Growing the Good and Shrinking the Bad: Output-Emissions Elasticities and Green Industrial Policy in Commodity-Dependent Developing Countries

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Abstract

This paper attempts to answer a series of questions that continue to hamstring the policy space of commodity dependent developing countries (CDDCs), particularly considering commitments made in the context of climate change adaptation and mitigation measures. First, is it possible for CDDCs to meet their development goals while also fulfilling their commitments to climate change mitigation? Is it possible to manage the commodity sector in a way that fosters growth without worsening environmental outcomes? Can CDDCs at their current development stage decouple economic growth and development from increasing emissions, environmental pollution, and resource depletion? While the international community needs to consider the challenges facing CDDCs as they attempt to move towards a low-carbon growth path, CDDCs should embrace green industrial policies to position themselves as viable producers and exporters of green goods. Continued reliance on traditional commodities in an era of green transition may not be a viable long-term option.