Exploring the nexus of globalization and natural resource scarcity in driving green technology innovation: Insights from advanced panel data techniques

Abstract

AbstractGreen technology innovation (GTI) plays a pivotal role in improving environmental sustainability. Our study fills a significant research gap by investigating how globalization and natural resource depletion (NRD) impact eco‐innovation. Rooted in knowledge spillover and ecological modernization theories, we utilize advanced panel data techniques, an aspect underexplored in empirical studies. Our panel data span G20 countries from 1986 to 2019, further dissected into sub‐panels—BRICS (emerging economies) and G7 (advanced economies). Initial tests reveal cross‐sectional dependencies and slope heterogeneities across all panels, corroborated by Westerlund cointegration test indicating a long‐term equilibrium. Driscoll–Kraay estimator highlights that economic and social globalization significantly drive eco‐innovation, while political globalization deteriorates GTI. The effect of NRD is also negative for G20 and BRICS countries, while G7 economies exhibit lower vulnerability to NRD shocks. Long‐run estimates from CS‐ARDL underscore the positive role of economic globalization in both the short and long run, while the negative role of NRD remains persistent in the long run. Panel quantile regression results prove that the effect of globalization is asymmetric across GTI distribution and varying across underlying groups. NRD, while hindering progress at higher quantiles, supports eco‐innovation at lower quantiles of advanced economies. Panel threshold estimations confirm the positive influence of both globalization and NRD, particularly for highly eco‐innovative nations. These findings bear significant policy implications, charting a path toward sustainable economic growth through the widespread adoption of green technology.