relationship between innovation (investment in clean/green technology R&D) and productivity (TFP).

However, in some cases, the green/clean technology innovations hurt firms’ productivity, mainly due to additional direct costs associated with R&D investments to innovate and modify production design and process, and increasing financial constraints due to the fixed budget for investment in innovation activities (Zhang et al., 2020; Zhang et al., 2019). Synthesizing a review of 65 different studies on the evidence of a relationship between R&D investment, both green/clean and other R&D investments, and firm or industry productivity in OECD countries, Ugur et al. (2016) report a weak and highly heterogeneous relationship. They find the sources of heterogeneous are the size of the firms (small or large), funding sources of R&D (private or public), and the magnitude of R&D investment (low or high).

# **Table 1. Selected empirical studies examining the relationship between green/clean investment and productivity**

|Study|Method|Main findings and argument|
|---|---|---|
|Qi et al. (2021)|An econometric method is<br>applied to 39 Chinese<br>manufacturing industries.|Firm size plays a key role in clean technology<br>adoption. Environmental regulations eliminate some<br>firms with low production efficiency through market<br>competition and increase the overall productivity level.|
|Sohag et al. (2021)|CS–ARDL technique is used<br>in 25 OECD countries from<br>1980 to 2015.|A higher share of renewable energy in the energy mix<br>in the production process significantly promotes TFP in<br>the long run, while it is inconclusive in the short run.|
|Cao et al. (2021)|PSM-DID method is applied<br>to Chinese energy firms from<br>2000 to 2007.|The cleaner production regulations increased regulated<br>firms’ TFP, especially small firms. Also, the impact of<br>cleaner production regulations of state-owned firms<br>was greater than that of non-state-owned firms.|
|Peng et al. (2021)|A DID method is used to a<br>panel data of Chinese<br>industrial enterprises for the<br>1998-2007 period.|The market-based environmental regulation exerted<br>significant productivity-enhancing effects across all<br>types of industrial enterprises, with stronger effects<br>associated with privately owned, more productive, and<br>less pollution-intensive enterprises.|
|Aldieri et al. (2020)|The empirical method using<br>panel data on firms’ patents<br>on environmental innovation<br>from 9 European countries,<br>Japan, and the USA for the<br>2002-2007 period.|Green technology innovation and its knowledge<br>spillovers affect firms’ TFP significantly and positively<br>in all the investigated economic areas.|
|Leoncini et al. (2019)|A quantile regression method<br>is used for 5498<br>manufacturing firms in Italy<br>from 2000 to 2008.|There is a positive effect of green technologies on a<br>firm’s growth. A firm’s experience appears important<br>for the growth benefits of green technologies.|
|Stucki (2019)|The ordinary least square<br>model is applied using firm-<br>level data to Austria,|Firms with relatively high energy costs show<br>significantly larger marginal effects of green<br>technology investments on TFP than do firms with low|

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