Green Industrial Policy in Emerging Markets

Posted: 27 Oct 2017

See all articles by Ann E. Harrison

Ann E. Harrison

University of California, Berkeley; National Bureau of Economic Research (NBER)

Leslie A. Martin

University of Melbourne - Department of Economics

Shanthi Nataraj


Date Written: October 2017


In this review, we discuss the challenges and opportunities associated with implementing green industrial policy in developing countries. These policies promote industries that produce green technologies and encourage traditional industries to produce goods and services in greener ways. We describe the experience in some emerging markets of voluntary programs to reduce emissions. Contrasting India and China's efforts to promote their solar photovoltaic industries, we also discuss the relative efficiency of promoting deployment versus promoting R&D. We also warn against expecting too much from policies that encourage renewables while governments simultaneously subsidize fossil fuels. The review discusses the potential of hybrid policies that combine command-and-control regulations targeted at the intensive margin for the largest polluters with market-based incentives that widen the reach of environmental regulations. We conclude with a discussion of how dismantling tariffs and facilitating foreign direct investment, ostensibly for nonenvironmental reasons, can have important environmental consequences.

Suggested Citation

Harrison, Ann E. and Martin, Leslie A. and Nataraj, Shanthi, Green Industrial Policy in Emerging Markets (October 2017). Annual Review of Resource Economics, Vol. 9, Issue 1, pp. 253-274, 2017, Available at SSRN: or

Ann E. Harrison (Contact Author)

University of California, Berkeley ( email )

Giannini Hall
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Leslie A. Martin

University of Melbourne - Department of Economics ( email )

Melbourne, 3010


Shanthi Nataraj

Independent ( email )

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