Abstract
This paper from the perspective of productivity changes examines the impact of innovation activities and foreign direct investment (FDI) on improved green productivity (IGP) in developing countries. We divide the sample into two sub-groups; the BRICS and the other developing countries so as to account for underlying country heterogeneity. The analysis follows a panel data approach over the period 1991 to 2014, and used the global Malmquist-Luenberger productivity index to measure IGP. The results indicate that IGP in developing countries has declined. Innovation activities have a positive impact on IGP. FDI has a significant negative impact on IGP. Further study finds that there are threshold effects between FDI and IGP based on innovation activities, when the developing countries with a low-level of innovation, FDI has a negative impact on IGP; when the developing countries innovation activities above the threshold, innovation activities and FDI both can promote IGP.
Highlights
As environmental pollution has become one of the most challenging issues facing the world, green productivity for sustainable development has received increasing attention (Li et al, 2020a; Zhang et al, 2020; Chevallier et al, 2021)
Before examining the impact of innovation activities and foreign direct investment (FDI) to improved green productivity (IGP), we test for stationarity of all variables applying the Levin-Lin-Chu (LLC) and the Fisher-Augmented DickeyFuller (Fisher-ADF) Results displayed in Table 2 indicate that the LLC and Fisher-ADF tests reject the null hypothesis at both the 1 and 5% significance level for all variables used in this study
The LnIP of the estimated coefficient for IGP is 3.1136, statistically significant at 1%, which indicates that innovation activities have a significant positive effect on green productivity in developing countries
Summary
As environmental pollution has become one of the most challenging issues facing the world, green productivity for sustainable development has received increasing attention (Li et al, 2020a; Zhang et al, 2020; Chevallier et al, 2021). The traditional output growth dependent on heavy resource use, resulting in a lot of pollution to the environment (Li and Lin, 2017). Green productivity is based on quality rather than quantity; that is, it promotes growth through the creation of new green products, technologies, investments, and environment protection behavior (Chen and Golley, 2014; Li and Lin, 2016; Kroze, 2019). Numerous studies use total factor productivity (TFP) considering both desirable and undesirable outputs to measure green productivity (Munisamy and Arabi, 2015; Emrouznejad and Yang, 2016; Du et al, 2018). The TFP measure considering undesirable outputs does not fully reflect the green part, so this paper introduces improved green productivity (IGP) to reflect the gap between TFP considering undesirable outputs and TFP without considering undesirable outputs
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