Growth In Knowledge-based Economy Under The Environmental Constraints

With advances in technology, economic development, as well as evolvement of economic theory and methods, it has been found that the quality of human resources and stock mainly results in the output disparity in different countries which even though utilize the same physical inputs. Human capital being considered into the new-classical function, led to the emergence of human capital theory, and became the focus of the study, in which the most representative studies is endogenous growth theory (new growth theory) raised by Romer and Lucas. This theory established the important status of human capital in economic growth. Even though Romer has been trying to endogen human capital, he did not eventually modeling it, and still assumed the rate of population and technological progress to be constant, and the optimal enduring growth rate to be determined by the technological progress. As a result, the meaning of endogenous human capital lost.The rapid development of industrial economy brought about an increasingly serious environmental damage. With the change in the pattern of development, sustainable development as the latest developments concept causes widespread concern around the world. The essence was to take consume and environmental factors into account and analyze the tradeoff of environment and economic growth.Based on Romer's work, the first part set up growth model of R&D knowledge-based economy, considering human capital and technological progress as endogenous at one time, to analyze the synthetical effect of their changes on economic growth, then achieve optimal economic growth through adjusting factors. Firstly, making basic assumptions of various elements and setting optimization of micro-behavior as objective, this paper set up the endogenous growth model with several constraints, and obtained the optimal path of economic growth through solving Hamilton equation. Then the effect of various elements was analyzed, and finally it came to the conclusion, also pointed out several directions of expanding models.The conclusion demonstrated that the optimal growth rate of the economy are the combined growth rate of technology and human capital. On the balance path, the growth of output and technology is related with greatest rate of human capital accumulation: the greater the human capital accumulation, the faster economic growth; the smaller the time discount rate, the higher the steady growth rate; the lower the consumer's relative risk aversion, the more conducive to long-term economic growth, and vice versa. In addition, the balance of economic growth has nothing to do with elasticity of technological level.On the basis of the literature, the second part of this paper, firstly by introducing environmental pollution into production function and utility function, developed the first model into an endogenous growth model with environmental constraints, followed by solving the dynamic optimization problem, deduced the optimal growth rate on balanced growth path. Then it analyzed the conditions for long-term economic growth, and discussed the intrinsic impact mechanism of the environmental pollution, physical capital, human capital and endogenous technological progress to long-term economic growth of the intrinsic the; Finally it came to the conclusion and policy recommendations.It concluded that the human capital and R&D of and knowledge are the dominant factors of long-term sustained economic growth. In order to achieve sustainable economic development strategy, the Government should try to increase investment in R&D department and human capital production, to enhance the power of economic growth and at the same time to promote environmental protection technology and to enact strict environmental standards.