Anatomy of Green Specialization: Evidence from EU Production Data, 1995-2015 : Evidence from EU Production Data, 1995-2015
Sciences Po OFCE working paper
Paris : OFCE
Sciences Po OFCE working paper : 21
Green goods, Green specialization, Revealed comparative advantage, Complementarity, Path dependency
We study green specialization across EU countries and detailed 4-digit industrial sectors over the period of 1995-2015 by harmonizing product-level data (PRODCOM). We propose a new list of green goods that refines lists proposed by international organizations by excluding goods with double usages. Our exploratory analysis reveals important structural properties of green specialization. First, green production is highly concentrated, with 13 out of 119 4-digit industries accounting for 95% of the total. Second, green and polluting productions do not occur in the same sectors, and countries tend to specialize in either green or brown sectors. This suggests that the distributional effect of European environmental policies can be large. Third, green specialization is highlypath dependent, but it is also reinforced by the presence of non-green capabilities within the same sector. This helps explain why economies with better engineering and technical capabilities have built a comparative advantage in green production.