Do pollution abatement expenditures lead to higher productivity growth? Evidence from Greek manufacturing industries

Several environmental concerns are not in favour of Greece’s sustainable future growth while the implementation of differential environmental policies to appoint the Kyoto protocol’s directives requires firms to balance their capital expenditures and operating costs to pollution abatement initiatives. This paper examines the impact of pollution abatement costs of Greek manufacturing over the period 1993–2006 using an industry-level balanced panel. Empirical results indicate that pollution abatement costs have no significant effect on the productivity of Greek manufacturing industries, on a yearly basis, providing no support on the Porter hypothesis stating that stricter environmental regulation triggers industrial productivity. However, significant changes are observed between energy intensive and energy consuming industries with pollution abatement efforts.