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Productivity and Green Transition in Finland

Author

Listed:
  • Kuosmanen, Natalia
  • Kiema, Ilkka
  • Maczulskij, Terhi

Abstract

This report discusses the shortcomings of conventional productivity measures that overlook the environmental efforts of firms aiming to reduce greenhouse gas emissions. It highlights the importance of utilizing green productivity metrics, such as carbon productivity and green total factor productivity, for a more comprehensive assessment of productivity within the context of sustainable development. Key findings from recent empirical research conducted in Finland reveal a positive correlation between carbon and labor productivity, demonstrating that environmentally friendly practices can enhance both sustainability and efficiency in energy-intensive sectors. Energy efficiency also positively affects firm productivity, emphasizing the potential advantages of environmental regulations in driving economic growth, while simultaneously maintaining ecological well-being. Furthermore, carbon productivity exhibits a procyclical pattern, with financially stronger firms seeking more environmentally conscious workers (i.e., offering green jobs) during periods of economic growth. The report also recognizes the challenge of overcoming technological path dependence and suggests strategies such as public funding for clean technology R&D and leveraging EU-level green investment programs, particularly for smaller nations like Finland.

Suggested Citation

  • Kuosmanen, Natalia & Kiema, Ilkka & Maczulskij, Terhi, 2024. "Productivity and Green Transition in Finland," ETLA Reports 151, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:report:151
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Carbon productivity; Green jobs; Green total factor productivity; Green transition; Energy efficiency;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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