Transitions to sustainable development: the role of green innovation and institutional quality

A growing body of literature has highlighted the importance of green innovation and institutional quality in sustainability transitions. However, there is little empirical research knowledge about green innovation and institutional quality as significant factors for sustainable development, particularly in Africa. In this context, the study examines the relationship between green innovation, institutional quality, economic growth, export, energy consumption, urbanization, and CO2 emissions in three (3) African countries over the period 1990 to 2016 at a panel and individual country level. Westerlund–Edgerton panel cointegration test together with the Cross-sectional Augmented Dickey-Fulller (CADF) test and Cross-sectional Im, Pesaran and Shin (CIPS) test correspondingly confirmed the variables employed are co-integrated and as well stationary. Major findings from the augmented mean group (AMG) estimator unveiled that: (i) green innovation mitigates CO2 emissions, whereas institutional quality increases CO2 emissions at the panel level and in South Africa; (ii) energy consumption increases CO2 emissions at the panel level and in all the individual countries; (iii) urbanization increases CO2 emissions at the panel and in Egypt and South Africa; (iv) an inverted U-shaped is evidenced to exist among economic growth and CO2 emissions in Egypt and South Africa. Finally, Dumitrescu-Hurlin panel causality test revealed a unidirectional causal link from CO2 emissions to green innovation and institutional quality correspondingly. Policy implications of these findings are discussed.