Is innovation good for the environment? A macro-level analysis

A widely spread assumption in economics and politics is that innovation is beneficial for long-term economic growth and can also help to achieve environmental goals. However, empirical evidence on the impact of innovation on environmental sustainability is scarce. The present study tries to fill this gap by employing a panel data set of 229 countries (2013−2020) and using a novel database of countries' innovation scores (the Global Innovation Index). The results are manifold: firstly, we find a robust negative relationship between a country's innovativeness and its CO2 per capita. Secondly, the negative relationship persists when we control for level of development and other drivers of CO2 emissions. Thirdly, the effect holds when we use other measures of environmental sustainability. Fourthly, the empirical results show that while innovation can help to reduce the environmental footprint, being innovative is not enough to achieve a sustainable level of emissions. This explains why the focus is shifting towards green or eco-innovations as a way to solve environmental problems.