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Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries

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  • Yang, Chih-Hai
  • Tseng, Yu-Hsuan
  • Chen, Chiang-Ping

Abstract

This paper examines whether stringent environmental regulations induce more R&D and promote further productivity in Taiwan. Using an industry-level panel dataset for the 1997–2003 period, empirical results show that pollution abatement fees, a proxy for environmental regulations, is positively related to R&D expenditure, implying that stronger environment protection induces more R&D. On the other hand, pollution abatement capital expenditures do not have a statistically significant influence on R&D. Further evaluation of the influence of induced R&D by environment regulations on industrial productivity shows a significant positive association between them. This finding supports the Porter hypothesis that more stringent environmental regulations may enhance rather than lower industrial competitiveness.

Suggested Citation

  • Yang, Chih-Hai & Tseng, Yu-Hsuan & Chen, Chiang-Ping, 2012. "Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(4), pages 514-532.
    • Handle: RePEc:eee:resene:v:34:y:2012:i:4:p:514-532
    DOI: 10.1016/j.reseneeco.2012.05.001
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    More about this item

    Keywords

    Environmental regulations; R&D; Productivity; Porter hypothesis;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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