A Virtuous Cumulative Growth Circle among Innovation, Inclusion and Sustainability? A Structuralist-Keynesian Analysis with an Application on Europe

Giulio Guarini (), Giuseppe Garofalo and Alessandro Federici
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Alessandro Federici: ENEA, Italy

No 2014-39, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: The Europe 2020 Strategy has been built on three pillars: smart, sustainable and inclusive growth. The aim of the paper is to provide, thanks to Dynamic Panel data models, an econometric analysis of the potential cumulative circle among the abovementioned three pillars, with a specific focus on how labour productivity and environmental intensity interact with each other, and how they may help improving employment. With reference to the effect of sustainable factors on smart factors, main results of this paper confirm the 'dual externality principle': eco-innovations may both provide R&D spillovers and reduce environmental negative externalities; depending on the Porter’s hypothesis, environmental regulations may stimulate eco-innovation in order to reduce regulation costs. Furthermore, an increase of energy intensity tends to stimulate cost-saving innovations. Concerning the effect of smart factors on sustainable factors, the 'pollution haven hypothesis' is confirmed: trade openness increases pollution because of more relaxed environmental regulation, delocalization and specialization. Finally, the positive impact of smart and sustainability factors on employment depends on the complementarity between the first two pillars. Europe 2020 goals are essential in order to overcome the current economic, social, and ecological crisis: this paper highlights how this implies to go beyond the widely adopted 'austerity policy framework' and to implement some proposals able to generate, stimulate and sustain the abovementioned cumulative circle. Main political points are: the proactive role of public institutions, to avoid innovation market failures and to generate an 'innovation multiplier' starting from public investments; the territorial perspective of strategy; the coordination among macroeconomic policies on the one hand, and industrial, innovation, environmental, and trade policies on the other.

Keywords: inclusion; innovation; sustainability; Europe 2020 Strategy (search for similar items in EconPapers)
JEL-codes: O3 O4 Q5 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-12
New Economics Papers: this item is included in nep-env, nep-ino, nep-pke and nep-sbm
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Citations: View citations in EconPapers (2)

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