Exploring The Nexus Between Entrepreneurial Activity, Co2 Emissions, And Growth

This study examines the relationships between entrepreneurship, renewable energy, research and development, GDP, and CO2 emissions over the period 2001–2016 in Italy and Finland. The ARDL bounds tests are employed to analyze the long-run relationships between the interest variables. In the two countries, in the long run (LR), we observe a very strong impact of per capita energy use on per capita GDP growth and of GDP growth on CO2 emission. Startups also have a much greater effect on growth and environmental performance in the long-run than mature independent companies. Concerning the other components of the model, Finland and Italy exhibit quite different profiles. In Finland, renewable energy and entrepreneurial activity simultaneously reduce the CO2 emissions and increase the GDP growth in the long run whereas R&D spending have no significant impact. In that country, the promotion of renewable energy and entrepreneurship are relevant tools for the achievement of long-term sustainable development. In Italy, renewable energy has neither a significant impact on the GDP growth nor on CO2 emission. Entrepreneurship has a positive impact on the GDP growth but, no marked pro-environmental effect. Finally, R&D spending has a very positive and significant impact on the GDP growth and may slightly contribute to the reduction of the CO2 emissions. With regard to renewable energy and entrepreneurship, Italy therefore faces a trade-off between economic growth and environmental performance. R&D is the only variable that could potentially overcome this trade-off via the promotion of the R&D spending targeting energy saving technologies by end users. The explaining reasons for the differences between Italy and Finland in terms of responding to renewable energy development and entrepreneurship may come from their respective degrees of energy independence. The promotion of the renewable energy in Italy may have not reached a sufficient level to produce perceivable results yet with regard to its domestic production of energy, which is very low in comparison to its consumption (28%).