Productivity and Green Transition in Finland

Natalia Kuosmanen, Ilkka Kiema and Terhi Maczulskij

No 151, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract This report discusses the shortcomings of conventional productivity measures that overlook the environmental efforts of firms aiming to reduce greenhouse gas emissions. It highlights the importance of utilizing green productivity metrics, such as carbon productivity and green total factor productivity, for a more comprehensive assessment of productivity within the context of sustainable development. Key findings from recent empirical research conducted in Finland reveal a positive correlation between carbon and labor productivity, demonstrating that environmentally friendly practices can enhance both sustainability and efficiency in energy-intensive sectors. Energy efficiency also positively affects firm productivity, emphasizing the potential advantages of environmental regulations in driving economic growth, while simultaneously maintaining ecological well-being. Furthermore, carbon productivity exhibits a procyclical pattern, with financially stronger firms seeking more environmentally conscious workers (i.e., offering green jobs) during periods of economic growth. The report also recognizes the challenge of overcoming technological path dependence and suggests strategies such as public funding for clean technology R&D and leveraging EU-level green investment programs, particularly for smaller nations like Finland.

Keywords: Carbon productivity; Green jobs; Green total factor productivity; Green transition; Energy efficiency (search for similar items in EconPapers)
JEL-codes: D24 O44 Q55 Q56 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2024-08-26
New Economics Papers: this item is included in nep-eec, nep-eff and nep-ene
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