The objective of this study is to analyze the role of environmental policy in the industrial environmental innovation. Many studies have regarded environmental policy as one of the crucial factors for inducing environmental innovation; especially famo...
The objective of this study is to analyze the role of environmental policy in the industrial environmental innovation. Many studies have regarded environmental policy as one of the crucial factors for inducing environmental innovation; especially famous is the Porter Hypothesis which states, "by stimulating innovation, strict environmental regulation can actually enhance industrial competitiveness." However, few studies have analyzed the role of environmental policy in relation to environmental innovation. To analyze the Porter Hypothesis, descriptive trend analysis is proposed for testing. In order to quantify the environmental innovation, I used the environmental innovation ratio(number of environmental patent/number of total patent) by industrial type as one variable. The other variable are environmental policy ratio(pollution abatement and control expenditure/total facility investment cost) by industrial type. For the analyses, data for 7 types of industry from 1992 to 1999 are used. The implication from the analysis is as follows: the elasticity according to the environmental policy is different according to the industrial types. Industries with high elasticity are paper products printing and publishing and basic metal industries. These types of industry have many environmental patents as environmental policy is getting more stringent. From these results, selective regulation according to type of industry is necessary. The innovation-friendly environmental policy is more and more important and mutual cooperation of government and industry is essential for implementing this policy.