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This thesis uses neoclassical growth models to
evaluate what effect the limited availability of nonrenewable resources has on
the economy´s (world´s) growth potential. Markus Merz concludes that recycling
may serve as a mid-term solution to continued growth, but technological
progress is needed in the long-run. The theoretical analysis starts with the
well-known Dasgupta-Heal model and considers the effect of recycling and
technological progress on the resource constraints; resource-augmenting and
backstop technology are analyzed. After a thorough analysis of the models it is
concluded that the ultimate solution to long-term economic growth is a backstop
technology.

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An Introduction to Economic Growth Theory.- The Dasgupta-Heal Model.- Recycling as a Source of Regeneration.- Technological Progress.

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Markus Merz is a research fellow at the Department of Banking, University of Tuebingen. His research interests are access to finance, finance and growth and microeconomics of banking.

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