Markandya, AnilPedroso-Galinato, Suzette2012-06-222012-06-222006-01https://hdl.handle.net/10986/8827One of the recurring themes in the sustainability literature has been the legitimacy of using an economic framework to account for natural resources. This paper examines the potential for substituting between different inputs in the generation of income, where the inputs include natural resources such as land and energy resources. A nested constant elasticity of substitution (CES) production function is used to allow flexibility in the estimated elasticities of substitution. Also, with this specification, natural resources and other inputs are combined in different levels of the function, thus allowing for different levels of substitutability. Institutional and economic indicators are also incorporated in the production function estimated. Results show that the elasticities derived from functions involving land resources were generally around one or greater, implying a fairly high degree of substitutability. Furthermore, changes in trade openness and private sector investment have a statistically significant and direct relationship with income generation. No statistically significant relationship between income and any of the institutional indicators was found.CC BY 3.0 IGOABSOLUTE VALUEACCOUNTABILITYACCOUNTINGAMOUNT OF LANDASSETSCAPITAL INPUTCAPITAL-LABORCO2CONSTANT ELASTICITYCROSS-SECTION DATADEPENDENT VARIABLEECONOMETRIC ANALYSISECONOMIC EFFECTSECONOMIC FACTORSECONOMIC FRAMEWORKECONOMIC GROWTHECONOMIC INDICATORSECONOMIC REVIEWECONOMIC STUDIESECONOMIC THEORYELASTICITYELASTICITY OF SUBSTITUTIONEMPIRICAL ESTIMATIONEMPIRICAL WORKEXPLANATORY VARIABLESEXPORTSFACTOR DEMANDFINANCIAL DEPTHFINANCIAL DEVELOPMENTFUNCTIONAL FORMFUNCTIONAL FORMSGDPGROSS OUTPUTHUMAN CAPITALINCOMEINCOME PER CAPITAINSTITUTIONAL DEVELOPMENTINSURANCELABOR INPUTLABOR PRODUCTIVITYLEVEL OF OUTPUTLEVELS OF CAPITALLOW INCOMEMACROECONOMICSMARKET VALUEMATHEMATICAL ECONOMICSNATIONAL INCOMENATURAL RESOURCESNEGATIVE ELASTICITYNEOCLASSICAL MODELPOLICY RESEARCHPOLITICAL INSTABILITYPOSITIVE IMPACTPRESENT VALUEPRICE CHANGESPRICE ELASTICITYPRICE ELASTICITY OF DEMANDPRIVATE SECTORPRODUCTION FUNCTIONPRODUCTION FUNCTIONSPRODUCTION INPUTSPROPORTIONAL CHANGEREGRESSION RESULTSRELATIVE PRICESRENEWABLE ENERGYSIGNIFICANT CORRELATIONSIGNIFICANT IMPACTSIGNIFICANT RELATIONSHIPSUBSTITUTION RESPONSESWEALTHWorld Bank10.1596/1813-9450-3803