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Green productivity evolution under non-convex environmental technology

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Abstract

Most of empirical studies assume convex production technology to analyze productivity growth at the aggregate level. However, convexity assumption implies benchmarking against production plans that are not empirically observed. Unlike previous studies, we adopt a non-convex approach based on observed input–output combinations, which requires minimal assumptions in terms of production technology. Incorporating energy and carbon emissions into the production function, this paper investigates green growth and its driving forces among 39 European countries over 1991–2019. A by-production technology is applied alongside the environmental Luenberger-Hicks-Moorsteen (LHM) productivity indicator and directional distance functions. The results show that the production technology has been expanding (i.e., technical progress), whereas scale inefficiency led to the negative green total factor productivity (TFP) growth in Europe. At the group level, green TFP in OECD countries tends to increase, whereas a sharp decline is observed for non-OECD countries. Furthermore, we note that human capital, R&D intensity, energy consumption structure, and urbanization level all have significant positive impacts on green TFP growth in Europe, especially for non-OECD countries. The corresponding policy implications are derived to promote regional cooperation and technology sharing.

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Data will be made available on request.

Notes

  1. 91/565/EEC: Council Decision of 29 October 1991 concerning the promotion of energy efficiency in the Community.

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Acknowledgements

This research was supported by the National Natural Science Foundation of China (71973011 and 72104028).

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Authors and Affiliations

  1. School of Management and Economics, Beijing Institute of Technology, Beijing, 100081, China

    Jinyang Cai & Xingyu Xu

  2. Yangtze Delta Region Academy, Beijing Institute of Technology, Jiaxing, 314001, China

    Jinyang Cai

  3. Lithuanian Centre for Social Sciences, A. Vivulskio G. 4A-13, 03220, Vilnius, Lithuania

    Tomas Balezentis & Z. Y. Shen

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  1. Jinyang Cai
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  2. Xingyu Xu
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  4. Z. Y. Shen
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Contributions

Cai J. and Xu X. contribute equally to this paper and share the first co-authorship. Introduction and Literature review, Cai J. and Xu X.; Method and data, Cai J. and Shen Z.Y.; Empirical results and discussion, Cai J. and Balezentis T.; Conclusions and discussions, Shen Z.Y. and Xu X.; Writing–Original Draft Preparation, Xu X.; Writing–Review and Editing, Balezentis T. and Shen Z.Y. All authors have read and agreed to the published version of the manuscript.

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Correspondence to Z. Y. Shen.

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Highlights

• The free disposal hull is adopted to construct best practice frontier.

• Green total factor productivity of European countries is calculated using LHM indicator.

• Human capital has an impact on green total factor productivity in Europe.

• Green total factor productivity is different between OECD and non-OECD countries.

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Cai, J., Xu, X., Balezentis, T. et al. Green productivity evolution under non-convex environmental technology. Energy Efficiency 16, 59 (2023). https://doi.org/10.1007/s12053-023-10136-2

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