Cooperation, diffusion of technology and environmental protection: a new index

Abstract

There are various types of environmental indexes or indicators in the literature. In this paper, we propose a new index that is able to point out the important relationship between environmental protection and investments in innovation processes. We identify the index with the acronym EICI (environmental innovation comparative index). This new empirical tool can represent a new way to illustrate how the level of innovation can determine different levels of air pollution in the world. We use generalized method of moments (GMM) and ordinary least squares (OLS) models to investigate how this new index impacts the variations in greenhouse gas emissions and we underline some fundamental policy implications. Considering the levels of the EICI and the empirical analysis of the role of this index then we conclude that enforcing new environmental agreements with some fundamental rules, as the incentive to reduce the technological gaps among the countries, is crucial to protect the environment and at same time stimulate the investment for innovation in all countries of the world.