Skip to main content
SpringerLink
Log in

Pro-industry Policies, Sustainability, and Industrial Growth

Industrial Policy and Sustainable Growth

Part of the book series: Sustainable Development ((SD))

  • 77 Accesses

Abstract

This study examines how pro-industry policies and environmental sustainability relate to industrial growth in countries with varying environmental records using a large panel dataset on 104 developing and developed countries over the period 2002–2012. Employing both the conditional and unconditional quantile regression estimators as well as the fixed effects panel estimator, the study finds that pro-industry policies in the form of improved legal and property rights, favorable trade, and business environments are associated with higher industrial growth and development. In line with the so-called Porter hypothesis, the findings indicate that a high environmental performance is indeed consistent with industrial development. In addition, the results show that pro-industry policies and environmental sustainability are substitutes rather than complements in their effect on industry. The study identifies some important policy measures which policy-makers could undertake to make the two complementary in their effect on industrial growth.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

References

  • Acemoglu D, Johnson S, Robinson J, Thaicharoen Y (2003) Institutional causes, macroeconomic symptoms: volatility, crises and growth. J Monet Econ 50(1):49–123

    Article  Google Scholar 

  • Agénor PR, Alpaslan B (2014) Infrastructure and industrial development with endogenous skill acquisition. Centre for Growth and Business Cycle Research Discussion Paper, 195

    Google Scholar 

  • Agénor PR, Dinh HT (2013) Public policy and industrial transformation in the process of development. World Bank Policy Research Working Paper, 6405

    Google Scholar 

  • Albrecht JA (1998) Environmental costs and competitiveness. A product-specific test of the porter hypothesis. University of Ghent, 98/50

    Google Scholar 

  • Ali A (2013) Are property rights institutions and financial development complements or substitutes? The case of private investment. Econ Bull 33(2):1126–1131

    Google Scholar 

  • Alpaslan B, Ali A (2016) The spillover effects of innovative ideas on human capital. CAMA, Australian National University Working Paper, 59/2016

    Google Scholar 

  • Bernard AB, Eaton J, Jensen JB, Kortum S (2003) Plants and productivity in international trade. Am Econ Rev 93(4):1268–1290

    Article  Google Scholar 

  • Buera FJ, Kaboski JP (2012) Scale and the origins of structural change. J Econ Theory 147(2):684–712

    Article  Google Scholar 

  • Dechezleprêtre A, Sato M (2014) The impacts of environmental regulations on competitiveness. Policy Brief, Grantham Research Institute on Climate Change and the Environment, LSE

    Google Scholar 

  • Delgado M, Ketels C, Porter ME, Stern S (2012) The determinants of national competitiveness, NBER Working Paper, 18249

    Google Scholar 

  • Dinh HT (2014) The practice of industrial policy – lessons for Africa. KOICA Work Pap 2014(6):1–34

    Google Scholar 

  • Easterly W, Levine R (2001) What have we learned from a decade of empirical research on growth? It’s not factor accumulation: stylized facts and growth models. World Bank Econ Rev 15(2):177–219

    Article  Google Scholar 

  • Easterly W, Rebelo S (1993) Fiscal policy and economic growth. J Monet Econ 32(3):417–458

    Article  Google Scholar 

  • Emerson JW, Hsu A, Levy MA, de Sherbinin A, Mara V, Esty DC, Jaiteh M (2012) Environmental performance index and pilot trend environmental performance index. Yale Center for Environmental Law and Policy, New Haven

    Google Scholar 

  • Fafchamps M, El Hamine S, Zeufack A (2008) Learning to export: evidence from Moroccan manufacturing. J Afr Econ 17(2):305–355

    Article  Google Scholar 

  • Firpo S, Fortin NM, Lemieux T (2009) Unconditional quantile regressions. Econometrica 77(3):953–973

    Article  Google Scholar 

  • Fischer S (1993) The role of macroeconomic factors in growth. J Monet Econ 32(3):485–512

    Article  Google Scholar 

  • Frölich M, Melly B (2013) Unconditional quantile treatment effects under endogeneity. J Bus Econ Stat 31(3):346–357

    Article  Google Scholar 

  • Haggard S, Zheng Y (2006) Institutional innovation and private Investment in Taiwan. World Bank Group, FIAS, Washington, DC

    Google Scholar 

  • Hausmann R, Hwang J, Rodrik D (2007) What you export matters. J Econ Growth 12(1):1–25

    Article  Google Scholar 

  • Herrendorf B, Rogerson R, Valentinyi A (2013) Growth and structural transformation. In: Philippe Aghion P, Durlauf D (eds) Handbook of economic growth, vol 2B. Elsevier, Amsterdam

    Google Scholar 

  • Huang H-C, Fang W, Miller SM (2014) Banking market structure, liquidity needs, and industrial growth volatility. J Empir Financ 26:1–12

    Article  Google Scholar 

  • Hulten CR (2001) TFP: a short biography. In: New developments in productivity analysis. University of Chicago Press for NBER, Chicago

    Chapter  Google Scholar 

  • Isaksson A (2010) Public capital, infrastructure and industrial development. UNIDO Research and Statistics Branch Working paper 15/2009, Vienna

    Google Scholar 

  • Kaldor N (1966) Causes of the slow rate of economic growth of the United Kingdom. Cambridge University Press, Cambridge

    Google Scholar 

  • King AA, Lenox MJ (2001) Does it really pay to be green? An empirical study of firm environmental and financial performance. J Ind Ecol 5(1):105–116

    Article  Google Scholar 

  • Kniivilä M (2008) Industrial development and economic growth: implications for poverty reduction and income inequality. In: O’Connor D, Kjöllerström M (eds) Industrial development in the 21st century. Zed Books, London

    Google Scholar 

  • Koenker R, Bassett G Jr (1978) Regression Quantiles. Econometrica 46(1):33–50

    Article  Google Scholar 

  • Lanoie P, Laurent-Lucchetti J, Johnstone N, Ambec S (2011) Environmental policy, innovation and performance: new insights on the Porter hypothesis. J Econ Manag Strategy 20(3):803–842

    Article  Google Scholar 

  • Levine R (1997) Financial development and economic growth: views and agenda. J Econ Lit 35(2):688–726

    Google Scholar 

  • Lewis WA (1954) Economic development with unlimited supplies of labour. Manch Sch 22(2):139–191

    Article  Google Scholar 

  • Lin JY, Sun X, Wu HX (2015) Banking structure and industrial growth: evidence from China. J Bank Financ 58:131–143

    Article  Google Scholar 

  • Lucas RE (1988) On the mechanics of economic development. J Monet Econ 22(1):3–42

    Article  Google Scholar 

  • Meyer SM (1992) Environmentalism and economic prosperity: testing the environmental impact hypothesis. Massachusetts Institute of Technology, Project on Environmental Politics and Policy, Cambridge

    Google Scholar 

  • Mitchener KJ, Wheelock DC (2013) Does the structure of banking markets affect economic growth? Evidence from US state banking markets. Explor Econ Hist 50(2):161–178

    Article  Google Scholar 

  • North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Porter M (1991) America’s green strategy. Sci Am 264(4):168

    Article  Google Scholar 

  • Reid A, Miedzinski M (2008) Sectoral innovation watch in Europe – eco-innovation. Europe Innova, Brussels

    Google Scholar 

  • Rodrik D, Subramanian A, Trebbi F (2004) Institutions rule: the primacy of institutions over geography and integration in economic development. J Econ Growth 9(2):131–165

    Article  Google Scholar 

  • Romer PM (1986) Increasing returns and long-run growth. J Polit Econ 94(5):1002–1037

    Article  Google Scholar 

  • Sachs J (2008) Common wealth: economics for a crowded planet. Penguin, New York

    Google Scholar 

  • Svensson J (1998) Investment, property rights and political instability: theory and evidence. Eur Econ Rev 42(7):1317–1341

    Article  Google Scholar 

  • UNIDO and UNCTAD (2011) Economic development in Africa – fostering industrial development in Africa in the new global environment. United Nations, New York

    Google Scholar 

  • Unruh GC (2000) Understanding Carbon Lock-in. Energy Policy 28(12):817–830

    Article  Google Scholar 

  • Uy T, Yi KM, Zhang J (2013) Structural change in an open economy. J Monet Econ 60(6):667–682

    Article  Google Scholar 

  • Vandenbussche J, Aghion P, Meghir C (2006) Growth, distance to frontier and composition of human capital. J Econ Growth 11(2):97–127

    Article  Google Scholar 

  • Vaona A (2012) Inflation and growth in the long run: a new Keynesian theory and further semiparametric evidence. Macroecon Dyn 16(1):94–132

    Article  Google Scholar 

  • Wells H, Thirlwall AP (2003) Testing Kaldor’s growth Laws across the countries of Africa. Afr Dev Rev 15(2–3):89–105

    Article  Google Scholar 

  • World Bank (1993) The East Asian miracle: economic growth and public policy. Oxford University Press, New York

    Google Scholar 

  • World Bank (2016) World Development Indicators 2016. Washington, DC

    Google Scholar 

  • Yülek M (2015) Revisiting national economic planning and industrial policy: concepts, experiences and the ecosystem. In: Yülek M (ed) Economic planning and industrial policy in the globalizing economy. Springer International Publishing, New York, pp 3–27

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Aberystwyth Business School, Aberystwyth University, Aberystwyth, UK

    Abdilahi Ali

  2. Faculty of Political Sciences, Ankara Yildirim Beyazit University, Ankara, Turkey

    Bariş Alpaslan

Authors
  1. Abdilahi Ali
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Bariş Alpaslan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Abdilahi Ali .

Editor information

Editors and Affiliations

  1. Istanbul Commerce University , İstanbul, Turkey

    Murat Yülek

Appendix

Appendix

Table A1 List of countries
Full size table
Table A2 Sources, definition, and summary statistics of variables
Full size table

Rights and permissions

Reprints and permissions

Copyright information

© 2017 Springer Nature Singapore Pte Ltd.

About this entry

Cite this entry

Ali, A., Alpaslan, B. (2017). Pro-industry Policies, Sustainability, and Industrial Growth. In: Yülek, M. (eds) Industrial Policy and Sustainable Growth. Sustainable Development . Springer, Singapore. https://doi.org/10.1007/978-981-10-3964-5_8-1

Download citation

  • DOI: https://doi.org/10.1007/978-981-10-3964-5_8-1

  • Received:

  • Accepted:

  • Published:

  • Publisher Name: Springer, Singapore

  • Print ISBN: 978-981-10-3964-5

  • Online ISBN: 978-981-10-3964-5

  • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

Publish with us

Policies and ethics

Chapter history

  1. Latest

    Pro-industry Policies, Sustainability, and Industrial Growth
    Published:
    22 June 2017

    DOI: https://doi.org/10.1007/978-981-10-3964-5_8-2

  2. Original

    Pro-industry Policies, Sustainability, and Industrial Growth
    Published:
    15 May 2017

    DOI: https://doi.org/10.1007/978-981-10-3964-5_8-1

Search

Navigation