Green growth: economic theory and political discourse
Working Paper 92
The paper explores the concept of ‘green growth’ as it has emerged in international policy discourse over recent years. Identifying the core meaning of the concept and sister terms such as ‘green economy’, it relates green growth to the prior concept of sustainable development.
The paper distinguishes between a ‘standard’ version of green growth, which asserts the long-run economic benefit of environmental protection, and a ‘strong’ interpretation, which claims, more boldly, that environmental policy can be a driver for growth. Three different forms of this claim are identified and the evidence for them surveyed.
The first is a Keynesian argument for short-term ‘green stimulus’ in times of recession. Second, a revision of standard growth theory identifies the contribution made to growth by investment in natural capital and the correction of a variety of market failures through environmental policy. Third, the theories of comparative advantage and long waves of capitalism emphasise the importance of technological innovation in generating growth.
The paper offers some conclusions on the political economy of green growth and how likely it is to succeed in increasing the priority given to environmental policy.