Do domestic and overseas technological innovations equally matter in renewable energy development? Empirical evidence from emerging economies

Abstract

Since fossil fuel consumption drives environmental degradation, existing studies highlight the role of clean energy development in climate change mitigation. The emerging economies can mitigate climate change and also achieve sustainable development if they focus on innovation-led renewable energy development. In this context, this study is motivated to analyze the impact of domestic and overseas innovations (i.e., resident and non-resident) on renewable energy generation for 16 emerging market economies by employing balanced panel data from 1996 to 2019. This study incorporates financial development, regulatory quality, and real economic growth as crucial control variables in renewable energy generation function. The long-run results of the PMG-ARDL estimation technique show the positive (negative) impact of domestic (overseas) innovation on renewable energy generation, while regulatory quality, financial development, and economic growth promote it. Our results are robust across FGLS, Driscoll–Kraay standard error, and dynamic GMM estimation techniques. The policy implications are also discussed.