Polluting Industrialization

Abstract

Recently, many contributions have focused on the relationship between capital accumulation, growth and population dynamics, introducing fertility choice in macro-dynamic models. In this paper, we go one step further highlighting also the link with pollution. We develop a simple overlapping generations model with paternalistic altruism according to wealth and environmental concerns. One can therefore explain a simultaneous increase of capital intensity, population growth and pollution, namely a polluting industrialization. We show in addition that a permanent productivity shock, possibly associated to technological innovations, promotes such a polluting development process, escaping a trap where the economy is relegated to a low capital intensity, population growth and pollution.Growth; Population dynamics; Pollution; Altruism; Development