Examining green productivity amidst climate change technological development and spillovers in the Nordic economies

Abstract

The common ground of both critics and proponents of green productivity is arguably hinged on the main role of environmental technological advancement. Considering the drive for climate-neutral economy among the Nordic states, the current study examines the role of climate change technological development within the countries and technological spillovers across countries in the pursuit for green economy. By using a combination of pooled mean group approach of autoregressive distributed lag (for coefficient estimation) and the recently developed Granger non-causality approach by Juodis et al. (2021) for the panel dataset analysis over the period 1990–2018, the results reveal that both domestic technological development and spillovers from abroad promote long-run green productivity growth in the panel and country-specific estimations. In both estimations, the impact of international diffusion of climate change technologies on green productivity is found to be larger. Additionally, the influence of these two dynamics of climate change-related technologies on attaining greening economy is the most impactful in Sweden. In the remaining Nordic economies, climate change technology spillovers in Denmark are more impactful than in Finland and least in Norway, while climate change technological development in Norway drives green productivity more than in Finland and least in Denmark. As a robust insight, the Granger causality techniques revealed causality from climate change technologies within the countries, climate change technology spillovers, and population to green productivity. Consequently, public policies should promote green innovativeness and especially learning and knowledge transfer from other countries to achieve climate neutrality targets.