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How do composite fiscal decentralization and human development promote inclusive green innovation in G7 countries?

Cheng Luo
Yonggang Li

Puni tekst: engleski pdf 1.715 Kb

preuzimanja: 18



The study analyzes the dynamic influences of composite fiscal
decentralization index (CFD), human development, and research
and development (R&D) expenditures on green innovations in G7
countries from 1990 to 2018. For empirical estimation, the study
applies the cross-section autoregressive distributed lag method to
resolve the issues of cross-section dependency and slope heterogeneity
in the panel data. The results exhibit that CFD, human
capital development, and R&D spending encourage green technologies
in the long run. The short-run findings are also compatible
with the long-run; however, their magnitude is smaller than
the long-run except for CFD. In addition, the error correction term
also indicates a negative and significant coefficient value, endorsing
the conversion towards the long-run equilibrium position
with a 25.3% annual adjustment rate in case of any shock in the
short run. The robustness of the estimates is confirmed through
the augmented mean group and common correlated effect mean
group. These findings recommend that G7 countries should
encourage human resources and R&D expenditures through education
and renewable energy investment, respectively. In addition,
local governments’ allocation of resources to promote green technologies
must be monitored and regulated by a strong institutional

Ključne riječi

Fiscal decentralization; human capital; R&D expenditures; green innovation; G7 countries

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