Nimra Hussain (11U0141) and Saeeda Malik

Introduction

A recurring theme in economics has been the economic growth fueled by an increasing consumption of finite resources that ultimately results in those very same resources unable to cope with its greater productive use. Resources here are any essential inputs to the economic process and are restricted to energy carriers, products of photosynthesis and other industrial raw material extracted from the natural environment. Such a practice is unsustainable and instigates the need for resource innovation so as to figure out how to generate growth with fewer resources. Much of economics runs around this one basic problem of resource scarcity and the aim of this paper is to emphasize on how human beings have created technologies or developed innovative methods to meet the challenges of limited resources available. More specifically this paper will review how technological innovation has made the problem of resource scarcity less onerous.

The notion of scarcity as a constraint on economic growth goes all the way back to Malthus.(Malthus 1798, 1946).Only in recent decades has scarcity been seen as a driver of innovation and thus a driver of economic growth. There have been actual instances of resource scarcity and even exhaustion usually limited to a particular resource or country. However technological innovation in these instances have allowed for the resulting issues of scarcity to be rectified. For example natural fertilizer, guano and nitrate deposits from the West coast of South America were largely exhausted by the end of the 19^th century. However superphosphate from bones and mineral apatites were a replacement for natural guano. Similarly, synthetic nitrogen-based fertilizers from coke-oven gas, calcium cyanamid and finally synthetic ammonia provided an alternative source of fixed nitrogen for agriculture (and military explosives). The search for alternatives to natural nitrates was deliberate and well-organized. Germany led this scientific search, with the objective of breaking the British monopoly control over the Chilean sources of nitrates (Smil, 2001).

Scarcities have not proven to be obstacles to economic growth. Far more often they have been stimulants to innovation that, in case after case, has led to new applications, new markets and accelerated growth rather than inhibiting it. An emerging scarcity is environmental assimilative capacity for wastes and pollutants. As it happens, most of the pollutants of concern, regionally and globally, are direct consequences of the use of fossil hydrocarbon fuels, especially coal. There is now a worldwide search for technological `fixes’ for the various environmental problems, from smog, acidification to global climate warming. But the most promising solutions involve reduced emissions, either by capture, treatment or storage of pollutants or by more efficient use of energy.