Accelerating green growth: The effect of technological innovation on production capabilities spillovers in developing economies

Abstract

This research addresses how technological innovation affects the spillovers of production capabilities into the green sectors in countries with developing economies. It examines the evolution of green production capabilities for 226 countries between 2003 and 2015 and identifies the key sectors driving the spillovers of production capabilities. It delves into the patterns observed in the evolution of these capabilities, considering the diverse economic classifications. Finally, it hones in on 72 developing countries that face unique challenges in their pursuit of green economic growth, exploring the effect of technological innovations on the spillovers of production capabilities into their green sectors. Using the ‘Green Sector Space’, an extension of the Product Space methodology, statistical analysis, and Partial Least Square Structural Equation Modeling, the findings of this analysis highlight significant disparities in green production capabilities in developing economies compared to other economic classifications. Additionally, the significant and dominant role non-green sectors have in driving the spillovers of production capabilities into the green sectors, demonstrating a significantly higher dominance observed in developing countries. Finally, the results underscore technological innovations’ significant and positive effect on the spillovers of production capabilities from non-green to green sectors in developing countries, which exhibits a path-dependent evolution pattern. Conversely, it does not have a significant effect on the spillovers between the green sectors. The findings address a gap in the literature by revealing the positive and significant effect of technological innovations on path-dependent green product development. This analysis recommends interventions in developing economies that heavily rely on non-green sectors to leverage technological innovations and diversify their green production capabilities for accelerated green growth.