. In this context, one should emphasize that the initial price must remain below bc1 < p. Due to the new attractive supply, the demand will increase, and the resource will be exhausted earlier (T1). With a more innovative technology, and more favorable extraction costs (bc2), one achieves an even earlier extraction time (T2) (Wacker and Blank 1999:43). In a similar way, Levy (2000) shows that a decrease of the initial average costs by one dollar leads to a decrease of the spot prices by somewhat less than a dollar. With regards to the promotion of these technologies, governments are faced with two different approaches: – “Technology Push” refers to the identification of a potential technology and the support of the research and development (R&D), in order to bring a competitive product on the market. “The Technology Push”—approach basically argues that 1 One can mention the following back-stop technologies concerning today’s knowledge level: Solar power and hydrogen and other renewable energy technologies, possible nuclear fission systems on the basis of the breeder reactors or light-water reactors with uranium production, new nuclear fusion techniques (Hensing et al. 1998).
162 P.J.J. Welfens et al. pt p0 1 p0 2 p0 t0 Source: (WACKER/BLANK, 1999) Fig. 1 Use of back-stop technology Use of Back-stop Technology the primary focus should be on the development of Green House Gas reduction technologies: via public R&D programs and not via obligatory regulations, such as restrictions on emission. Obligatory restrictions may be used only if the innovations would sufficiently lower the costs of green house gas emissions. – The opposite “Market Pull”-approach stresses that technological innovation must come primarily from the private sector. In this context, the economic interaction of changing needs and shifts in technologies (supply side) bring about new appropriate products. The focus of this approach lies in the fact that the obligatory restrictions could force the enterprises to innovations in search for cost reduction (Grubb 2004:9; Hierl and Palinkas 2007: 5). The origins of environmental problems and the various solutions proposed by businesses and institutions in innovative green technologies, have been often examined since the 80s and 90s: The concepts, as well as the conditions for the emergence and diffusion of technological and institutional innovations are based on so-called nonlinear system dynamics, a theory partly introduced by J. A. Schumpeter, stating that unforeseeable innovative processes with positive externality stand in close relationship with knowledge and learning processes (Farmer and Stadler 2005: 172). For most countries, foreign sources of technology account for 90% or more of the domestic productivity growth. At present, only a handful of rich countries account for most of the world’s creation of new technology. G-7 Countries accounted for 84% of the world‘s R&D, but their world GDP share is 64%. (Keller 2004). The pattern of worldwide technical change is, thus, determined in large part by international technology diffusion. Aghion et al. (2009) argue that radical innovations are needed to bring about strong progress in CO2 emissions: Given the fact that the share of green patents in total global patents is only about 2%, one cannot expect that incremental changes in technologies will bring about strong improvements in energy efficiency and massive T2 T1 T t p bc 1 bc 2
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240 R. Bleischwitz The vast majorit
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244 R. Bleischwitz Ericsson M (2009
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246 R. Walz 1 Introduction Competen
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248 R. Walz Based on the pollution
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250 R. Walz procedures. However, ev
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252 R. Walz In addition to exports,
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254 R. Walz 4 Technological capabil
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256 R. Walz 4.2 Analysis of patents
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258 R. Walz recycling (e.g. shiftab
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260 R. Walz Fig. 10 Specialization
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262 R. Walz Table 1 Overview of ind
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346 C. Lutz The scenario analysis a
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348 C. Lutz is designed to reduce g
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350 C. Lutz 120 100 80 60 40 20 0 C
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352 C. Lutz Table 2 EU27 productivi
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354 C. Lutz material-intensive to l
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358 T. Machiba While industries are
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360 T. Machiba Field Target Technol
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