21 Jun 2013
Green entrepreneurship: the missing link towards a greener economy: Positive externalities of green entrepreneurship and innovation
NCCR Trade Working Paper No. 2013/17 by Fulvia Farinelli, Marino Bottini, Sule Akkoyunlu and Philipp Aerni
Most international organizations – including the World Bank, UNCTAD, OECD, UNIDO, WTO and FAO – share the view that there needs to be a global transformation towards a greener economy. However, in the aftermath of the Rio+20 UN Summit, some key issues about the green economy must be clarified to reach a global consensus for collective action. In this article, it is argued that a green economy cannot be mandated from above but needs to be driven by entrepreneurs who respond to policy incentives through innovation in management and technology. These private sector investments in green innovation not only generate private profits but also (create) large positive externalities for society and the environment as a whole, especially when they not only contribute to the creation of a small niche market, but have the potential to be scaled up to reach the sustainable transformation of a entire industry. In this article, it is therefore argued that the emphasis of the term ‘green innovation’ must be on ‘innovation’ rather than what is generally perceived to be ‘green’. This would imply that governments focus more on the creation of an enabling environment for large-scale innovations that contribute to the global green transformation of an entire industry rather than merely subsidizing green niche markets.