On the Green Side of Trade Competitiveness? Environmental Policies and Innovation in the EU

33 Pages Posted: 31 Aug 2010

See all articles by Valeria Costantini

Valeria Costantini

University of Rome III - Department of Economics

Massimiliano Mazzanti

University of Ferrara & CERIS CNR, Italy; CESAER INRA, UMR, France

Date Written: August 31, 2010

Abstract

This paper aims to explore how the competitiveness of the EU economy, here captured by export dynamics over the medium run (1996-2007), has been affected by environmental regulation both on the public and private sector side. The strong and weak versions of the Porter hypothesis are tested by specifying the export dynamics of five aggregated manufacturing sectors classified by their technological or environmental content using a dynamic panel data estimator applied to a theoretically-based gravity model. When testing the strong version on export performances of manufacturing sectors, the overall effect of environmental policies does not conflict with export competitiveness. When testing the weak version using export flows of environmental goods, environmental policies, as well as innovation activities, all foster competitive advantages of green exports. Public policies and private innovation patterns trigger higher efficiency in the production process, thus turning the perception of environmental protection actions as a production cost into a net benefit. These results constitute useful advice for policy makers involved in the new wave of environmental tax reforms and green recovery packages currently debated at European Union level.

Keywords: Environmental Policies, Porter Hypothesis, Technological Innovation, Export Performances, Gravity Model, European Union

JEL Classification: F14, O14, Q43, Q56

Suggested Citation

Costantini, Valeria and Mazzanti, Massimiliano, On the Green Side of Trade Competitiveness? Environmental Policies and Innovation in the EU (August 31, 2010). FEEM Working Paper No. 94.2010, Available at SSRN: https://ssrn.com/abstract=1669163 or http://dx.doi.org/10.2139/ssrn.1669163

Valeria Costantini (Contact Author)

University of Rome III - Department of Economics ( email )

Via Silvio D'Amico, 77
00145 Rome, 00145
Italy
+39 06 5711 4723 (Phone)

Massimiliano Mazzanti

University of Ferrara & CERIS CNR, Italy ( email )

via Voltapaletto, 11
Ferrara, 44100
Italy

CESAER INRA, UMR, France ( email )

via Bassini 15
Milan
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
148
Abstract Views
1,026
rank
245,376
PlumX Metrics