Trade dynamics of environmental goods within global energy economy and their impacts on green technological innovation: A complex network analysis

Abstract

Trade in environmental goods, primarily renewable energy plants and wastewater management equipment, facilitates the dissemination of technologies essential for ecological preservation. Traditional indicators like trade intensity fail to capture the network advantage that a country may possess in advancing environmental-related technologies. Therefore, this study develops a directed trade network of environmental goods (EGTN) from 2002 to 2021 across 234 countries or regions. By applying network topology, we investigate the structural features and dynamic changes of the EGTN. Our analysis reveals that the EGTN has become increasingly interconnected, predominantly influenced by certain OECD countries (i.e., France, Germany and the US) and developing countries (i.e., South Africa, China, and India). Utilizing panel data from 27 OECD countries and 5 BRICS countries between 2002 and 2019, our baseline quantile regressions show that enhanced trade central status can significantly promote green innovation across all percentiles. Non-linear and U-shaped relationships are detected for betweenness centrality and closeness centrality variables. In contrast, the effects of eigenvector centrality diminish in more innovative countries. The above findings remain robust after accounting for potential endogeneity problems. Moreover, while stricter environmental policies tend to promote the development of green innovations in OECD countries, non-market-based policies in BRICS may pose challenges to advancing such innovations. Policies that facilitate information dissemination and strengthen partnerships with influential trade partners can help local organizations leverage their network advantages to spur innovation.