Sustainable Development in Economic Growth Theory

This book is made up of five parts and 17 chapters. In each part, the basic R&D-based growth model is explained and the basic model is expanded by incorporating pollution emissions and environmental policy. In all the chapters, the overall picture of the economic model is presented in diagrams and environmental taxes or emissions trading are considered as environmental policy. Part 1 presents the book’s issues and research agenda based on a concise survey of research trends. The variety expansion model and the mechanism of sustainable development through labour migration from the goods sector to the R&D sector via environmental policy and interest rate manipulation are explained. Part 2 shows that the growth-promoting effect of environmental policy in a variety expansion model with physical capital is influenced by household preferences including leisure, social status, and non-homothetic preferences. In Part 3, after the R&D-based location model is explained, pollution emissions and emissions trading are introduced and the mechanisms of the pollution haven hypothesis and the sustainable tourism through direct regulation and industrial agglomeration are explained. Part 4 highlights that, under the overlapping double regulation, environmental taxes inhibit the pollution reduction effect of emissions trading, while the additional burden of double regulation provides an incentive to evade taxes. In Part 5, the R&D-based model with heterogeneous firms is explained. Environmental policies affect industrial structure under a discriminatory environmental tax rate for local and export firms and the Porter hypothesis mechanism is explained. In the conclusion, the main results of this book are outlined. In addition to the empirical implications and policy recommendations, the limitations of this book and future directions are discussed.