Economic Growth and Resource Use

Abstract

Economic growth goes hand in hand with resource use growth – a correlation that seems inescapable for all of humanity. These dynamics are explored in this chapter using oil as an example. In specific regions relative decoupling has proven possible, that is, to slow the rate of resource use growth to the point where it is lower than the economic growth rate. So far, however, there are no signs that absolute decoupling, that is, economic growth without additional resource use, will take hold at any time in the foreseeable future on the global level, as the quickening pace of climate change, as well as the recent energy crisis, clearly shows. Financial markets play an ambivalent role in that they promote short-term orientation on economic growth and contribute to bubbles of raw-material prices, but it is exactly their excesses that draw attention to resource scarcity. In a finite world, resource availability will inevitably run up against absolute limits, which in turn entail absolute decoupling of economic growth from resource use, so to say a dematerialization of economic growth. The energy revolution called for by the IEA illustrates the unprecedented resource productivity increase and technological strides that would be necessary to achieve the aforementioned goals. The fact that such efficiency strategies could potentially fail calls into question the viability of the economic growth paradigm.

This chapter contains the author’s personal views and does not necessarily reflect those of Oesterreichische Nationalbank.