Pathway to Sustainability: The Role of Eco-Innovation and Income Inequality in Green Growth

Abstract

Green growth is a novel theme gaining attention in the current era of environmental sustainability. It necessitates the decoupling of economic growth from natural resource depletion. To attain true sustainability, countries must urgently foster eco-innovation (EI) as a key driver. Nevertheless, high income disparities might influence the inducing effect of EI on green growth. Glaring through the literature, there is limited empirical research analyzing the relationship between EI and income inequality on green growth. For a panel of 72 countries from 1990-2021, we estimate the unconditional and conditional impact of EI on green growth. The empirical results, derived from the two-step system GMM estimator, show that while EI enhances green growth, income inequality hinders it. Additionally, we found that income inequality is a negative mediator in the impact of EI on green growth. This negative total effect is particularly pronounced with higher levels of income inequality. These results hold across different estimation techniques, which is the panel quantile regression estimator.

Presenters

Pamela Efua Ofori
Student, PhD in Methods and Models for Economic Decisions, University of Insubria, Agrigento, Italy