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The causal impact of material productivity on microeconomic competitiveness and environmental performance in the European Union

Flachenecker, F; Kornejew, M; (2018) The causal impact of material productivity on microeconomic competitiveness and environmental performance in the European Union. Environmental Economics and Policy Studies 10.1007/s10018-018-0223-z. (In press). Green open access

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Abstract

Interdisciplinary scholars and policymakers in the European Union (EU) claim that increasing material productivity improves the competitiveness of firms. However, the current evidence base has two main shortcomings. First, most studies fail to provide evidence beyond case studies, thus not considering dynamic effects and heterogeneity across firms, sectors, and countries. Second, they do not adequately take the endogeneity of changes in material productivity into account. In this paper, we investigate data from the Community Innovation Survey comprising over 52,000 firms across 23 sectors and 12 EU member states. Moreover, we take an instrumental variable approach to account for endogeneity. Our findings provide evidence for a positive and causal effect of material productivity improvements on microeconomic competitiveness for those firms that received targeted public financial support to realise eco-innovations. The effect tends to be limited to firms in certain material-intensive sectors and countries. We further show that such increases in material productivity reduce the firms’ carbon dioxide footprint, thus achieving both economic and environmental objectives. Therefore, our findings provide the important policy insight that tailoring the availability of public financial supports to sector and country specific circumstances and those eco-innovations that increase material productivity is most promising in reconciling competitiveness and climate change mitigation objectives.

Type: Article
Title: The causal impact of material productivity on microeconomic competitiveness and environmental performance in the European Union
Open access status: An open access version is available from UCL Discovery
DOI: 10.1007/s10018-018-0223-z
Publisher version: https://doi.org/10.1007/s10018-018-0223-z
Language: English
Additional information: Copyright © The Author(s) 2018. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Keywords: material productivity, competitiveness, instrument, LATE, Ecoinnovations
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/10057458
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