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February 14, 2024

Brown Bag Seminar Industrial Economics

Growing Clean? Directing Technological Change in Germany


February 14, 2024
11:30 - 12:30
Francine D. Blau Room 3.3.002B + 3.3.002C


Nils Handler, DIW Berlin

The emerging net zero paradigm requires economies to go green; and Europe’s ambition is to lead the way. This requires directing technological change toward cleaner growth, which intersects with green industrial policies in the form of green innovation subsidies. Leveraging a quasi-exhaustive novel dataset on German R&D subsidies, we provide rigorous evidence on whether green R&D subsidies increase research productivity at least as effectively as non-green subsidies (green productivity effect), and whether they steer the recipient firm’s innovation and production portfolios from dirty to clean (redirection effect). We further test for potentially heterogeneous treatment effects when interacted with carbon pricing and competition. Our findings add much-needed rigor to this heated debate and support the emerging evidence that well-targeted industrial policies elicit their desired responses; and specifically, that green R&D subsidies are effective at reorienting research towards low-carbon growth.


Nils Handler, DIW Berlin