| Summary: | In this thesis, we employ the concept of productivity in order to examine how climate change affects economic growth and productivity in three different levels: country, European manufacturing industries and European manufacturing firms level. We also use climate characteristics as temperature and precipitation, and emissions of different pollutants to depict climate change. In that endeavor, we combine different databases and build three distinct datasets that provide detailed information to conduct our analysis.
Our findings, on country level, concern a set of 115 countries for 55 years and suggest a positive effect of carbon dioxide emissions and temperature on countries' economic growth but when controlling for poor countries, the results point out that poor countries are more vulnerable compared to those that are considered rich. This is proof that climate change will widen the existing disparities and will bring an extra burden to vulnerable countries. We also provide evidence that the share of renewable energy sources in total energy is of high importance in the combat against climate change and substitution of fossil fuels with renewable energy sources should be accelerated.
The industry level analysis, concerning thirteen manufacturing industries from twenty-seven European countries for a twenty year period and treat the carbon dioxide emissions as undesirable output of industries and through the use of a technological metafrontier we compute the environmental productivity, enveloping the existing heterogeneity among European manufacturing industries. We find that industrial environmental productivity has deteriorated, having a big drop during the years of crisis that could explain the average drop in productivity terms. We also test for the convergence or divergence hypothesis and results confirm the existence of convergence among European industries. The role of temperature is tested by classifying Europe in climatic zones and results indicate that the two groups have very similar patterns but the losses during crisis are greater for the countries that are considered hotter.
Finally, we turn our attention to the firm level analysis in order to extract information on how different groups of emissions affect firms' environmental productivity and how the latter can be impacted by changes in environmental regulations. Findings indicate that environmental productivity growth of firms has increased in a small scale over the period of study but this increase is mainly attributed to the component that denotes innovation. We also shed light on the impact that a regulatory shock has on productivity and its components. We examine the “weak'' Porter Hypothesis and provide evidence that a well designed and enforced environmental regulation does not hinder economic growth but it promotes environmental innovation.
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