The Impact of Innovation Activities, Foreign Direct Investment on Improved Green Productivity: Evidence From Developing Countries

Abstract

This paper from the perspective of productivity changes examines the impact of innovation activities and foreign direct investment (FDI) on improved green productivity (IGP) in developing countries. We divide the sample into two sub-groups; the BRICS and the other developing countries so as to account for underlying country heterogeneity. The analysis follows a panel data approach over the period 1991 to 2014, and used the global Malmquist-Luenberger productivity index to measure IGP. The results indicate that IGP in developing countries has declined. Innovation activities have a positive impact on IGP. FDI has a significant negative impact on IGP. Further study finds that there are threshold effects between FDI and IGP based on innovation activities, when the developing countries with a low-level of innovation, FDI has a negative impact on IGP; when the developing countries innovation activities above the threshold, innovation activities and FDI both can promote IGP.