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How does international capital flows drive green technological innovation in emerging and developed markets?

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  • Ohikhuare, Obaika M.
  • Khan, Nasir
  • Saidi, Kais

Abstract

Green technological innovation is vital for advancing sustainable development, as it reconciles the dual objectives of economic growth and environmental sustainability. This study investigates the roles of institutional quality and international capital flows—both independently and interactively—in driving green technological innovation across emerging and developed economies. Using panel quantile regression on panel data spanning from 1996 to 2021, the study reveals several key findings. First, aggregation bias and the limitations of linear regression models in capturing the heterogeneity of green technological innovation contribute significantly to the lack of scholarly consensus. Second, the influence of international capital flows and capital per worker on green innovation varies across the stage of economic development and the level of green technological progress. Third, institutional quality consistently promotes green innovation, regardless of a country's level of development. Finally, whether institutional quality matters in how international capital flows drive green technological innovation is contingent on the stage of economic development and the level of green technical progress. These findings offer valuable insights for policymakers aiming to enhance green technological innovation through tailored strategies considering development stages and institutional contexts.

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  • Ohikhuare, Obaika M. & Khan, Nasir & Saidi, Kais, 2025. "How does international capital flows drive green technological innovation in emerging and developed markets?," Research in International Business and Finance, Elsevier, vol. 77(PA).
    • Handle: RePEc:eee:riibaf:v:77:y:2025:i:pa:s0275531925001291
    DOI: 10.1016/j.ribaf.2025.102873
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