Structural Changes and Sustainability. A Selected Review of the Empirical Evidence

The paper offers a review of selected topics in the empirical literature on structural change and sustainability. We focus on aspects of structural change that directly affect emissions and energy intensity: changes of the sectoral composition of economies, trade and international fragmentation of production, technological change and innovation, and demand. We identify several empirical facts. First, only a few countries have experienced a decoupling between growth and emissions, due to proportionately faster growth rather than greater energy efficiency. Second, the long-term shift from manufacturing to services has not led, in all cases, to the de-materialisation of economies and a lower environmental burden. Exploitation of energy efficiency increases depends on the ability of the service sectors to incorporate technical changes to reduce energy intensity. Third, global trade and energy and emissions intensity trends support the pollution haven hypothesis, which predicts displacement of the environmental burden from developed to emerging countries. The pursuit by developing countries of a long-term strategy of trading jobs for emissions is likely to exacerbate the asymmetry related to emissions intensities between developed and less developed economies. The review should inform debate on environmental policy within the broader context of innovation and development policies. Classification-JEL; O3; O44; Q55