How effective are green innovations as a remedy for mineral resource scarcity in the European region?

Abstract

The relationship between environmental externalities and green innovation is being increasingly explored in the literature but there is no paper exploring the nexus between green innovation (GI) and sustainable development. This article sheds light on the connection between GI and mineral rents from 2007 to 2021. In order to verify our results, we conduct a robustness assessment using a variety of natural resource rents, encompassing coal rents, gas rents, and forest rents. Our research furnishes evidence indicating that the adoption of environmental innovation is poised to curtail the consumption of most mineral resources, with the exception of forest rents in the PCSE and FGLS estimates. While GI does not exhibit statistical significance in the short term, its long-term impact reduce reliance on mineral rents. These findings maintain their robustness and reliability when accounting for endogeneity, fixed effects, and heterogeneity. To illuminate the relationship between institutional quality and mineral rents (MR), we incorporate six different indicators of institutions: voice and accountability (VA), government effectiveness (GE), rule of law (RL), regulatory quality (RQ), political stability and absence of violence/terrorism (PV), and control of corruption (CC). Our findings underscore the fact that integrating GI with institutions diminishes activities associated with mineral rents; from this we provide important policy recommendations for promoting GI development to use mineral resources more efficiently.

Keywords

• Mineral rents
• Mineral resources curse
• Green innovation
• Global database
• European region