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Environmental Policies, Innovation and Productivity in the EU

  • R. De Santis EMAIL logo and C. Jona Lasinio
Published/Copyright: October 11, 2016
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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.

JEL Classification: D24; Q50; Q55; O47; O31

Appendix

Table 7:

Descriptive statistics.

VariableObsMeanStd. Dev.Min
lnLP1923.7915220.87460212.783899
lnnonICTK1434.200870.98319382.869709
lnICTK1432.0256131.1251430.3929425
lnR&D1921.3983691.25344–0.7112087
Outputgap3060.10464052.33713–7.97
Realoilp372–135.92651051.201–5877.109
eps_mb2521.5078871.041510.125
eps_nmb2502.251.135410.75
eps_fs2501.883850.96806980.5
Envtaxes2042.82009892589350.8
Envpatent312110.5359146.76831
Ets4920.13414630.34115640
Tgemiss2511.9153211.113396–0.35757
Kyoto4920.20121950.40131980
Table 8:

Data description.

VariableDescriptionSource
Labour productivityReal value added per hours workedEUKLEMS
NON-ICTReal capital stockEUKLEMS
ICTReal capital stockEUKLEMS
R&DExpenditure dataBERD Eurostat
etsTime dummy “2005” to catch the impact of the introduction of the European Emission Trading SystemEU
envtaxesThe revenues from environmental taxes in percentage of GDPOECD
KyotoRatification of the Kyoto agreementUNFCC
tgemissCO2 emissions in metric tons per capita as a difference with respect to the 2020 targetOECD
envpatentNumber of environmental patent applications to the EPOOECD
Output gap% deviation of GDP from its trend.Source: OECD
Fiscal balance/GDPTax 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 opennessExport +Import/2 in US dollars current pricesSource: OECD

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Published Online: 2016-10-11
Published in Print: 2016-12-1

©2016 by De Gruyter

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