Role of Entropy in Sustainable Economic Growth
Journal Title: International Journal of Academic Research in Accounting, Finance and Management Sciences - Year 2012, Vol 2, Issue 1
Abstract
This paper investigates a possible relationship among economic growth, entropy and environmental preservation. Physics shows that energy is necessary for economic production and, therefore, economic growth but the mainstream theory of economic growth, pays no attention to the role of energy. Economics has attempted to address this question from different point of view. The classic literature focused on exhaustible resources puts at the core the importance of the price mechanism and the substitution possibilities of manmade inputs for natural resources. At the same time, others stressed the economic implications of thermodynamic laws and ecology. They insisted on the limits that physical and natural processes impose on economic activity and the difficulties in invoking the price mechanism because establishing property rights on environmental assets is often impossible. Because thermodynamics implies that energy is essential to all economic production, criticism of mainstream economic growth models that ignore energy appears legitimate. On the other hand, theories that try to explain growth entirely as a function of energy supply, while ignoring the roles of information, knowledge, and institutions, are also incomplete. This paper discusses ecological economics views on energy and growth.
Authors and Affiliations
Angelina De Pascale
Keywords
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