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This chapter presents a comprehensive review of the literature covering various facets of environmental regulations. The multidimensional association of environmental regulation with economic growth, innovation, and industrial competitiveness are laid down. The cost of regulation is considered as a major reason for the decline in industrial production. This is not only due to the institutional cost of regulation but also because of the cost imposed on firms as a result of restricted resource use. The results of studies investigating the Porter hypothesis are balanced almost equally on both sides of the inconclusive induced innovation debate. The innovation economics literature still has not gained ground in studying innovation activity, particularly environmental innovation, in developing countries. Lack of reliable, comprehensive, and accessible macroeconomic and innovation related studies was certainly one of the reasons few years ago. With the emergence of India, China, and Brazil as new economic powerhouses, new variants of policymaking, governance, and regulatory intervention are surfacing. This section attempts to bring focus on the neglected but critical issue of environmental regulation and innovation in economies, which are currently in a phase of economic, social, and technological transition.
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