Strategies towards sustainability through technological innovation: MMQ approach for European countries

This paper examines the role of technological innovation, foreign direct investment (FDI), and industrialization in reducing CO₂ emissions in the EU, focusing on the period from 2006 to 2020. Using a balanced panel of 38 EU countries, the study applies the Method of Moments Quantile (MMQ) approach to analyze how these factors influence emissions across different levels of environmental degradation. The MMQ method allows for the investigation of quantile-specific effects, providing unique insights into how technological innovation drives emission reductions, particularly in low-emission contexts. The results indicate that while technological advancements effectively reduce emissions in less industrialized regions, the impact diminishes as industrialization and emissions increase. The findings highlight the critical need for tailored climate policies that balance economic growth with environmental sustainability, emphasizing the integration of innovation into EU climate frameworks and economic strategies. This study contributes to sustainability research by showcasing the value of the MMQ method in understanding the dynamics of emissions reduction at different emission levels.