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Total Factor Productivity Growth and the Environment: A Case for Green Growth Accounting

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  • Anastasios Xepapadeas

    (University of Crete)

  • E. Tzouvelekas

    (University of Crete)

  • D. Vouvaki

    (University of Crete)

Abstract

We examine whether the use of the environment, proxied by CO2 emissions, as a factor of production contributes, in addition to conventional factors of production to output growth, and thus it should be accounted for in total factor productivity growth (TFPG) measurement and deducted from the .residual. A theoretical framework of growth accounting methodology with environment as a factor of production which is unpaid in the absence of environmental policy is developed. Using data from a panel of 23 OECD countries, we show that emissions. growth have a statistically significant contribution to the growth of output, that emission augmenting technical change is present along with labor augmenting technical change, and that part of output growth which is traditionally attributed to technical change should be attributed to the use of the environment as a not fully compensated factor of production. Our results point towards the need for developing a concept of "Green Growth Accounting".

Suggested Citation

  • Anastasios Xepapadeas & E. Tzouvelekas & D. Vouvaki, 2007. "Total Factor Productivity Growth and the Environment: A Case for Green Growth Accounting," Working Papers 2007.38, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2007.38
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    Cited by:

    1. Pantelis Kalaitzidakis & Theofanis P. Mamuneas & Thanasis Stengos, 2008. "The Contribution of Pollution to Productivity Growth," Working Paper series 06_08, Rimini Centre for Economic Analysis.
    2. Everett, Tim & Ishwaran, Mallika & Ansaloni, Gian Paolo & Rubin, Alex, 2010. "Economic growth and the environment," MPRA Paper 23585, University Library of Munich, Germany.
    3. Vouvaki, Dimitra & XEPAPADEAS, Anastasios, 2008. "Total Factor Productivity Growth when Factors of Production Generate Environmental Externalities," MPRA Paper 10237, University Library of Munich, Germany.
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    6. Xie, Rui & Yao, Siling & Han, Feng & Zhang, Qi, 2022. "Does misallocation of land resources reduce urban green total factor productivity? An analysis of city-level panel data in China," Land Use Policy, Elsevier, vol. 122(C).
    7. Yanqing Jiang, 2015. "Foreign Direct Investment, Pollution, and the Environmental Quality: A Model with Empirical Evidence From the Chinese Regions," The International Trade Journal, Taylor & Francis Journals, vol. 29(3), pages 212-227, August.
    8. Shiyi Chen, 2009. "Engine or drag: Can high energy consumption and CO 2 emission drive the sustainable development of Chinese industry?," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(4), pages 548-571, December.
    9. Wanping Yang & Jinkai Zhao, 2018. "Sources of China’s Economic Growth: A Case for Green Accounting," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 8(2), pages 1-3.
    10. Karl-Göran Mäler, 2007. "Wealth and sustainable development: the role of David Pearce," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 63-75, May.
    11. Lal, Amant, 2009. "An Empirical Time Series Model of Economic Growth and Environment," MPRA Paper 66475, University Library of Munich, Germany.
    12. Pantelis Kalaitzidakis. & Theofanis P. Mamuneas. & Thanasis Stengos., 2008. "The Contribution of Greenhouse Pollution to Productivity Growth," Working Papers 0802, University of Guelph, Department of Economics and Finance.
    13. Partha Dasgupta, 2009. "The Welfare Economic Theory of Green National Accounts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 3-38, January.
    14. Karl-Göran Mäler, 2008. "Sustainable Development and Resilience in Ecosystems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(1), pages 17-24, January.
    15. Maxime MENUET & Alexandru MINEA & Patrick VILLIEU & Anastasios XEPAPADEAS, 2021. "Growth, Endogenous Environmental Cycles, and Indeterminacy," LEO Working Papers / DR LEO 2889, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    16. Neophyta Empora & Theofanis Mamuneas, 2011. "The Effect of Emissions on U.S. State Total Factor Productivity Growth," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 3(2), pages 149-172, October.
    17. Pantelis Kalaitzidakis & Theofanis P. Mamuneas & Thanasis Stengos, 2018. "Greenhouse Emissions and Productivity Growth," JRFM, MDPI, vol. 11(3), pages 1-14, July.
    18. Neophyta Empora, 2017. "Air pollution spillovers and U.S. state productivity growth," University of Cyprus Working Papers in Economics 06-2017, University of Cyprus Department of Economics.
    19. Wanping Yang & Jinkai Zhao, 2018. "Study On China’S Economic Development From The Perspective Of Strong Sustainability," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 161-192, April.

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    More about this item

    Keywords

    Solow Residual; Total Factor Productivity Growth; Growth; Environment; Green Growth Accounting;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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