Unravelling complexities: a study on geopolitical dynamics, economic complexity, R&D impact on green innovation in China

Green innovation is essential in achieving sustainable development goals of enhancing resource efficiency, reducing environmental impact, and promoting renewable resource consumption. Identifying the factors that promote green innovation is necessary to capitalise on the benefits of green innovation. The literature has overlooked the economic and geopolitical factors influencing sustainable technological development. Limited studies have analysed the multifaced drivers of green innovations. Therefore, this study fills the gap by exploring the impact of geopolitical risk, economic complexity, and R&D expenditures on green innovation in China from 1995 to 2022. The study employed the “bootstrapping autoregressive distributed lag” (BARDL) method and examined the long-term cointegration. Diagnostic tests confirm that the data series are normally distributed, and unit root tests establish an integration order of I(1). Outcomes of the BARDL approach indicate that increases in economic complexity, R&D expenditures and economic growth significantly enhance the green innovation initiatives. Conversely, rising geopolitical risk deters steady investment in green innovation in the short and long run. The results highlight that while economic complexity and R&D expenditures have greater capabilities and resources to support innovative activities, geopolitical risk acts as a mitigator and diverts focus and resources away from long-term environmental sustainability projects; therefore, effective policy measures focusing on these variables can increase investments in green innovations.