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Factors Influencing the Decline of Manufacturing Pollution in the European Union: A Study of Productivity, Environmental Regulations, Expenditure, and Trade Costs

Author

Listed:
  • Sahar Amidi

    (Université d'Orléans)

  • Rezgar Feizi

    (University of Luxembourg)

Abstract

This paper investigates how various factors affect pollution levels in Europe’s manufacturing industry. The paper explores how productivity, expenditure share, trade cost, and environmental regulations affect pollution levels in Europe’s manufacturing industry. The World Input-Output Database provides data on global and local pollution for each industrial sector solely for the period ranging from 1995 to 2009. We use a general equilibrium model and quantitative trade model that considers pollution as a byproduct of production. The study aims to examine the effectiveness of regulations and control for the primary causes of environmental pollution (the main causes). Our empirical results reveal that air pollution emissions from EU manufacturing decreased by 33.21 percent despite an 85.44 percent increase in real manufacturing output. This outcome could provide evidence for the role of reducing the pollution contamination of manufacturing. The study finds that most of the decrease in emissions can be ascribed to changes in environmental regulations, rather than changes in expenditure share, trade cost, and productivity. Increasing environmental regulations by 20 percent can eliminate emissions intensity. After increasing environmental regulations by 20%, the emission of global pollutants such as methane decreased by 17.27% in 2009.

Suggested Citation

  • Sahar Amidi & Rezgar Feizi, 2024. "Factors Influencing the Decline of Manufacturing Pollution in the European Union: A Study of Productivity, Environmental Regulations, Expenditure, and Trade Costs," Working Papers 2024.10, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2024.10
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    References listed on IDEAS

    as
    1. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    2. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    3. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    4. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    5. Duan, Yuwan & Ji, Ting & Lu, Yi & Wang, Siying, 2021. "Environmental regulations and international trade: A quantitative economic analysis of world pollution emissions," Journal of Public Economics, Elsevier, vol. 203(C).
    6. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
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    Cited by:

    1. Oana-Ramona Lobonț & Ana-Elena Varadi & Sorana Vătavu & Nicoleta-Mihaela Doran, 2025. "Bridges or Barriers? Unpacking the Institutional Drivers of Business Climate Adaptation in the EU," Sustainability, MDPI, vol. 17(11), pages 1-20, May.

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    More about this item

    Keywords

    Environmental account and accounting; environmental taxes; general equilibrium model; productivity; quantitative model; technological innovation; trade cost;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

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