Factors Influencing the Decline of Manufacturing Pollution in the European Union: A Study of Productivity, Environmental Regulations, Expenditure, and Trade Costs

Sahar Amidi () and Rezgar Feizi ()
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Sahar Amidi: Université d'Orléans
Rezgar Feizi: University of Luxembourg

No 2024.10, Working Papers from International Network for Economic Research - INFER

Abstract: This paper investigates how various factors affect pollution levels in Europe’s manufacturing industry. The paper explores how productivity, expenditure share, trade cost, and environmental regulations affect pollution levels in Europe’s manufacturing industry. The World Input-Output Database provides data on global and local pollution for each industrial sector solely for the period ranging from 1995 to 2009. We use a general equilibrium model and quantitative trade model that considers pollution as a byproduct of production. The study aims to examine the effectiveness of regulations and control for the primary causes of environmental pollution (the main causes). Our empirical results reveal that air pollution emissions from EU manufacturing decreased by 33.21 percent despite an 85.44 percent increase in real manufacturing output. This outcome could provide evidence for the role of reducing the pollution contamination of manufacturing. The study finds that most of the decrease in emissions can be ascribed to changes in environmental regulations, rather than changes in expenditure share, trade cost, and productivity. Increasing environmental regulations by 20 percent can eliminate emissions intensity. After increasing environmental regulations by 20%, the emission of global pollutants such as methane decreased by 17.27% in 2009.

Keywords: Environmental account and accounting; environmental taxes; general equilibrium model; productivity; quantitative model; technological innovation; trade cost (search for similar items in EconPapers)
JEL-codes: Q (search for similar items in EconPapers)
Pages: 49 pages
Date: 2024
New Economics Papers: this item is included in nep-agr, nep-eec, nep-eff, nep-ene, nep-env, nep-int and nep-res
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