Economic well-being effect of innovations and energy transition quality

Abstract While the role of environmental technologies and technological innovation have been widely argued in their context of green (environment) effect, little is known about their potentially dissimilar blue (economic) effect. As such, by relying on the selected panel of the Organisation for Economic Co-operation and Development (OECD) countries, this study compares the economic (de)merit of environmental technologies and technological innovation while also examining the economic contribution of energy transition quality measured by Green Quality Index. By combining the Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE) methods, the results show that renewable energy consumption and environmental technologies all promote economic well-being, thus affirming their desirable (blue) effect. Contrarily, both the quality of energy transition of the energy mix and technological innovation hamper economic development given their negative impact on per capita gross domestic product (GDP). These results were affirmed with the Dynamic Least Squares (DOLS), Fully Modified Least Squares (FMOLS), and Driscoll-Kraay methods. Overall, effective measures should be taken to avert potential delay and even rebound effect related to the response of economic well-being to changes in technological innovation and energy transition approach in these economies. This outcome further contributes to Solow-Swan and endogenous growth theories by offering more insight on the relevance of policy response and transmission lag.