THE IMPACT OF CARBON TAXATION ON SMALL-SCALE MANUFACTURING SECTORS: A COMPARATIVE STUDY BETWEEN DEVELOPED AND DEVELOPING COUNTRIES

Abstract

Global climate change has prompted many countries to implement carbon taxes as part of efforts to reduce greenhouse gas emissions. The policy is designed to reduce emissions, but its impact on the small-scale manufacturing sector varies between developed and developing countries. This study aims to analyze the difference in the impact of carbon taxes on the profitability of the small-scale manufacturing sector in the two groups of countries. A comparative quantitative approach was used in this study by taking samples from 150 companies in each country. Data were obtained through questionnaires and secondary data from international institutions. The analysis used included a two-sample T-test to compare profitability, as well as linear regression to see the relationship between low-carbon technology adoption and profitability. The results of the study show that carbon taxes have a more significant impact on the decline in profitability in developing countries than in developed countries. In addition, the adoption of low-carbon technologies has proven to be important in mitigating the negative impact of carbon taxes, especially in developed countries, which have higher rates of technology adoption. This study provides recommendations for developing countries to implement flexible carbon tax policies, along with policy support for the adoption of environmentally friendly technologies to ensure sustainable economic growth