Environmental regulation and innovation in Europe: an empirical analysis

Abstract

The work examines ‘Environmental regulation and innovation in Europe: an empirical analysis’, relaunching the territorial dimension with the relevant economic and institutional aspects. Its contributions (Porter, 1991; Porter and Van der Linde, 1995) put a new emphasis on the ability of the regulation to stimulate companies to innovate. Rubaschina et al. (2015) also dealt with a similar topic with European data, but focusing on the manufacturing sectors and using the PACE indicator (Pollution Abatement Costs and Expenditures) in place of the EPS. In the model, innovation, i.e. lnPAT dependent variable, is measured through the number of patent applications presented at the same time in the three main patent offices: European Patent Office, Japan Patent Office and United States Patent and Trademark Office. Substantially, the positive impact of environmental regulation on innovation is confirmed, although in this case lnGERD presents a weak statistical significance. R-sq. 0.99 F-stat 665.39 703.31 Obs. 193 193 *p<0.05; **p<0.01; ***p<0.001 p-value in parentheses Conclusion The empirical results, as a whole, confirm Porter's weak hypothesis by demonstrating how environmental regulation can effectively work from incentive to innovative growth.

Keywords

innovation; environment; Europe; territorial indicators; Productivity; public expenditure

JEL codes

Q56; O31; Q58