Ezra Mishan's Cost of Economic Growth: Evidence from the Entropy of Environmental Capital

16 Pages Posted: 24 Feb 2016

See all articles by Dodo Jesuthason Thampapillai

Dodo Jesuthason Thampapillai

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Date Written: February 23, 2016

Abstract

Ezra Mishan’s (1967) famous articulation of the costs of economic growth included amongst others the rearrangement and loss of nature. This paper builds on this theme by recourse to two important concepts in science, namely the assimilative capacity of nature and the entropy of law of thermodynamics. These concepts enable the formulation of an alternative conceptual framework for the explanation of national income (Y) in terms of factor-utilization. In this framework, environmental capital (KN) is an explicit factor besides manufactured capital (KM) and labour (L). A simple methodology that permits the estimation of the volume of KN utilized is used towards demonstrating that economic growth is an entropic process. Empirical illustration of KN utilization as point-estimates is made for Australia and South Korea.

Keywords: economic growth, entropy, assimilative capacity, factor utilization and environmental capital

JEL Classification: Q56, Q57

Suggested Citation

Thampapillai, Dodo Jesuthason, Ezra Mishan's Cost of Economic Growth: Evidence from the Entropy of Environmental Capital (February 23, 2016). Lee Kuan Yew School of Public Policy Research Paper No. 16-04. Available at SSRN: https://ssrn.com/abstract=2737234

Dodo Jesuthason Thampapillai (Contact Author)

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

Singapore 117591
Singapore
+6565164844 (Phone)

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