Does Environmental Policy Stringency Foster Innovation and Productivity in OECD Countries?

35 Pages Posted: 15 Apr 2016

See all articles by Rafael Morales-Lage

Rafael Morales-Lage

Universitat Jaume I

Aurelia Bengochea Morancho

Universitat Jaume I - Department of Economics

Inmaculada Martínez-Zarzoso

University of Goettingen (Göttingen) - School of Law, Economics, Social Sciences; Jaume I University - Department of Economics

Date Written: April 14, 2016

Abstract

In this paper we use panel data models and quantile regressions to test the “weak” and “strong” versions of the Porter hypothesis, using data from 14 OECD countries over the period 1990-2011. A newly-released environmental policy stringency index (EPS) provided by the OECD is used as an indicator of the stringency of environmental regulations in order to tackle endogeneity issues of proxies used in earlier research. The findings indicate that more stringent environmental regulations positively influence R&D expenditure, the number of patent applications and total factor productivity (TFP). The results show that environmental stringency has a positive effect on R&D, mainly for the lower quantiles (0.10, 0.25) of the distribution of R&D, whereas for the number of patent applications and total factor productivity, the effect increases for the highest quantiles (0.75, 0.90) of the distribution of the targeted indicators.

Keywords: Environmental regulations, Porter Hypothesis, OECD, Innovation, Quantile regression

JEL Classification: Q43, Q48, Q53

Suggested Citation

Morales-Lage, Rafael and Bengochea Morancho, Aurelia and Martínez-Zarzoso, Inmaculada, Does Environmental Policy Stringency Foster Innovation and Productivity in OECD Countries? (April 14, 2016). Available at SSRN: https://ssrn.com/abstract=2764834 or http://dx.doi.org/10.2139/ssrn.2764834

Rafael Morales-Lage

Universitat Jaume I ( email )

Castellon
E-12071 Castello de la Plana, Castellón de la Plana 12071
Spain

Aurelia Bengochea Morancho

Universitat Jaume I - Department of Economics ( email )

Campus del Riu Sec.
E-12071 Castellon
Spain

Inmaculada Martínez-Zarzoso (Contact Author)

University of Goettingen (Göttingen) - School of Law, Economics, Social Sciences ( email )

Germany

Jaume I University - Department of Economics ( email )

Campus del Riu Sec.
E-12071 Castellon
Spain

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
233
Abstract Views
1,176
Rank
238,410
PlumX Metrics