Energy, Growth and Environment: Analysis from the Microeconomics Perspective

Abstract

The tradeoff between environment, growth, and development has been an issue of increasing concern for academic research. This paper, propose a theoretical model of Endogenous Efficiency decision (choice) in the firm, to understand the relationship between energy, production and growth. The literature and empirical evidence, is reviewed for all the variables involved. It is assumed that profit –utility maximizing economic agent, make management decisions out of a CES function, the key to get the production mix efficiency. The proposed model, and its maximizing utility- profit purpose out of human capital investment, do fit empirical evidence about the East Asian countries economic growth case (1950-1995). Further research, is recommended to test the CES management production function, to explain energy and growth relationships. A relevant limitation, is the lack of a comprehensive format, about the macro and microeconomics variable specifications, which influence economic growth. 

Finally, missing the role of management, has a biased effects for policy recommendation to get a better approach, to solve the tradeoff between energy and growth.