This article by Joseph Stiglitz examines the implications of exhaustible natural resources on economic growth and optimal growth paths. It argues that while limited natural resources may constrain growth, economic forces such as technical change, substitution of capital for natural resources, and returns to scale can offset these limitations. The study aims to determine under what conditions a sustainable level of per capita consumption is feasible, characterize steady-state paths in economies with natural resources, and describe the optimal growth path of the economy, particularly deriving the optimal rate of extraction and savings rate in the presence of exhaustible natural resources. The paper highlights that traditional growth theory concepts like "steady state" and "natural rate of growth" need to be re-examined in the context of exhaustible resources. It presents a model based on a Cobb-Douglas production function, considering the rate of technological progress, capital, labor, and natural resources. The analysis shows that the optimal growth path depends on the savings rate, the rate of resource utilization, and the rate of technical change. The study also demonstrates that the choice among efficient growth paths involves trade-offs between growth rates and consumption levels, with higher resource utilization leading to lower long-run growth rates. The paper analyzes steady-state conditions, showing that the optimal savings rate, capital-output ratio, and resource utilization rate depend on the growth rate of consumption. It also discusses the implications of technical change and capital accumulation in offsetting the effects of declining natural resource inputs. The study concludes that sustained per capita consumption requires a certain level of technical progress, and that the presence of exhaustible resources does not necessarily lead to economic stagnation or decline, as technical change and capital accumulation can compensate for the depletion of natural resources. The analysis provides a framework for understanding optimal growth paths in economies with exhaustible natural resources, emphasizing the importance of balancing resource extraction, savings, and technological progress.This article by Joseph Stiglitz examines the implications of exhaustible natural resources on economic growth and optimal growth paths. It argues that while limited natural resources may constrain growth, economic forces such as technical change, substitution of capital for natural resources, and returns to scale can offset these limitations. The study aims to determine under what conditions a sustainable level of per capita consumption is feasible, characterize steady-state paths in economies with natural resources, and describe the optimal growth path of the economy, particularly deriving the optimal rate of extraction and savings rate in the presence of exhaustible natural resources. The paper highlights that traditional growth theory concepts like "steady state" and "natural rate of growth" need to be re-examined in the context of exhaustible resources. It presents a model based on a Cobb-Douglas production function, considering the rate of technological progress, capital, labor, and natural resources. The analysis shows that the optimal growth path depends on the savings rate, the rate of resource utilization, and the rate of technical change. The study also demonstrates that the choice among efficient growth paths involves trade-offs between growth rates and consumption levels, with higher resource utilization leading to lower long-run growth rates. The paper analyzes steady-state conditions, showing that the optimal savings rate, capital-output ratio, and resource utilization rate depend on the growth rate of consumption. It also discusses the implications of technical change and capital accumulation in offsetting the effects of declining natural resource inputs. The study concludes that sustained per capita consumption requires a certain level of technical progress, and that the presence of exhaustible resources does not necessarily lead to economic stagnation or decline, as technical change and capital accumulation can compensate for the depletion of natural resources. The analysis provides a framework for understanding optimal growth paths in economies with exhaustible natural resources, emphasizing the importance of balancing resource extraction, savings, and technological progress.