Determinants of Green Technology Diffusion and Green Trade

Purpose - This study aims to explore the factors that contribute to the international diffusion of green technology and further analyze the relationship between green technology diffusion and green trade. Previous studies and theoretical foundations suggest that economic, technological, and institutional environments are important factors influencing the diffusion of green technology among countries. For this study, trade openness, intellectual property protection, the level of development of information and communication technology (ICT), research and development (R&D) investment, environmental regulations, and environmental norms were used as the key factors in the diffusion of green technology. In addition, a comparative analysis of OECD and non-OECD countries is conducted. Design/methodology - Panel data were collected from 58 countries for the period 2007-2019. The empirical analysis consists of two parts, first exploring the drivers of green technology diffusion using the feasible generalized least squares (FGLS) method, and then analyzing the linkage between green technology diffusion and green trade using the two-stage least squares (2SLS) model. The demand for green technology is expected to vary among countries because of their different economic development levels and goals. A comparative analysis was conducted based on the classification of countries by the level of economic development. Findings - We found that the level of intellectual property protection, R&D investment and environmental norms contribute positively to the diffusion of green technology. However, there is a negative correlation between trade openness, environmental regulations and green technology diffusion. Green technology diffusion positively affects green trade. Moreover, the positive impact of green technology diffusion on green trade is more pronounced in non-OECD countries than in OECD countries. Originality/value - Previous studies have focused on technology transfer and green technology innovation at the firm level; however, research on green technology diffusion is insufficient. This study investigated the determinants of green technology diffusion at the national level. The study also explored the relationship between green technology diffusion and green trade. It helps to fill the gap in the literature on green technology diffusion and provides a reference for future studies. Additionally, our findings offer valuable guidance for government and corporate decision-makers in formulating strategies for the transfer of green technologies and sustainable development initiatives.