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Research Papers to Download

Claudio Baccianti and Andreas Löschel, The Role of Product and Process Innovation in CGE Models of Environmental Policy. WWWforEurope Working Paper No. 68, October 2014

Georg Licht and Bettina Peters, Do Green Innovations stimulate Employment? – Firm-level Evidence From Germany. WWWforEurope Working Paper No. 53, February 2014

Georg Licht and Bettina Peters, The Impact of Green Innovation on Employment Growth in Europe. WWWforEurope Working Paper No. 50, December 2013

Philip Amison and David Bailey, Industrial diversity and innovation spillovers: dynamic innovation and adoption. WWWforEurope Working Paper No. 45, November 2013

Watch online

Watch Reinhilde Veugelers' WWWforEurope Lecture "What policies for ecological transition? Powering the green innovation machine" online.

Green innovation: win situations on all sides

Europe’s future lies in knowledge and innovation. This has been recognised at least since the Lissabon Process in 2000. But surprisingly, innovation is still a little bit of a black hole in economic modelling.

Innovation takes place in manufacturing and in the service sector, it can pertain to products (new offers on the market) or to processes (making the production of known products more efficient).

Claudio Baccianti and Andreas Löschel show in their paper "The Role of Product and Process Innovation in CGE Models of Environmental Policy", that General Equilibrium models incorporate innovation usually as process innovation, by increasing productivity. Firm heterogeneity and new products on the market are, on the other hand, foreign bodies in mainstream modelling. Here, some research is still needed.

There has always existed a fear that innovation means job losses. Since the Luddites the impression that new processes and new products might endanger jobs has not vanished. And nowadays, fears persist, that stronger environmental regulation and higher standards might also lead to job losses. Are these fears legitimate? And how are green innovations different from others?

In a WfE lecture on September 24th, 2014, Reinhilde Veugelers spoke on "What Policies for Ecological Transition? Powering the Green Machine". She stressed that for keeping the costs of mitigation and adaptation to climate change manageable we need a wide range of green technologies soon. But she also sees that green innovations are only a very small share in patents. So governments will have to act – and it is advisable to offer an intelligent combination of both carbon pricing (respectively stricter regulation) and subsidies for green innovation. Both of these instruments are much more effective and cheaper in combination than alone. undefinedWatch the full lecture.

Georg Licht and Bettina Peters point to the fact that just by counting patents green innovation is massively underestimated in their paper "Do Green Innovations Stimulate Employment?". Licht and Peters have already shown in their previous paper "The Impact of Green Innovation on Employment Growth in Europe" that innovative products stimulate employment growth. In their newest paper they look at this question in detail on firm level in Germany. And they show that there is no significant difference between green or non-green innovations, neither in products nor in processes, neither in manufacturing nor in services. For all kinds of innovation it is valid to say that innovation creates jobs. In the converse argument that means that policies incentivising green innovation (eg by defining stricter standards) would not lead to employment losses.

And who are the innovators? In "Industrial Diversity and Innovation Spillovers", Philip Amison and David Bailey show that former traditional industrial areas can become more innovative (and therefore more competitive) when there is interaction between smaller and larger firms. These innovative clusters have to specialise smartly: diverse enough to stay open to innovation and specialised enough to create an USP. Not only does this spur innovation in the economy as a whole, but it also increases regional resiliencies.