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

Florian Flachenecker () and Martin Kornejew
Additional contact information
Florian Flachenecker: University College London, Institute for Sustainable Resources
Martin Kornejew: Kiel University, Department of Economics

Environmental Economics and Policy Studies, 2019, vol. 21, issue 1, No 5, 87-122

Abstract: 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.

Keywords: Material productivity; Competitiveness; Instrument; LATE; Eco-innovations (search for similar items in EconPapers)
JEL-codes: C21 C26 D24 O31 Q32 Q56 Q58 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s10018-018-0223-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:envpol:v:21:y:2019:i:1:d:10.1007_s10018-018-0223-z

Ordering information: This journal article can be ordered from
http://www.springer. ... mental/journal/10018

DOI: 10.1007/s10018-018-0223-z

Access Statistics for this article

Environmental Economics and Policy Studies is currently edited by Ken-Ichi Akao

More articles in Environmental Economics and Policy Studies from Springer, Society for Environmental Economics and Policy Studies - SEEPS Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().