Towards sustainable development: How does technological innovation drive the increase in green total factor productivity?

Abstract

Abstract This study aims to assess the impact of technological innovation on green total factor productivity (GTFP), within Organization for Economic Cooperation and Development (OECD) countries, by using a panel data over the period 1996–2017. The results show that technological innovation has a significant positive influence on GTFP. The interaction between technological innovation and the economic development level has a significant negative impact on GTFP. However, the interaction between technological innovation and foreign direct investment (FDI) has no significant influence on GTFP. In addition, technological innovation has a positive effect on GTFP when the economic development level is lower than the threshold value. However, technological innovation has an otherwise insignificant promotional effect. Technological innovation has a positive effect on GTFP when FDI is below the threshold value, and it has a slightly significant positive impact when FDI exceeds the threshold value. Therefore, various measures should be taken to guide technological innovation and improve its quality to promote GTFP and realize sustainable development.