Exploring country characteristics that encourage emissions reduction

Abstract

We explore the relation between sound institutions favouring innovation and technology investment and firms’ emissions reduction. Even though emission abatement is achieved at the firm or plant level, we postulate that structural and institutional fac- tors underpinning green innovation, skills and technology adoption at the country level are of material importance. Advances in technology and infrastructure are the main drivers for the reduction of emissions and are, in turn, intrinsically linked to overall country characteristics. Sound institutions can act as enablers and accelerators for firms and industries in the green transition process, hence we find an attenuating effect on emissions conditional on firm attributes.