Green Growth: A Theoretical Model Based on Schumpeterian Product Vertical Innovation Framework

The paper constructs an endogenous growth model based on Schumpeterian approach to demonstrate the possibility and conditions of green growth. It is finding that despite the constraints of natural resources and environment, there exists an optimal growth path and along this path sustained economic growth with improvement of environmental quality and resources utilization can be achieved. Schumpeterian approach distinguishes intellectual capital and tangible capital, which recognizes the technology for producing knowledge is cleaner than the technology for producing material goods, highlighting the role of innovation in green growth.