Green innovation for competitiveness: impact on GDP growth in the European Union

Abstract

The global climate has changed dramatically since the beginning of the industrial revolution. Concentrations of greenhouse gases in the atmosphere have increased sharply, followed by an increase in global average temperatures. Although the European Union has a proper attitude towards environmental protection and has shown in action by reducing greenhouse gas emissions by more than 20% as compared to the 1990 levels in 2014 and since then kept it below despite industry and economic growth; however, business activities in environmental protection mostly focused on legal rules implementation instead of free-will initiatives such as green innovation due to doubts on costs and profit. This paper investigates the impact of green innovations on economic growth under an innovative environment and digitalization conditions. We found that eco-innovations had a positive impact on economic growth under an innovativeness environment in the European Union. Although the impact of digitalization on economic growth is still under discussion and depends on qualitative aspects of coverage and their reflection on digitalization indicators. Sophisticated data from countries of the European Union were used and the least squares method was applied for estimation. Our research’ outcomes could help to ground actions at the policy level, and orient and motivate businesses to be focused on green innovation.