ECONOMIC THEORY AND POLITICAL RECOMMENDATIONS FOR ENVIRONMENTAL SUSTAINABILITY However, it is not only large companies that can do something for less by-products. The circular economy also offers major business potentials for small and medium-sized enterprises. A small British company, Batoko, produces swimming dresses and bathing suits only from plastic from the ocean, while 4ocean in Florida also manufactures bracelets from plastic fished from the oceans. The textile industry innovation of the Dutch startup company, DyeCoo, dyes clothing without water and overly harmful chemicals, and thus it not only uses less harmful materials, but is also able to produce the end-product faster, using less energy. The Australian company, Close the Loop, manufactures road surface – by 60 percent more durable than traditional asphalt – by recycling used printer cartridges, plastic and glass. For one kilometre of road it uses 530,000 plastic bags, 168,000 bottles and 12,500 empty printer cartridges. The American Lehigh Technologies manufactures construction base materials from decomposed rubber waste. The Danish RGS90 produces construction insulator materials from porcelain and glass waste. While the Canadian startup company, Enerkem, produces biofuels from hydrocarbon extracted from waste. The Berlin-based startup, Kaffeeform, collects waste from coffee shops in the capital and produces recycled coffee cups from coffee-grounds, while the Danish ecoXpac manufactures biodegradable beer bottles. However, the concept of circular economy can only be based on households’ collective environmental awareness and on changing corporate business models. The thoughts of sustainability, green energy and no-waste have spread rapidly in the western part of Europe and in the highly developed countries of the world. As a result, in Germany, the Netherlands and the Scandinavian countries convincing and conviction have already reached such levels that a large part of the population is willing to use more expensive products and energy, if they are provably based on sustainability and global climate protection. Due to the income differences, this approach has not yet spread widely in the Eastern and Central European countries. However, numerous examples show that the circular economy approach is a profitable business model and a significant take-off opportunity for the small and medium-sized enterprises of a country, the benefits of which the world will truly appreciate only in the future.
3.3 Directed technological change and green growth
renewable resources and clean production. An example of backstop technologies, already available for natural resources, is the solar and wind energy. Thus, the alternate technologies are already available today, but their exploitation is hindered because they are often not yet competitive enough to be widely implemented (Chakravorty et al., 1997; Pittel et al., 2014). The application of backstop technologies will commence when the exploitation costs of those are lower than the revenues calculated based on market prices.
Since the financial crisis of 2008-2009, economic models relying more directly on the role of efficient government intervention than before have gained ground. Since purely market coordination-based growth models predict that sustainable economic growth cannot be achieved or can only be achieved under very strong assumptions, green growth theories implemented by the state’s environmental policy have become increasingly more popular (Bowen, 2012, 2014; Jacobs, 2012). Based on green growth theories, the innovative state – looking beyond market trends – is also able to orient the direction of growth towards a future growth path it deems desirable, and thus the support of innovation also stimulates the innovation capacity of the entire economy.
Acemoglu et al. (2012, 2016) build their green growth models based on directed technological change by overshadowing harmful technologies and treating alternate, non-polluting technologies as growth drivers, which is the harmonisation of the relative prices of production factors (Hicks, 1932), the technological pressure and innovation limit (Kennedy, 1964) and the concept of directed technological changes (Acemoglu, 1992).
It was Nordhaus (1973) who first introduced the “backstop technologies” as a production factor in his analysis, which are able to replace the harmful production of non-renewable resources, or even the resource itself, with
In the two-sector economy, economic production harmful for the environment (causing pollution) absorbs natural resources, while clean (green) production preserves them. It follows from market structure that labour force flows GROWTH REPORT • 2019
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