Abstract
The starting point for this article is the idea put forward by Gadrey (2008, 2010) that environmental problems and a policy of addressing them by introducing an environmental tax could trigger economic contraction and downscaling and a shrinking of the service sector in developed economies. The purpose of this article is to test these hypotheses using an evolutionary simulation model. To this end, we use a model of endogenous growth and structural change into which an environmental dimension is incorporated. The results of our simulations certainly reveal structural change within service industries but no change in the distribution of employment between services and manufacturing. Furthermore, we show that the environmentally desirable stagnation of labor productivity in the capital goods sector is compatible with a largely positive growth trend in the economy as a whole, with the development of knowledge-intensive business services apparently able partially to offset the stagnation of productivity in the capital goods sector. We conclude by emphasizing the need for environmental innovation in service activities and cast doubt on the long-term effectiveness of an environmental tax in the fight against pollution.
Similar content being viewed by others
Notes
Gadrey (2008) does, after all, advance the hypothesis that “many necessary changes in the production (of goods or services) will be accompanied by a reduction in labour productivity, at least as it is currently measured” (p. 13).
As all profit margins in our model are identical, regardless of sector, they are denoted by the same term μ in all sectors.
The model we are proposing comprise four sectors. If \( \bar{\pi}_{\rm it} \), A kt , A jt , A zt are, respectively, labor productivity in the final goods firm i , the capital goods firm k , the final service firm j and the intermediate service firm z and N is the total number of firms, then average macroeconomic productivity at time t is given by:
$$ \bar{A}_{t}= \dfrac{\sum_{i}\bar{\pi}_{\rm it}+\sum_{k}A_{kt}+\sum_{j}A_{jt}+\sum_{z}A_{zt}}{N} $$Our firm reviews only half of its capital goods because we take the view that the firm is not rational in its investment decisions.
The machines are delivered at the end of the period.
The machine tools providers produce in just-in-time.
Our knowledge accumulation process is similar to that for material capital, but brings into play a number of random events. A similar approach can be found in Baumol et al. (2007): “business firms’ investment in knowledge creation is analogous to their investment in new equipment that promises to make employees more productive. But unlike investment in a new machine, which has more or less predictable productivity-enhancing consequences, investment in knowledge discovery is fraught with uncertainty” (p. 51).
Variable \( \bar{B}_{\rm it} \) should not be confused with the environmental intensity of the productive process of the firm i . Indeed, \( \Upsilon_{\rm it}=\frac{E_{\rm it}}{Q_{\rm it}^{s}} \) is environmental intensity for firm i , whereas here \( \bar{B}_{\rm it}=\frac{Q_{\rm it}^{s}}{E_{\rm it}} \).
We are assuming that there is a non-linear relationship between the environmental productivity of capital goods and the productivity that these capital goods confer on labor. Such a relationship can be justified by the literature on environmental Kuznets curves (Panayotou 1997).
The values of the filter parameters are those recommended by Baxter and King (1999) and Stock and Watson (1999), namely, k = 12 , lower frequency bound = 8 , upper frequency bound = 32 . In doing so, we must support the implicit assumption that a time period of our model corresponds to an actual quarter.
Gallouj (2002) notes in this regard that “the organizational memory of KIBS firms is heavily dependent on the loyalty of its staff. The loss of certain members of staff produces an effect akin to amnesia or a cognitive haemorrhage” (p. 274).
Dosi and Grazzy (2006) take the view that the long-term trend towards the replacement of human inputs by machinery and other equipment (which is much more efficient but also more polluting) constitutes a technological paradigm in Dosi’s sense of the term (Dosi 1982). Noting that a paradigm shift is an “extraordinary” event (p. 12), these two authors consider it very unlikely that growth will become sustainable in the long term. Similarly, they consider the hypothesis that a tax could lead to a substitution of inputs (which is, as already noted, the basis of Gadrey’s argument Gadrey 2010) to be “a far-fetched idea with little empirical support” (p. 14).
References
Attali J (1981) Les trois mondes. Fayard, Paris
Bacon RW, Eltis W (1976) Britain’s economic problem: too few producers. MacMillan, New York
Baumol WJ (1967) Macroeconomics of unbalanced growth: the anatomy of urban crisis. Am Econ Rev 57:415–426
Baumol WJ, Litan RE, Schramm CJ (2007) Good capitalism, bad capitalism, and the economics of growth and prosperity. Yale University Press, New Haven
Baumol WJ, Wolf EN (1983) Feedback from productivity growth to R&D. Scand J Econ 85:147–157
Baxter M, King RG (1999) Measuring business cycles: approximate band-pass filters for economic time series. Rev Econ Stat 81:575–593
Bell D (1973) The coming of post-industrial society. Basic Book, New York
Bleda M, Valente M (2009) Graded eco-labels: a demand-oriented approach to reduce pollution. Technol Forecast Soc Change 76:512–524
Camacho JA, Rodriguez M (2010) How important are knowledge-intensive services for their client industries? an assessment of their impact on productivity and innovation. In: Gallouj F, Djellal F (eds) The handbook of innovation and services. A multi-disciplinary perspective, chapter 18. Edward Elgar, Aldershot, pp 424–447
Ciarli T, Lorentz A, Savona M, Valente M (2010) The effect of consumption and production structure on growth and distribution. A micro to macro model. Metroeconomica 61:180–218
Djellal F, Gallouj F (2009) Innovation dans les services et entrepreneuriat: au-delà des conceptions industrialistes et technologistes du développement durable. Innovations 1:59–86
Dosi G (1982) Technological paradigms and technological trajectories. Res Policy 11:147–162
Dosi G, Fagiolo G, Roventini A (2006) An evolutionary model of endogenous business cycles. Comput Econ 27:3–34
Dosi G, Fagiolo G, Roventini A (2008) The microfoundations of business cycles: an evolutionary, multi-agent model. J Evol Econ 18:413–432
Dosi G, Fagiolo G, Roventini A (2010) Schumpeter meeting keynes: a policy-friendly model of endogenous growth and business cycles. J Econ Dyn Control 34:1748–1767
Dosi G, Grazzy M (2006) Energy, development and the environment: an apparaisal three decades after the “limits to growth” debate. In: Cantner U, Greiner A, Kuhn T, Pyka A (eds) Recent advances in neo-schumpeterian economics, chapter 2. Edward Elgar, Aldershot, pp 34–52
Fourastié J (1949) Le grand espoir du XXème siècle. Presse Universitaire de France, Paris
Fournier J-Y (2000) Extraction du cycle des affaires: la méthode de baxter et king. Écon Prévis 5:155–178
Fuchs VR (1968) The service economy. NBER Books
Gadrey J (1992) L’économie des services. La Découverte, Paris
Gadrey J (2008) La crise écologique exige une révolution de l’économie des services. In: Développement durable et territoires, pp 1–26
Gadrey J (2010) The environmental crisis and the economics of services: the need for revolution. In: Gallouj F, Djellal F (eds) The handbook of innovation and services. A multi-disciplinary perspective, chapter 5. Edard Elgar, Aldershot, pp 93–125
Gallouj F (2002) Knowledge-intensive business services: processing knowledge and producing innovation. In: Gadrey J, Gallouj F (eds) Productivity innovation and knowledge in services, chapter 11. Edward Elgar, Aldershot, pp 256–284
Gershuny J (1978) After industrial society? The emerging self-service economy. MacMillan, New York
Gershuny J, Miles I (1983) The new service economy: the transformation of employment in industrial societies. Frances Pinter, London
Lipietz A (1980) Le tertiaire, arborescence de l’accumulation capitaliste. Crit Écon Polit 12:37–69
Lorentz A, Savona M (2008) Evolutionary micro-dynamics and changes in the economic structure. J Evol Econ 18:389–412
Maury T-P, Pluyaud B (2004) Les ruptures de tendances dans la productivité par tête de quelques pays industrialisés. In: Notes d’‘’etudes et de recherches de la Banque de France, p 111
OECD (2000) The service economy
Panayotou T (1997) Demystifying the environmental kuznets curve: turning a black box into a policy tool. Environ Dev Econ 2:465–484
Roberts J, Miles I, Hull R, Howells J, Andersen B (2000) Introducing the new service economy. In: Andersen B, Howells J, Hull R, Miles I, Roberts J (eds) Knowledge and innovation in the new service economy, chapter 1. Edward Elgar, Aldershot, pp 1–6
Schettkat R, Yocarini L (2006) The shift to services employment: a review of the literature. Struct Chang Econ Dyn 17:127–147
Stanback TM (1979) Understanding the service economy. Employment, productivity, location. The Johns Hopkins University Press, Baltimore
Stock J, Watson M (1999) Business cycle fluctuations in U.S. macroeconomic time series. In: Taylor JB, Woodford M (eds) Handbook of macroeconomics, vol 1, chapter 1. Elsevier, Amsterdam, pp 3–64
Author information
Authors and Affiliations
Corresponding author
Additional information
We thank the two anonymous reviewers for their very helpful comments.
This paper draws on a research carried out within the servPPIN project (European Commision, FP 7).
Rights and permissions
About this article
Cite this article
Desmarchelier, B., Gallouj, F. Endogenous growth and environmental policy: are the processes of growth and tertiarization in developed economies reversible?. J Evol Econ 23, 831–860 (2013). https://doi.org/10.1007/s00191-012-0292-2
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00191-012-0292-2