Evaluating spatial spillover and non-linear effects of green innovation on environmental balance: A global perspective

• Green innovation significantly improves the environmental balance • Environmental balance is measured through the gap between ecological demand and supply. • Spatial econometric approaches reveal strong local and global spillovers and feedback effects. • The relationship between green innovation and environmental outcomes is nonlinear. This study investigates the spatial spillover and non-linear effects of green innovation (Gi) on environmental balance (EB) in the context of environmental challenges. Specifically, it aims (i) to analyze the spatial spillover effects of Gi on EB at local and global levels and (ii) to examine the linear and non-linear impacts of Gi on EB, following an inverted U-shaped pattern. Using spatial econometric techniques and panel data from 60 global economies (1990–2022), the study confirms significant spatial spillovers of Gi on EB. The empirical results show that the effects of Gi on EB decompose into local (64.7%), global spillover (35%), and feedback (0.3%) respectively. Initially, Gi exacerbates EB by widening the ecological footprint-biocapacity gap but improves it beyond a critical threshold (40.522), demonstrating a non-linear and U-shaped relationship between Gi and EB. A positive spatial relationship in EB is observed with high-high and low-low agglomeration patterns. Globalization (Gb) has mixed effects, negatively impacting EB locally and globally but showing positive effects when interacting with Gi. The findings have important policy implications for sustainable environmental practices at a global scale.