What is it about?
The European Union has set the target that by 2020 harmful emissions and energy consumption should be reduced by 20% compared to the 1990s. This paper examines the impacts of environmental quality on two parameters of national competitiveness (exports and GDP per capita). The study focuses on the EU-15 countries and covers the period from 1960 to 2013. Even though the analyzed economies are developed countries which are the leaders in environment protection, they are still also the leading emitters of greenhouse gases. The paper uses traditional econometric techniques to test the relations between energy use, CO2 emissions, exports and GDP. The results show that the variables are co-integrated. In addition, energy-led growth hypothesis is valid in most of the analyzed economies. The results have also shown that increased CO2 emissions reduce economic activity and export performance. Finally, we will conclude that there are two tasks for future policy makers: first, to strengthen renewable-energy goals, and second, to adjust the economic structure towards less harmful emissions. In such circumstances, we could expect the economies to further develop clean technologies and to obtain their benefits for national competitiveness.
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Why is it important?
The novelty of the paper is as follows: the previous studies have examined the effects of real economy on CO2 emission and energy consumption, while in this study the primary focus is on the effects of environmental quality on the indicators of national competitiveness. The contribution of this paper is related to the fact that analyzed economies are of particular interest to global trends, since they have the highest degree of environmental protection and the global competitiveness index.
Perspectives
Although the results of the conducted analysis are not unambiguous, it is possible to derive implications that are valid for the analyzed economies. First, it is necessary to establish an appropriate balance between environmental quality and real economy in order to make the system sustainable. In this respect, although energy-related growth is in force in most countries, it is necessary to increase the efficiency of energy consumption by moving towards renewable energy sources. In some EU countries, clean energy is dominant: in Sweden over 50% of the use of energy is related to renewable sources and in Finland about 40%. On the other hand, other countries are significantly lagging behind, including the Netherlands and Great Britain. In countries where CO2 emissions lead to a decline in economic activity and exports, it is necessary to adjust the economic structure in favor of those sectors that involve less use of these emissions. All key sectors, ranging from the power sector, through industry, transport, buildings, construction and agriculture should bear the burden of reducing harmful emissions. In this way, the analyzed countries will be able to count on the increased innovation of their economies, the development of clean technologies, and low or zero carbon energy. Reducing the use of harmful emissions will also provide health benefits, and a lower dependency of the EU countries on expensive imports of oil and gas. In this sense, the benefits to the real economy will further boost the competitiveness of national economies.
Nemanja Lojanica
Univerzitet u Kragujevcu Ekonomski fakultet
Read the Original
This page is a summary of: Does environmental quality reflect on national competitiveness? The evidence from EU-15, Energy & Environment, December 2018, SAGE Publications,
DOI: 10.1177/0958305x18813596.
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