Abstract
There is growing evidence that resource efficiency can be beneficial for boosting competitiveness and mitigating climate change. However, the majority of relevant studies either rely on case studies or suffer from methodological shortcomings. This chapter critically reviews the existing evidence base on the effects of resource efficiency on (firm and country level) competitiveness and climate change mitigation objectives. The concept of competitiveness is reviewed in detail followed by a discussion on the channels linking resource efficiency, competitiveness, and climate change. Furthermore, this chapter describes new empirical evidence on the effects of resource efficiency on competitiveness and greenhouse gas (GHG) emissions at the country and firm level in the European Union. The results provide a nuanced picture. On the one hand, there appears to be only limited evidence for a link at the country level. On the other hand, particular firms that have increased their resource efficiency as a result of investments in eco-innovations can realise positive competitiveness effects and simultaneously reduce their GHG emissions. This suggests that resource efficiency investments can reconcile competitiveness with climate change mitigation objectives for certain firms, in particular those that invested in eco-innovations. Important policy insights can be distilled from these results, including that not all firms are likely to benefit from resource efficiency improvements, and that investments in eco-innovations can play a crucial role in bringing about the resource transition.
This chapter benefited from collaborative work and analytical support by Martin Kornejew and is based on:
Flachenecker, Florian (2018). The causal impact of material productivity on macroeconomic competitiveness in the European Union. Environmental Economics and Policy Studies 20(1):17– 46. doi: https://doi.org/10.1007/s10018-016-0180-3
Flachenecker, Florian and Kornejew, Martin (2018). The causal impact of material productivity on microeconomic competitiveness and environmental performance in the European Union.Environmental Economics and Policy Studies [in print]. https://doi.org/10.1007/s10018-018-0223-z
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Notes
- 1.
This has previously been discussed in the literature as the Kaldor paradox which originates from relative unit labour costs being positively correlated with the relative market share of manufacturing exports (Kaldor 1978). Hence, Kaldor (1978) questioned “the relative importance of price (or cost?) competition, as against other ‘non-price’ factors, such as superiority of design or quality, length and reliability of delivery dates, after-sales service, etc.”
- 2.
Porter (1990) identifies four factors. First, factor conditions such as labour, capital, land, resources, highly-specialised skills, and infrastructure, which determine which goods and services a country specialises in and how competitive they can be supplied to the market. Second, demand conditions, which describes the sophistication of domestic demand and is positively linked to competitiveness. Third, related and supported industries, including the strength, proximity and specialisation of the domestic supplier industry to increase the likelihood of innovation spill-overs (due to proximity, clusters, networks, preferential treatment). Fourth, firm strategy, structure, and rivalry, which emphasises the importance of the legislative environment, the creation, organisation, and management of firms as well as the level of competition in the market.
- 3.
At the same time, Bleischwitz (2005) argues that institutions face a trade-off between setting rules, which can decrease transaction costs and lead to an efficient allocation of resources, and the cost of setting up and maintaining institutions as well as the costs of ‘over-regulation’, for instance when outdated regulation impedes technological progress.
- 4.
- 5.
Thompson (2003) criticises competitiveness indices (and thus the GCI) on four grounds: (i) content validity (methodologies and underlying indicators changes over time), (ii) convergent validity (correlation across different indicators is high suggesting that they all measure similar aspects, but not necessarily competitiveness), (iii) weighting and nature of variables (weights of indicators are arbitrary), and (iv) methodology (the data is not transparently described). Lee (2010) argues that the problem is the lack of theoretical and empirical foundation for using individual sub-indicators. Pérez-Moreno et al. (2015) points to the problem of total substitutability across and within the GCI’s 12 pillars, as the index is aggregated using the arithmetic mean.
- 6.
The analysis has also been tested using the following indicators as dependent variables: exports per capita, exports of high-technology goods and services per capita, a price competitiveness measure from the European Central Bank, patent application per capita, foreign direct investments, and labour productivity.
- 7.
- 8.
See for example the EU’s small business portal (http://ec.europa.eu/small-business/finance/index_en.htm; last accessed on 1 November 2016), initiatives of national chambers of commerce and development banks.
- 9.
The harmonised survey questionnaire of the CIS 2008 can be accessed via (last accessed on 22 March 2017) http://ec.europa.eu/eurostat/documents/203647/203701/CIS_Survey_form_2008.pdf
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Flachenecker, F. (2018). The Effects of Resource Efficiency on Competitiveness and Climate Change Mitigation: The Role of Investments. In: Flachenecker, F., Rentschler, J. (eds) Investing in Resource Efficiency. Springer, Cham. https://doi.org/10.1007/978-3-319-78867-8_7
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DOI: https://doi.org/10.1007/978-3-319-78867-8_7
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