Overcoming the natural resource constraints through dedicated R&D efforts: contrasting the non-renewable and the renewable resource economies

There exist specific factor scarcities if, and only if, the inputs of the production process are not perfect substitutes. Under the extreme assumption of strict factor complementarity between labour and resources in the production of some aggregate consumption good, and assuming that the technical coefficient of the resource input can be improved through a dedicated research effort, we compare the optimal research policy in a pure non-renewable resource economy to the optimal research policy in a pure renewable resource economy. We show that they are strongly contrasted.