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Green Vanguards and Dependent Followers: Green Growth and Decarbonisation in Small Export-Led Economies

Environmental Policy
Green Politics
Political Economy
Anna Hehenberger
Max Planck Institute for the Study of Societies – MPIfG
Anna Hehenberger
Max Planck Institute for the Study of Societies – MPIfG

Abstract

Decarbonising the way in which economies grow has become a policy priority across the globe. Simultaneously, an increasing number of countries shift their growth models towards foreign demand to foster export-led economic growth. However, the relationship between export-led growth and decarbonisation remains underexplored. While exportled growth tends to build on more emissions-intense manufacturing sectors, such growth models also profit from manufacturing capabilities which provide fertile ground for the creation of green industries and, therefore, green growth. In exploring this relationship comparatively in two case studies, I pursue the shift of global demand towards promoting green industries, green growth, and decarbonisation. I show that in Denmark, a new, green industry became dominant and evolved into a green growth model, which decarbonises at an unprecedented rate. In Austria, no meaningful climate policy making is in place and yet, its emissions decline recently. The reason, as this paper argues, is the shift in the export sector’s position towards decarbonisation that has changed due to supply chain pressures. Thus, this paper shows that before domestic climate policy was made and decarbonisation set in, the sectors at the core of both export-led growth models changed. In Denmark, an entirely new sector became dominant, in Austria, a dominant sector started to decarbonise. In both cases, this shift translated into national decarbonisation. Thus, this paper emphasises the role global economic integration plays for both economies’ green growth and decarbonisation, and scrutinises an oftenoverlooked decarbonisation agent – the manufacturing sector. By tracing the shifts in global demand on firm-level, this project goes beyond common conceptions of decarbonisation that focus on either intentional, policy-driven, or unintentional deindustrialization-driven processes and opens up the nascent Growth Models perspective to system-level dynamics.