The impact of product and process innovation on abandoning fossil fuel energy consumption in low and middle income countries: consent towards carbon neutrality

Abstract

The study used a sample of 43 low and middle-income countries for the time span of 14 years, i.e., from 2005 to 2018 with the objective to analyze the global fossil fuel market. The novelty of the study lies in its variable product and process innovation, study sample as well as the methodology adopted by the System GMM model. The fossil fuels demand in terms of Domestic material consumption of fossil fuel is regressed against 4 Energy and innovation, social and economic variables. The study employed System GMM model for estimation of results and FMOLS for robustness check. The results reveal that estimates for lag fossil fuels consumption, fossil fuel price and GDP are statistically significant and positive while estimates for patents are negative. The study suggests that low and middle income countries’ Government should focus on product and process innovation as a critical element while structuring their policy for climate change mitigation.