Authors: Sabiou Inoua
Comments: 30 Pages.
Abstract The standard approach to economic growth and development consists of simplifying the products and the inputs of an economy to aggregate variables, GDP, labor and capital, thus overlooking the complexity of modern economies. Recently, two authors, Hausmann and Hidalgo, initiated an alternative framework where complexity is precisely the key concept, for it is identified to be the driving force behind economic development: rich countries have complex economies, and they make products that reflect this complexity. The aim of this paper is threefold. First, we discuss some conceptual and empirical limitations of the standard theories, in particular the aggregation problem they suffer from. Second, we make a succinct presentation of the complexity approach as an alternative account on economic development. Finally, we use a simple model to explain the phenomenon of divergence and poverty trap, building on ideas developed by the authors. This model allows for more: it provides a rationale for the interpretation of ECI as a measure of the productive knowledge embedded in an economy (i.e. the number of capabilities it has), and its confrontation with the data will make it possible to compute the number of capabilities for each country compatible with its observed ECI.
In 2008, the Canadian province of British Columbia introduced a carbon tax starting at CAD$10 per tonne of carbon dioxide equivalent (CO2e) and rising by CAD$5/tonne CO2e/year to a 2012-2013 value of CAD$30/tonne CO2e. In the current work, we find no clear evidence over the short post-tax period of record that unequivocally links British Columbia's carbon tax to significant reductions in provincial greenhouse gas emissions. There are indications the implementation of this tax may have negatively impacted British Columbia's economic performance relative to the rest of Canada. A longer post-tax period of record is likely necessary in order to reliably determine what, if any, economic and environmental effects have been generated from British Columbia's carbon tax.
Category: Economics and Finance