Did transition bring cleaner air? Effects of ownership, territorial and technology policy on air pollution

Abstract

The paper investigates trends in air pollution in Poland during transition to a market economy. By analysing how the EU, national and regional development policy mix affects environmental outcomes we show the importance of context in terms of assessing the contribution to air pollution of different stakeholders such as foreign investors. The results show that while state owned firms pollute more, new domestic firms make a positive contribution to reducing emitted particulate matter and foreign owned subsidiaries on average have an increasing or neutral impact on air pollution. However, territorial policy becomes in Poland the focal point for understanding these changes as there are large differences for areas that are subject to this policy. When accounting for the combinations in these policies results suggest that zone governance has been very effective in reducing emissions of particulate matter. Zones combine ownership changes with technological changes associated with restructuring of enterprises and FDI along with EU subsidies associated with technology policies such as adoption of more green technologies in general. Both policy factors (e.g. using FDI to restructure former SOEs within the zones and using zones also as a policy tool to distribute structural funds) aid in reducing emissions, while to the extent we can compare them (due to differential measuring scales) we conclude that technology policy through structural funds has been by far the most effective policy tool towards curbing high emissions levels in Poland.