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Environment, Health, and New Technologies

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Environmental Regulations and Innovation in Advanced Automobile Technologies

Part of the book series: SpringerBriefs in Economics ((BRIEFSECONOMICS))

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Abstract

This chapter presents a comprehensive review of the literature covering various facets of environmental regulations. The multidimensional association of environmental regulation with economic growth, innovation, and industrial competitiveness are laid down. The cost of regulation is considered as a major reason for the decline in industrial production. This is not only due to the institutional cost of regulation but also because of the cost imposed on firms as a result of restricted resource use. The results of studies investigating the Porter hypothesis are balanced almost equally on both sides of the inconclusive induced innovation debate. The innovation economics literature still has not gained ground in studying innovation activity, particularly environmental innovation, in developing countries. Lack of reliable, comprehensive, and accessible macroeconomic and innovation related studies was certainly one of the reasons few years ago. With the emergence of India, China, and Brazil as new economic powerhouses, new variants of policymaking, governance, and regulatory intervention are surfacing. This section attempts to bring focus on the neglected but critical issue of environmental regulation and innovation in economies, which are currently in a phase of economic, social, and technological transition.

This chapter is derived from an article ‘Technological and Socioeconomic Issues in the Global Automobile Industry,’ published in Transp. in Dev. Econ. 1: 33, Springer International. doi:10.1007/s40890-015-0005-2. It was later included in the database of US National Academy of Sciences.

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Notes

  1. 1.

    Polluting firms in developed countries may also move to countries for other reasons.

  2. 2.

    Grossman and Krueger (1993), Kalt (1988), Tobey (1990) all use US trade data and do not find significant effects.

  3. 3.

    However, recent work suggests that this conclusion was rather weak. According to Copeland and Taylor (2004), most pre-1997 empirical studies testing the link between regulatory stringency and trade investment flows had drawbacks. This was because they (a) used cross-sectional data, (b) were unable to control for unobserved heterogeneity across countries and (c) treated environmental regulations as exogenous.

  4. 4.

    Innovation not only refers to technological innovation but can take various other forms such as design innovation, process innovation, or even innovation in marketing techniques (Porter and vander Linde 1995, p. 98).

  5. 5.

    Heckscher–Ohlin–Vanek model uses factor intensities and trade flows to understand factor intensities. He used a variation of the HOV model to investigate cross-country effects of individual country resource endowments (such as available land, labor, capital, oil, coal.) on trade in specific (dirty) goods.

  6. 6.

    The downsizing effect is the reduction of total capital stock (and consequently the size) of the firm, while the modernization effect is the reduction in the average age of the total capital stock (consequently increases productivity) (p. 167).

  7. 7.

    For an opposing view see Feichtinger et al. (2005) who show that an emission tax can have the exact opposite effect, that is, it may lead to an increase in the average age of the total capital stock and thereby reduce productivity.

  8. 8.

    The authors use pollutant- and county-specific amendments of the 1970 Clean Air Act which required all states to meet National Ambient Air Quality Standards for certain air pollutants such as carbon monoxide, sulfur dioxide, total suspended particulates, ozone, and lead. Environmental regulations in the non-attainment counties were intended to be stringent, while polluting plants located in attainment areas face a more lax regulatory standard (p. 7, 8).

  9. 9.

    They found negative effects in regulations governing ozone, particulates, and sulfur dioxide, while carbon monoxide regulations were found to be positively associated with productivity.

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  1. Jindal Global Law School, O.P. Jindal Global University, Sonipat, Haryana, India

    Ashish Bharadwaj

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Bharadwaj, A. (2018). Environment, Health, and New Technologies. In: Environmental Regulations and Innovation in Advanced Automobile Technologies. SpringerBriefs in Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-6952-9_3

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