Abstract
In this paper we test the narrow Porter hypothesis on a sample of European economies in the period 1995–2008. We focus on the channels through which tighter environmental regulation affect productivity and innovation. Our findings suggest that the “narrow” Porter Hypothesis cannot be rejected and that the choice of policy instruments is not neutral. In particular, market based environmental stringency measures seem to be the most suitable to stimulate innovations and productivity growth. Consistently with the strategic reorientation of environmental policies in the European Union since the end of the eighties, our results indicate that the EU might privilege the market based instruments in order to meet more effectively the 2030 targets, especially through the channels of innovation and productivity enhancement.
Appendix
Descriptive statistics.
Variable | Obs | Mean | Std. Dev. | Min |
---|---|---|---|---|
lnLP | 192 | 3.791522 | 0.8746021 | 2.783899 |
lnnonICTK | 143 | 4.20087 | 0.9831938 | 2.869709 |
lnICTK | 143 | 2.025613 | 1.125143 | 0.3929425 |
lnR&D | 192 | 1.398369 | 1.25344 | –0.7112087 |
Outputgap | 306 | 0.1046405 | 2.33713 | –7.97 |
Realoilp | 372 | –135.9265 | 1051.201 | –5877.109 |
eps_mb | 252 | 1.507887 | 1.04151 | 0.125 |
eps_nmb | 250 | 2.25 | 1.13541 | 0.75 |
eps_fs | 250 | 1.88385 | 0.9680698 | 0.5 |
Envtaxes | 204 | 2.820098 | 9258935 | 0.8 |
Envpatent | 312 | 110.5359 | 146.7683 | 1 |
Ets | 492 | 0.1341463 | 0.3411564 | 0 |
Tgemiss | 251 | 1.915321 | 1.113396 | –0.35757 |
Kyoto | 492 | 0.2012195 | 0.4013198 | 0 |
Data description.
Variable | Description | Source |
---|---|---|
Labour productivity | Real value added per hours worked | EUKLEMS |
NON-ICT | Real capital stock | EUKLEMS |
ICT | Real capital stock | EUKLEMS |
R&D | Expenditure data | BERD Eurostat |
ets | Time dummy “2005” to catch the impact of the introduction of the European Emission Trading System | EU |
envtaxes | The revenues from environmental taxes in percentage of GDP | OECD |
Kyoto | Ratification of the Kyoto agreement | UNFCC |
tgemiss | CO2 emissions in metric tons per capita as a difference with respect to the 2020 target | OECD |
envpatent | Number of environmental patent applications to the EPO | OECD |
Output gap | % deviation of GDP from its trend. | Source: OECD |
Fiscal balance/GDP | Tax revenue minus any government spending. | Source: WDI World Bank |
Real oil price in US$ | Price of oil in US dollars. | Source: Thomson Reuters Datastream |
Trade openness | Export +Import/2 in US dollars current prices | Source: OECD |
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Articles in the same Issue
- Frontmatter
- Articles
- Growth Prospects for Advanced and Emerging Market Economies
- Environmental Policies, Innovation and Productivity in the EU
- The Effects of Cultural Differences on Bilateral Trade Patterns
- International Market Orientation and International Outcomes
- Foreign Direct Investment and Investor Sentiment: A Causal Relationship
- India-ASEAN Trade in Intermediates and Final Products: A Study of Selected Sectors
- The Relationship between Trade Integration and Economic Growth: Case of ASEAN-5 Countries
- Forecast Transparency and Inflation Volatility: Empirical Evidence from Developing Countries
Articles in the same Issue
- Frontmatter
- Articles
- Growth Prospects for Advanced and Emerging Market Economies
- Environmental Policies, Innovation and Productivity in the EU
- The Effects of Cultural Differences on Bilateral Trade Patterns
- International Market Orientation and International Outcomes
- Foreign Direct Investment and Investor Sentiment: A Causal Relationship
- India-ASEAN Trade in Intermediates and Final Products: A Study of Selected Sectors
- The Relationship between Trade Integration and Economic Growth: Case of ASEAN-5 Countries
- Forecast Transparency and Inflation Volatility: Empirical Evidence from Developing Countries