‘Eco-Innovations’ (EIs) are a type of innovations that may contribute to reduce the environmental burden and to deal with specific problematic areas, such as greenhouse effects, loss of biodiversity, sustainable use of natural resources and so on. However, despite their relevance, EIs still represent a vague and unclear concept. The present chapter firstly clarifies the true meaning of EIs, by defining their characteristics and typologies. Then, it explores and contextualises roles and functions of EIs for sustainability in the framework of two contrasting approaches, namely the more traditional neoclassical literature on innovations and the new evolutionary studies on the techno-paradigm shifts.
Browse by title
The Financial Constraints of Eco-Innovation Companies
Theory and Practice
Mohamed Ariff and Shamsher Mohamad
Adam Smith traced the source of opulence of nation, which he called capital, to the uninterrupted efforts of every man to better his condition. Today we define wealth as the item that has some economic substance, a value such that this wealth can be used for several intended purposes, in modern economics, for consumption as theoretically glorified by the Utility Maximization Theorem (Arrow-Debreu). In this chapter, the reader is introduced to the modern idea of net wealth held by households and entities. The amount of wealth as at 2017 is given as US$ 250 trillion after all liabilities are subtracted from total wealth. In this context, Calvin’s contribution of wealth as God’s gift to man is referred to, which provides a continuity with Islam’s claim that wealth belongs to God, and He apportions who begets it.
This chapter analyses the special nature of banks, and how the importance of the banking sector and its stability overlaps with the preservation of competitive banking markets. Banks have a unique standing in the economy, and are regarded as more vulnerable to instability than other firms as they provide liquidity and are involved in inter-bank lending markets and the payment system. Due to the systemic nature of banks, governments try to avert a crisis that can affect the whole banking sector by ensuring that banks which are ‘too big to fail’ remain sustainable. Such intervention has a distortive effect on competition, as it prevents ‘self-correction’ of the market. State aid measures that characterized the response of regulators in the recent financial crisis were based on the premise of the special nature of the banking sector and its importance to the economy. In addressing the special nature of banks the chapter looks into the approach adopted towards banks under State aid control, tackling issues such as ‘too-big-to-fail’ and the BRRD and SRM.