R&D, human capital and environmental externality in an endogenous growth model

This study constructs an endogenous growth model that incorporates the R&D sector, the education sector, and environmental problems. First, environmental impacts are considered. We show that, if government exercises appropriate policies and some parameter restrictions are satisfied, then the per-capita growth rate will become positive in the long run without environmental harm. Secondly, problems related to scale effects are considered. In typical growth models, an economy with a larger population grows faster. However, the scale effect has been rejected by Jones (1995). Our results suggest that the population level does not affect the economic growth rate.