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Green Industrial Policy in Emerging Markets


  • Ann Harrison

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Leslie A. Martin

    (Department of Economics, University of Melbourne, Parkville, Victoria 3010, Australia)

  • Shanthi Nataraj

    (RAND Corporation, Santa Monica, California 90401)


In this review, we discuss the challenges and opportunities associated with implementing green industrial policy in developing countries. These policies promote industries that produce green technologies and encourage traditional industries to produce goods and services in greener ways. We describe the experience in some emerging markets of voluntary programs to reduce emissions. Contrasting India and China's efforts to promote their solar photovoltaic industries, we also discuss the relative efficiency of promoting deployment versus promoting R&D. We also warn against expecting too much from policies that encourage renewables while governments simultaneously subsidize fossil fuels. The review discusses the potential of hybrid policies that combine command-and-control regulations targeted at the intensive margin for the largest polluters with market-based incentives that widen the reach of environmental regulations. We conclude with a discussion of how dismantling tariffs and facilitating foreign direct investment, ostensibly for nonenvironmental reasons, can have important environmental consequences.

Suggested Citation

  • Ann Harrison & Leslie A. Martin & Shanthi Nataraj, 2017. "Green Industrial Policy in Emerging Markets," Annual Review of Resource Economics, Annual Reviews, vol. 9(1), pages 253-274, October.
  • Handle: RePEc:anr:reseco:v:9:y:2017:p:253-274
    DOI: 10.1146/annurev-resource-100516-053445

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    Cited by:

    1. Zhu, Zhaohui & Tan, Yafei, 2022. "Can green industrial policy promote green innovation in heavily polluting enterprises? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 59-75.
    2. Avenyo, Elvis Korku & Tregenna, Fiona, 2022. "Greening manufacturing: Technology intensity and carbon dioxide emissions in developing countries," Applied Energy, Elsevier, vol. 324(C).
    3. Mike Morris & Glen Robbins & Ulrich Hansen & Ivan Nygard, 2022. "The wind energy global value chain localisation and industrial policy failure in South Africa," Journal of International Business Policy, Palgrave Macmillan, vol. 5(4), pages 490-511, December.
    4. Hamed, Mohammad M. & Mohammed, Ali & Olabi, Abdul Ghani, 2023. "Renewable energy adoption decisions in Jordan's industrial sector: Statistical analysis with unobserved heterogeneity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    5. Li Song & Xiaoliang Zhou, 2021. "Does the Green Industry Policy Reduce Industrial Pollution Emissions?—Evidence from China’s National Eco-Industrial Park," Sustainability, MDPI, vol. 13(11), pages 1-22, June.
    6. Isabella Tamine Parra Miranda & Juliana Moletta & Bruno Pedroso & Luiz Alberto Pilatti & Claudia Tania Picinin, 2021. "A Review on Green Technology Practices at BRICS Countries: Brazil, Russia, India, China, and South Africa," SAGE Open, , vol. 11(2), pages 21582440211, May.
    7. Shen, Wei & Ayele, Seife & Worako, Tadesse Kuma, 2023. "The political economy of green industrial policy in Africa: Unpacking the coordination challenges in Ethiopia," Energy Policy, Elsevier, vol. 179(C).
    8. Edward B. Barbier, 2020. "Greening the Post-pandemic Recovery in the G20," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 685-703, August.
    9. Honma, Satoshi & Ushifusa, Yoshiaki & Okamura, Soyoka & Vandercamme, Lilu, 2023. "Measuring carbon emissions performance of Japan's metal industry: Energy inputs, agglomeration, and the potential for green recovery reduction," Resources Policy, Elsevier, vol. 82(C).
    10. Daquan Gao & Christina W. Y. Wong & Kee-hung Lai, 2023. "Development of Ecosystem for Corporate Green Innovation: Resource Dependency Theory Perspective," Sustainability, MDPI, vol. 15(6), pages 1-28, March.
    11. Dalia Fadly, 2020. "Greening Industry in Vietnam: Environmental Management Standards and Resource Efficiency in SMEs," Sustainability, MDPI, vol. 12(18), pages 1-27, September.
    12. Chen, Tianqi & Zhang, Yi & Jiang, Cailou & Li, Hui, 2023. "How does energy efficiency affect employment? Evidence from Chinese cities," Energy, Elsevier, vol. 280(C).
    13. Jianfei Zhao & Anan Pongtornkulpanich & Wenjin Cheng, 2022. "The Impact of Board Size on Green Innovation in China’s Heavily Polluting Enterprises: The Mediating Role of Innovation Openness," Sustainability, MDPI, vol. 14(14), pages 1-20, July.

    More about this item


    green subsidies; clean technologies; renewable energy; environmental regulation; tariffs;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics


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