Factors Affecting Firm Productivity in Turkey

Official URL: https://risc01.sabanciuniv.edu/record=b3200102

Paris Agreement is a milestone of climate change mitigation. Before the agreement there was an imbalance in emission regulations between countries which resulted in carbon leakage. It is the first legally binding agreement that gives incentives countries to reduce emissions. It also opened way for international trade regulations such as CBAM where energy incentive firms that export need to decrease emissions in order to stay competitive in the export market. We use firm level data where we constructed the energy costs of each firm. We then calculated the energy intensity of each firm and investigated the changes in energy intensity after the agreement in energy intensive sectors compared to other manufacturing firms in Turkey. We find that the differences in changes in the energy intensity differs for exporters and EU exporters. Results suggest evidence for carbon leakage for firms that had exposure to export market in the pre-reform period and low energy intensity for firms that enter the export market after the agreement.