Pollution Abatement and Productivity Growth: Evidence from Germany,Japan, the Netherlands,and the United States

The passage of environmental legislation was accompanied by concerns about its potential detrimental effect on productivity. We assume inputs can be assigned to either abatement activities or good output production. This allows us to specify regulated and unregulated production frontiers to determine the association between pollution abatement and productivity growth. We then employ our “assigned input” model to determine the association between productivity and abatement activities for manufacturing industries in Germany, Japan, the Netherlands and the United States.     

The impact of environmental regulation on productivity in German industries

The objective of this paper is to adjust a traditional total factor productivity (TFP) measure for the direct effect of environmental regulation on material and capital input. For this purpose we consider the fact that part of material input and pollution abatement capital have not been used to increase output but to cover the cost of using the environment as a factor of production. Therefore TFP growth rates are lower if part of the material input is allocated to abatement activities instead of producing output. We propose to treat compliance with environmental regulation as an unproductive input linked to the use of productive material input. Our aim is to answer and discuss two questions: How to measure the effect of environmental regulation on TFP, and does the effect matter. We examine data from 1975–1991 for ten pollution intensive German industries.We would like to thank Cornelia Oßwald for valuable research assistance. We are especially grateful to two anonymous referees for many helpful comments.     

Business cycles and productivity growth: Are temporary downturns productive or wasteful?

This paper investigates the relationship between the structure of the business cycle and total factor productivity (TFP) growth in U.S. manufacturing. Previous empirical studies on cycle-growth interactions have been conducted at the aggregate level, and have produced mixed results. In contrast, we examine the dynamic linkages between temporary employment shocks and TFP at the industry level, using the NBER Productivity Database. Given the substantial differences in factor intensities, costs and the nature of innovation and productivity-enhancing activities across industries, there are good reasons why cycle-growth interactions may be more readily captured at the sectoral level. We construct an exactly identified Vector Autoregressive model for employment and TFP growth, and find strong support for the “opportunity-cost” view of business cycle-productivity growth interaction. This result suggests that recessions can lead to TFP growth through reorganization and restructuring effects. On the other hand, we find little support for the notion that temporary booms increase TFP through “learning-by-doing” effects. The responsiveness of TFP to employment shocks also seems to be related to the degree of job reallocation within individual industries and the capital intensity of the industry in question. This is further evidence in favour of the view that employment shocks can trigger reorganization effects. Finally, we suggest possible future avenues for this research, including the adjustment of TFP measures to allow for variable factor utilization over the cycle.     

Does Environmental Protection Lead to Slower Productivity Growth in the Chemical Industry?

Efficiency and productivity growth is measured at the three-digit SIC level for six chemical industries for 1988–1993. The directional distance function is used to measure the lost chemical manufacturing output and the overproduction of toxic chemical releases. Total factor productivity growth is decomposed into a product of efficiency change and technical change. Accounting for toxic chemical releases, productivity grows at anannual rate of between 2.4% and 6.9%. We find no evidence that environmental protection measures reduce productivity growth.     

POST-REFORM PRODUCTIVITY PERFORMANCE AND SOURCES OF GROWTH IN CHINESE INDUSTRY: 1980–85

This paper examines the productivity growth and its sources in 39 Chinese industries in the post-reform period 1980–85. We use both the gross-output and value-added models to isolate the contributions of labor, capital, materials and technical efficiency to growth in industrial output. Using new data from the National Industrial Census of China (1988) for large and medium-size enterprises, we find that Chinese industries, in particular, those in the manufacturing experienced sharp increases in total factor productivity growth in the 1984–85 period as compared to the 1980–84 period. Moreover, collective and private enterprises show higher output and total factor productivity gains than do state enterprises. Our regression results show that total factor productivity gains are closely tied to increases in retained profits and the proportion of total employees that are technical workers. However, labor bonuses have a negative effect on total factor productivity growth.     

A re-examination of the technological catching-up hypothesis across OECD industries

This study re-examines the catching-up hypothesis at the industry level across the main OECD countries, using panel data econometric models involving technological gap indicators calculated with a nonparametric distance function suggested by Färe et al. [Färe, R.S., Grosskopf, M.N., Norris, M., Xhang, Z., 1994. Productivity growth, technical progress, and efficiency change in industrialized countries. American Economic Review 84, 66–83]. The results show that there is statistical evidence of a catching-up process at the industry level. Moreover, both tradables and nontradables sectors exhibit catching-up effects and technology adoption from abroad. This result complements the findings by Bernard and Jones [Bernard, A.B., Jones, C.I., 1996a. Comparing apples to oranges: productivity convergence and measurement across industries and countries. American Economic Review 86(5), 1216–1238., Bernard, A.B., Jones, C.I., 1996b. Productivity across industries and countries: Time series theory and evidence. Review Of Economics and Statistics 78, 135–146], Gouyette and Perelman [Gouyette, C., Perelman, S., 1997. Productivity convergence in OECD services industries. Structural Change and Economic Dynamics 8, 279–295] and Hansson and Henrekson [Hansson, P., Henrekson, M., 1997. Catching up, social capability, government size and economic growth, in V. Bergström, eds, Government and Growth, Oxford: Clarendon Press, 61–126] that there is no (or even a slow) catching-up effect in the manufacturing sector. Moreover, social capability indicators evaluated for each country show that “Non-European” and “Central European” tradables sectors have a rather similar degree of inefficiency while “North European” countries are less efficient for both tradables and non-tradables. Lastly, both the cross country and the cross sectors dispersions of inefficiency levels are smaller for tradables sectors than for non-tradables.     

Measuring environmental efficiency of industry: a case study of thermal power generation in India

Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.06 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 6/ while decreasing generation of pollution by 6%. This result shows that there are incentives or win–win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. This result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in India to reduce air pollution.

Entrepreneurship and productivity: The slow growth of the planned economies

Trends in gross domestic product (GDP) and total factor productivity (TFP) growth in the former socialist economies seem to indicate that these economies were converging to unusually low long-run growth rates in the late 1980s. In this paper we develop an endogenous growth model of entrepreneurship that is able to account for the difference in long-run performance between centrally planned economies and market-oriented ones. Long-run growth rates of output and productivity are determined by the growth of the stock of managerial knowledge, which in turn depends on the share of the population involved in entrepreneurial activities and on the time that spent on those activities. We analyze the effect of two characteristics of centrally planned economies on their growth performance. First, in centrally planned economies factors of production are distributed by the central planner to the firms' managers through a contest that uses up some of the managers' productive effort. Second, the leadership is “egalitarian,” in the sense that it treats individuals with different abilities equally. We show that these two features reduce the fraction of people becoming entrepreneurs/managers, as well as their managerial effort, which in turn reduces long-run output and TFP growth. Furthermore, we find that centrally planned economies have lower income inequality and slightly higher capital–output ratios, which is consistent with these countries' experiences.     

制造业FDI行业内和行业间溢出对全要素生产率变动的影响*

在中国制造2025的大背景下,如何利用FDI来促进制造业全要素生产率、技术效率与技术水平的提升具有重要意义。采用2005—2014年中国制造业的26个行业的面板数据实证分析FDI行业间和行业内的技术溢出对全要素生产率变动的影响,结果发现行业内直接溢出能有效促进内资制造业全要素生产率和技术效率的提高;行业内间接溢出则会挤占内资企业的生存空间阻碍全要素生产率、技术效率和技术水平的增长;行业间后向关联程度能显著且明显地促进内资制造业全要素生产率和技术效率的提升;行业间前向关联程度能显著但微弱地抑制内资制造业全要素生产率和技术效率的提升。     

Environmental regulation and the productivity of Japanese manufacturing industries

This paper attempts to provide empirical evidence on issues concerning: (a) the effect of the stringency of environmental regulations (as measured by pollution control expenditures) on innovative activity (as measured by R&D expenditures) and on the average age of capital stock and (b) the productivity enhancement effect of environmental regulations in Japanese manufacturing industries. The empirical findings in the paper show that the pollution control expenditures have a positive relationship with the R&D expenditures and have a negative relationship with the average age of capital stock. It is also shown that increases in R&D investment stimulated by the regulatory stringency have a significant positive effect on the growth rate of total factor productivity.     

Environmental Abatement Costs and Establishment Size

The impact of environmental abatement costs on the size distribution of manufacturing establishments in pollution-intensive industries is analyzed. Utilizing both state- and industry-specific measures of environmental regulation, a new and important interaction is discovered: Establishment size increases with state environmental abatement costs, but only in industries during periods of relatively high (national) pollution abatement intensity. Increased state environmental stringency during times when similar industries located in other states are not undertaking sufficient abatement expenditures leads to a decrease in establishment size. (JEL L11 , L51 , R38 )     

THE SOURCES OF AGGREGATE PRODUCTIVITY GROWTH: US MANUFACTURING INDUSTRIES, 1958–1996

The sources of aggregate productivity growth are explored using detailed data for four‐digit US manufacturing industries during 1958–96 and a decomposition formula that allows us to quantify the contribution of structural change. Labour productivity as well as total factor productivity are considered with either value‐added or employment shares serving as aggregation weights. It is shown that structural change generally works in favour of industries with increasing productivity. This effect is particularly strong in the years since 1990, in high‐tech industries and in durable goods producing industries. The impact of the computer revolution can be clearly identified.     

Government interventions and productivity growth

This article investigates the impact of government industrial policy and trade protection of the manufacturing sector in Korea. Empirical results are provided, using four-period panel data for the years 1963 through 1983, for thirty-eight Korean industries in which trade protection reduced growth rates of labor productivity and total factor productivity, while industrial policies, such as tax incentives and subsidized credit, were not correlated with total factor productivity growth in the promoted sectors. The evidence thus implies that less government intervention in trade is linked to higher productivity growth.     

ECONOMIC PERFORMANCE AND PUBLIC INFRASTRUCTURE: AN APPLICATION TO GREEK MANUFACTURING

To comprehend the impact of public infrastructure on economic performance this paper provides a measure of productivity growth as derived from duality theory. This productivity growth is decomposed into the components of technical change, returns to scale and the effects of public infrastructure, the variable of our interest. In an application, we opt for Greek manufacturing so as to investigate whether the decline in its growth rate is partly explained by public infrastructure. Despite some variation in the estimation results of shadow shares across industries, public infrastructure asserts a cost saving effect in most industries, though it also appears that traditional labour‐intensive industries with lower level of technological advancement do not benefit from the provision of public infrastructure. The estimation results further demonstrate that while public infrastructure enhanced productivity growth over the sample period for most industries, low infrastructure investment in the 1970s and the 1980s undermined productivity growth.     

Long-run technical change and multifactor productivity growth in US manufacturing

This study utilizes a translog cost function to produce econometric estimates of the separate influences of technical change versus scale efficiency in contributing to multifactor productivity growth within the US manufacturing sector. The analysis generates (two-digit) industry-specific parameters that capture the effects of output versus time-related shifts in the cost function over the 1949–1991 period. Thus initial evidence concerning the relative importance of technical progress (versus ‘scale’) cannot be provided as a source of productivity gains within two-digit industries. The parametric estimates of total factor productivity growth are compared with existing Divisia measures to explore the shortcomings of the growth accounting technique. These long-run patterns hold implications for the productivity convergence hypothesis traced to knowledge spillovers between industries.     

Scale,Technique and Composition Effects in Manufacturing SO<Subscript>2</Subscript> Emissions

Combining two data sources on emissions with value-added and employment data, this paper constructs six data bases on sulfur dioxide (SO₂) intensities that vary across countries, sectors and years. This allows us to perform a growth decomposition exercise where the change in world manufacturing emissions is decomposed into scale, composition and technique effects. The sample covers the period 1990–2000, and includes 62 countries that account for 76% of world-wide emissions. While manufacturing activity has increased by a rough 10% (scale effect), we estimate that emissions have fallen by about 10%, thanks to the adoption of cleaner production techniques (the technique effect) and a small shift towards cleaner industries (between-sector effect). As output and productivity gains have been biased towards large emerging countries like China and India, which are both clean in terms of emissions per unit labor and dirty in terms of emissions per dollar, the sign and magnitude of the between-country effect depends on the choice regarding the scaling factor ( − 2% for employment,  + 25% for value-added, with a corresponding adjustment of the technique effect). The paper also shows that these estimates are robust to changes in aggregation across entities (regions or countries) and across industries, and that composition changes are correlated with changes in prices and trade intensities.

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Plant Level Productivity, Efficiency, and Environmental Performance of the Container Glass Industry

This paper presents a methodology and empirical results based on theMalmquist productivity index. We measure productivity while treatingpollution as an undesirable output. Our estimates show that technicalchange has contributed to productivity and environmental performancegrowth in the container glass industry, an energy and pollution intensivesector. Changes in inter-plant efficiency over time have made thisproductivity growth more rapid than otherwise would have occurred withthe underlying technical change. The efficiency estimates show that thereare both opportunities to improve productivity and reduce pollution in thisindustry, as well as productivity losses associated with the emissionscontrol. The shadow prices for NOx, the undesirable output we analyze,is quite high compared to other regulated sectors.     

Stochastic convergence of per capita carbon dioxide emissions and multiple structural breaks in OECD countries

This research applies an innovative panel data stationarity testing procedure developed by Carrion-i-Silvestre et al. [Carrion-i-Silvestre, J.L., Barrio-Castro, T.D. and Lopez-Bazo, E., 2005. Breaking the panels: An application to the GDP per capita, Econometrics Journal 8, 159–175.], which has the advantage of recognizing multiple structural breaks and the presence of cross-section dependence in order to re-investigate the hypothesis that per capita carbon dioxide (CO₂) emissions stochastically converge for 21 OECD countries from 1950 to 2002. Remarkably, the evidence clearly indicates that the panel dataset of relative per capita CO₂ emissions is stationary after the structural breaks and cross-sectional dependence are introduced into the model. These findings offer strong policy implications for governments, regardless of whether they are in “convergent group” or “divergent group” countries. We also find that the structural breaks in the 1960s and over the 1970–1982 period are associated with time periods of fossil fuel becoming the main source of productivity, higher oil prices, and the development of nuclear power.     

Are ICT Spillovers Driving the New Economy?

Some observers have raised the possibility that production spillovers and network effects associated with information and communications technology (ICT) are an important part of the "New Economy." Across U.S. manufacturing industries, however, ICT capital appears correlated with the acceleration of average labor productivity (ALP) growth as predicted by a standard production model, but not with total factor productivity (TFP) growth as these New Economy forces imply. Once one allows for productivity differences across industries, measured TFP growth is uncorrelated with all capital inputs, including ICT capital. This provides little evidence for a New Economy story of ICT-related spillovers or network effects driving TFP growth throughout U.S. manufacturing.     

Engines of growth. Innovation and productivity in industry groups

The diversity of technological activities that contribute to growth in labour productivity is examined in this article for manufacturing and services industries in eight major EU countries. We test the relevance of two “engines of growth”, i.e., the strategies of technological competitiveness (based on innovation in products and markets) and cost competitiveness (relying on innovation in processes and machinery) and their impact on economic performance. We propose models for the determinants of changes in labour productivity and we carry out empirical tests for both the whole economy and for the four Revised Pavitt classes that group manufacturing and services industries with distinct patterns of innovation. Tests are carried out by pooling industries, countries and three time periods, using innovation survey data from CIS 2, 3 and 4, linked to economic variables. The results confirm the specificity of the two “engines of growth”; economic performances in European industries appear as the result of different innovation models, with strong specificities of the four Revised Pavitt classes.