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Enterprise investment in environment protection means traditionally are seen as a burden induced by environmental policy. It is claimed that these investments do not support increase in output and productivity and rise production costs. Environmental investments directed to reduce abatement cost may not produce the productivity growth effect if the productivity gain do not outweigh the increase in abatement cost. Though environmental investments of firms are seen as less productive allocations, strong version of the Porter Hypothesis implies that investments to production process innovation, induced by environmental policy requirements, might lead to extra profits, which can exceed the cost of investment. Enterprise' investment to innovations related to environment protection, targeted to the production processes, technologies, activities and product design are likely to improve profitability and competitiveness of the firm due to the production cost savings and product improvements. Empirical evidence on the effect of environmental investments on productivity is inconclusive. This paper investigates the effect of enterprise' environmental investments on industry level productivity growth. Cobb-Douglas production function framework was extended to allow for effects of environmental investments. The endogenous growth approach of production function is augmented with variables of investment to environment protection remedies and investment to production process improvement, associated to the production factor of knowledge. Investment to environmental innovations of production process and products is interrelated to the accumulation of the stock of knowledge. The extent to which variations in productivity can be explained by the environmental investment is estimated from regression analysis of Lithuanian industry sectors' level data for the period of 2000-2015. The results revealed insignificant average productivity effect of the total environmental investment, integrating the impact of different types of investments - investment aimed at reducing environmental impact of production and also investment aimed at production process improvement. However, there is evidence, that environmental investment in production process improvement has statistically significant effect on sector's productivity growth. This result supports the strong version of the Porter Hypothesis. [ABSTRACT FROM AUTHOR]

In this paper R&D and technology spillovers across the EU countries are analysed. R&D and technology spillovers from the research and development generated countries to receiving countries are approximated by measures of the channels of knowledge diffusion - foreign direct investments and trade. The effect of external R&D and technology spillovers on the labour productivity is estimated from regression analysis, based on the econometric productivity-growth framework. An empirical investigation was based on the annual data of twenty EU countries for the period from 2004 to 2014. The results reveal, that capital - labour ratio and skilled labour input explain the considerable part of labour productivity. Estimated regression coefficients are significant and similar in value for lower labour productivity countries as well as in higher labour productivity economies of EU. The results for econometric model of R&D domestic expenditure and EU 28 R&D spillover indicate positive significant effect of foreign R&D spillover from the trade channel on labour productivity in lower labour productivity and higher labour productivity country subsamples. The estimate supports the idea, that labour productivity in EU countries can be attributed to R&D spillover from the trade channel. Result for domestic R&D expenditures varying in different country subsamples. Domestic R&D expenditures have significant negative effect on productivity in higher labour productivity countries and are insignificant in lower productivity countries. Result for inward FDI shows that FDI as diffusion channel for technology spillover have not significant effect on labour productivity in EU countries. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to test to what extent an economic growth can be attributed to the international knowledge spillovers. The knowledge spillover is related to the possible output growth gains from the total factor productivity increase in other countries. Analysis of growth accounting was based on the production function of neoclassical growth model. The augmented production function accounted for the labour, physical and human capital, and also captured the other country's total factor productivity growth variable. An empirical investigation was based on the annual data of national accounts of the eighteen European Union countries for the period from 2005 to 2012. The extent, to which variations of productivity can be explained by the production factors of physical and human capital, and the inter-country productivity spillovers, is estimated from the regression analysis. The results reveal, that augmented neo-classical growth model explains considerable part of productivity growth. The regression coefficients of capital - labour ratio and human capital inputs are highly significant. The estimated regression coefficient for the variable of total factor productivity growth in Germany was found significant but low in value. The estimate supports the idea, that economic growth of European Union countries can be attributed to the international knowledge spillover, associated to the productivity increase in German economy. [ABSTRACT FROM AUTHOR]