Within the last few years, the impact of governmental greenhouse gas emission control regulation on national competitiveness and growth potentials faced increasing interest among economists. The main concern is that regulation increases domestic costs of greenhouse gas-intensive production and therefore shifts pollution intensive production in emerging and developing countries that adopted less stringent regulation, the so called pollution havens. This development is expected to lower domestic competitiveness and growth potential while increasing greenhouse gas intensity of production abroad. This effect is referred to as the so called carbon leakage effect. (Endogenous) Technical change can reduce this problem as it can provide technologies that use polluting input factors less intensive or even not at all. If the climate policy fails to direct technical change toward cleaner technologies, pollution intensive production can in part be relocated into pollution haven countries. In this case, climate policy induces structural change that becomes obvious as changes in the patterns of international trade, which in turn has very different effects on economic growth in the countries involved.Although some research on the relationship of climate policy, economic growth, structural change, and international trade is done, only little empirical evidence on these issues exists. Therefore, the aim of this project was to provide a contribution the empirical research. In the joint research project including the Potsdam Institute for Climate Impact Research (PIK), the University of Bielefeld, and the Leipzig Graduate School of Management (HHL), the ZEW was involved in setting up a joint database and in its application using econometric and numeric approaches. The project was funded within the research program “economics of climate change” by the German ministry of education and science (BMBF).
Bundesministerium für Bildung und Forschung
01.09.2011 - 30.11.2014