The green investments and competitiveness of the Italian manufacturing system

  • Ernesto Cassetta
  • Marco Pini
Keywords: green technologies; investments; productivity; manufacturing industry; environmental policies

Abstract

Purpose of the paper: This paper aims to verify whether investments in climate change mitigation and adaptation would result in sectoral gains in relation to the way in which resources are allocated and used, thus potentially contributing to the competitiveness of Italian manufacturing firms.

Methodology: We carried out an econometric analysis on a data set drawn from the annual Istat Structural Business Statistics (SBS) with specific reference to manufacturing sectors based on their size class during the middle years of the economic crisis (2009-2012).

Findings: We find that expenditures in climate change mitigation and adaptation have positive and significant effects on business performance in terms of labour productivity over the whole period considered.

Research limits: Some limitations apply to this study. The relationship between investments in environmental technologies and different measures of economic performance should be explored, possibly from a comparative perspective. Additional research is also needed to explore firm-level environmental behaviours in order to bring out potential heterogeneity and difference in economic performances.

Practical implications: Our results are in line with the hypothesis that firms having environmental concerns and devoting substantial resources to green technologies may also improve their economic performance and competitiveness. Evidence from this study also indicates that there is great potential in adopting more proactive environmental strategies other than compliance-driven ones. From this perspective, the so-called Paris Agreement creates huge market opportunities at a global level.

Originality of the paper: Several studies have recently attempted to assess the effects of the decarbonisation process on business performance and industrial competitiveness. This paper brings new insights into the economic effects of environmental activities and green management by focusing on the relationship between investments in green technologies and productivity, still regarded as the foundation of industrial competitiveness.

References

ALBRIZIO S., KOŹLUK T., ZIPPERER V. (2014), “Empirical Evidence on the Effects of Environmental Policy Stringency on Productivity Growth”, OECD Economics Department Working Papers, N. 1179, OECD Publishing.

ALBRIZIO S., BOTTA E., KOŹLUK T., ZIPPERER V. (2014), “Do Environmental Policies Matter for Productivity Growth? Insights from New Cross-Country Measures Of Environmental Policies”, OECD Economics Department Working Papers, N. 1176, OECD Publishing.

ALPAY E., KERKVLIET J., BUCCOLA S. (2002), “Productivity growth and environmental regulation in Mexican and US food manufacturing”, American Journal of Agricultural Economics, vol. 84, n. 4, pp. 887-901.

AMBEC S., COHEN M.A., ELGIE S., LANOIE P. (2013), “The Porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness?”, Review of Environmental Economics and Policy, vol. 7, n. 1, winter 2013, pp. 2-22.

AMBEC S., LANOIE P. (2008) “Does It Pay to Be Green? A Systematic Overview”, Academy of Management Perspectives, vol. 4, n. 22, pp. 45-62.

AMBEC S., BARLA P. (2002), “A theoretical foundation of the Porter hypothesis”, Economics Letters, vol. 75, n. 3, pp. 355-360.

ANTONIETTI R., MARZUCCHI A. (2014), “Environmental investments and firm’s productivity: a closer look”, SEEDS Working Paper, n. 1/2014.

ANTONIETTI R., MARZUCCHI A. (2013), Green Investment Strategies and Export Performance: A Firm-Level Investigation, Nota di Lavoro n. 76.2013, Fondazione Enrico Mattei.

BARBERA A.J., MCCONNEL V.D. (1990), “The impact of Environmental Regulations on Industry Productivity: Direct and Indirect Effects”, Journal of Environmental Economics And Management, vol. 18, n. 1, pp. 50-65.

BECKER R.A. (2009), “Local environmental regulation and plant-level productivity”, Ecological Economics, vol. 70, n. 2, pp. 2516-2522.

BLOOM N., GENAKOS C., MARTIN R., SADUN R. (2010), “Modern management: good for the environment or just hot air?”, Economic Journal, vol. 10, n. 544, pp. 551-572.

BORGHESI S., CAINELLI G., MAZZANTI M. (2014), “Linking emission trading to environmental innovation: evidence from the Italian manufacturing industry”, SEEDS Working Paper, 27/2014, October.

BRÄNNLUND R., LUNDGREN T. (2009), “Environmental Policy Without Costs? A Review of the Porter Hypothesis”, International Review of Environmental and Resource Economics, vol. 3, n. 1, pp. 75-117.

CAINELLI G., MAZZANTI M., ZOBOLI R. (2011), “Environmentally oriented innovative strategies and firm performance in services. Micro-evidence from Italy”, International Review of Applied Economics, vol. 25, n. 1, pp. 61-85.

CHEN S., GOLLEY J. (2014), “Green productivity growth in China’s industrial economy”, Energy Economics, vol. 44, pp. 89-98.

CONFINDUSTRIA (2015), Proposte per il potenziamento e la qualifica del meccanismo dei Certificati Bianchi, Allegato all’Audizione Parlamentare Commissione Attività Produttive, Ottobre 2015.

COSTANTINI V., MAZZANTI M. (2012), “On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports”, Research Policy, vol. 41, n. 1, pp. 132-153.

DECHEZLEPRÊTRE A., SATO M. (2014), The impacts of environmental regulations on competitiveness, Policy brief. Grantham Research Institute on Climate Change and the Environment/Global Green Growth Institute (GGGI). November.

DOGNAY S.M., SYEK S., TASKIN F. (2014), “Is environmental efficiency trade inducing or trade hindering?”, Energy Economics, vol. 44, pp. 340-349.

ECORYS (2009), Study on European Energy Intensive Industries - The Usefulness of Estimating Sectoral Price Elasticities, ENTR/06/054 Methodological Review, First Interim Report, Cambridge, 16th of March 2009.

EYRAUD L., WANE A., ZHANG C., CLEMENTS B. (2011), Who’s Going Green and Why? Trends and Determinants of Green Investment, Working Paper No. 11/296, International Monetary Fund, December.

FRANKFURT SCHOOL-UNEP, BLOOMBERG NEW ENERGY FINANCE (2015), Global trends in renewable energy investment, Frankfurt/ Main, Germany.

FRONDEL M., HORBACH J., RENNINGS K. (2007), “End of pipe or cleaner production? An empirical comparison of environmental innovation decision across OECD countries”, Business Strategy and the Environment, vol. 16, n. 8, pp. 571-584.

GOLDSMITH R.W. (1951), A Perpetual Inventory of National Wealth, in NATIONAL BUREAU OF ECONOMIC RESEARCH, Studies in Income and Wealth, Volume 14, NBER Books, New York.

GRAY W.B., SHADBEGIAN R. (1998), “Environmental Regulation, Investment Timing, and Technology Choice”, The Journal of Industrial Economics, vol. 46, n. 2, pp. 235-256.

GREENSTONE M., LIST J., SYVERSON C. (2012), “The effects of environmental regulation on the competitiveness of U.S. manufacturing”, NBER Working Paper Series 18392, National Bureau of Economic Research, Cambridge Massachusetts.

GROSSMANN G.M., KRUEGER A.B. (1995), “Economic Growth and the Environment”, The Quarterly Journal of Economics, vol. 110, n. 2, pp. 353-377.

HAMAMOTO M. (2006), “Environmental regulation and the productivity of Japanese manufacturing industries”, Resource and Energy Economics, vol. 28, n. 4, pp. 299-312.

HART S.L., DOWELL G. (2011), “A Natural-Resource-Based View of the Firm. Fifteen Years After”, Journal of Management, vol. 37, n. 5, pp. 1464-1479.

HART S.L., AHUJA G. (1996), “Does it pay to be green? An empirical examination of the relationship between emission reduction and firm performance”, Business Strategy and the Environment, vol. 5, n. 1, pp. 30-37.

HART S.L. (1995), “A natural-resource-based view of the firm”, Academy of Management Review, vol. 20, n. 4, pp. 986-1014.

IMF (2015), World Economic Outlook database, October.

IRALDO F., TESTA F., MELIS M., FREY M. (2011), “A Literature Review on the Links between Environmental Regulation and Competitiveness”, Env. Pol. Gov., vol. 21, n. 3, pp. 210-222.

ISSOUFOU S., OUATTARA N. (2011), Does Green Investment Raise Productivity?, 2011 African Economic Conference, Addis Ababa, Ethiopia, October 2011.

ISTAT (2014), Struttura e competitività del sistema delle imprese industriali e dei servizi, Statistiche report, Roma.

ISTAT (2013), Gli investimenti per la protezione dell’ambiente delle imprese industriali, Statistiche report, Roma.

JAFFE A.B., NEWELL R.G., STAVINS R.N. (2003), “Technological Change and The Environment”, Handbook of Environmental Economics, vol. 1, Edited by Miller K.G., Vincent J.R.. Elsevier Science B.V.

JAFFE A.B., PALMER K. (1997), “Environmental Regulation and Innovation: A Panel Data Study”, The Review of Economics and Statistics, vol. 79, n. 4, pp. 610-619.

JAFFE A.B., PETERSON S.R., PORTNEY P.R., STAVINS R.N. (1995), “Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?”, Journal of Economic Literature, vol. 33, n. 1, pp. 132-163.

JARAITÉ J., DI MARIA C. (2012), “Efficiency, productivity and environmental policy: A case study of power generation in the EU”, Energy Economics, vol. 34, n. 5, pp. 1557-1568.

KI-HOON L. (2009), “Why and how to adopt green management into business organizations? The case study of Korean SMEs in manufacturing industry”, Management Decision, vol. 47, n. 7, pp. 1101-1121.

KLASSEN R.D. (2000) “Exploring the linkage between investment in manufacturing and environmental technologies”, International Journal of Operations and Production Management, vol. 20, n. 2, pp. 127-147,

KOŹLUK T., ZIPPERER V. (2013), “Environmental Policies and Productivity Growth - A Critical Review of Empirical Findings”, OECD Economics Department Working Papers, n. 1096.

LEITER A.M., PAROLINI A., WINNER H. (2011), “Environmental regulation and investment: Evidence from European industry data”, Ecological Economics, vol. 70, n. 4, pp. 759-770.

LANOIE P., PATRY M., LAJEUNESSE R. (2008), “Environmental regulation and productivity: testing the Porter Hypothesis”, J Prod Anal, vol. 30, n. 2, pp. 121-128.

LANOIE P., LAURENT-LUCCHETTI J., JOHNSTONE N., AMBEC S. (2011), “Environmental policy, innovation and performance: new insights on the Porter hypotesis”, Journal of Economics and Management Strategy, vol. 20, n. 3, pp. 803-842.

MORELLI G., MELEO L. (2013), “Regolazione ambientale e competitività d’impresa. Solo vincoli o qualche opportunità?”, Economia dei Servizi, vol. 8, n. 3, pp. 269-291.

OECD (2015), Economic Policy Reforms 2015: Going For Growth, OECD Publishing.

OECD (2014), Green Growth: Environmental Policies and Productivity Can Work Together, OECD Policy Brief, OECD Paris.

OECD (2011), Towards Green Growth, OECD Paris, May 2011.

PANE HADEN S.S., OYLER J.D., HUMPHREYS J.H. (2009), “Historical, practical, and theoretical perspectives on green management”, Management Decision, vol. 47, n. 7, pp. 1041-1055.

PORTER M. (1991), “America’s green strategy”, Scientific American, vol. 264, n. 4, p. 168.

PORTER M., VAN DER LINDE C. (1995), “Green and competitive: Ending the Stalemate”, Harvard Business Review, vol. 73, n. 5, pp. 121-134.

RODRIK D. (2014), “Green industrial policy!”, Oxford Review of Economic Policy, vol. 30, n. 3, pp. 469-491.

RUBASHKINA Y., GALEOTTI M., VERDOLINI E. (2014), Environmental regulation and competitiveness: Empirical Evidence on the Porter Hypothesis from European Manifacturing Sectors, Nota di Lavoro, 80/2014, Fondazione ENI Enrico Mattei.

SCHMALENSEE R. (2012), “From “Green Growth” to sound policies: An overview”, Energy Economics, vol. 34, n. S1, pp. S2-S6.

SHORTT K. (2012), Does Going Green Make Economic Sense, The Leonard N. Stern School of Business, Glucksman Institute for Research in Securities Markets.

SYMBOLA FOUNDATION, UNIONCAMERE (2016), GreenItaly, Rome.

YANG C., TSENG Y., CHEN C. (2012), “Environmental Regulations, Induced R&D, and Productivity: Evidence from Taiwan’s Manufacturing Industries”, Resource and Energy Economics, vol. 34, n. 4, pp. 514-532.

UNEP (2011), Modelling global green investment scenarios: Supporting the transition to a global green economy, in Towards a green economy: Pathways to Sustainable Development and Poverty Eradication, pp. 497-542.

WORLD ECONOMIC FORUM (2013), The Green Investment Report - The ways and means to unlock private finance for green growth, A Report of the Green Growth Action Alliance, Switzerland.

Published
2017-04-30