Population Growth and Natural Resource Scarcity: Long run development under seemingly unfavourable conditions

The paper considers an economy which is constrained by natural resource use and driven by knowledge accumulation. Resources are essential inputs in all the sectors. It is shown that population growth and poor input substitution are not detrimental but, on the contrary, even necessary for obtaining a sustainable consumption level. We find a new type of Hartwick rule defining the conditions for a constant innovation rate. The rule does not apply to capital but to labour growth, the crucial input in research. Furthermore, it relates to the sectoral structure of the economy and to demographic transition. The results continue to hold with a backstop technology and are extended for the case of minimum resource constraints.