Eco-efficiency convergence and technology spillovers of European industries

European policies regarding global warming have been outspread the last few decades with many initiatives focusing on industrial production process. In this paper we model eco-efficiency (ECOE) performance under a metafrontier (MF) framework for 14 industries of the manufacturing sector from 27 European countries over the 1995-2011 period. The utilization of NOx, SOx, CO2, CH4, N2O, CO, NMVOC and NH3 as undesirable outputs represent the impact of industrial activities on the environment. In a first stage, we estimate eco-efficiency using a conventional Directional Distance Function (DDF) as well as a non-radial slack-based DDF (DDFS) approach. In the second stage of our analysis, we investigate the existence of conditional and unconditional convergence by employing several methodologies. Our results point out that heavy industries perform eco-inefficiently. In addition, our results support the non-convergence hypothesis and the creation of discrete clubs with uneven characteristics when the distributional dynamics approach and the recent approach of Phillips and Sul (PS) come into play. Finally, the establishment of a catch-up index indicate that technological spillovers do exist but with a small effect.

Automated summary

This study models eco-efficiency performance in the manufacturing sector of 27 European countries over a period of 1995-2011. Results indicate that heavy industries perform eco-inefficiently, while technological spillovers do exist but have a small effect.