Arpaci-Ayhan, S. (2022). Foreign Aid as Catalyst for Improving Productive Capabilities in Recipients. Journal of International Development.

Work Under Review

R&D Expenditure, Resource Endowment, and Economic Complexity

Working Paper

Environmental Policies, Institutional Quality, and Green Innovation

Abstract. In this article, I estimate the impact of environmental policies on environment- friendly patents. This study contributes to the literature by investigating the joint effect of environmental policy stringency with institutional quality. Panel data covers 31 countries from 1990 to 2019. Due to the count nature of patent data my model has a Poisson distribution. I use a pre-sample mean estimator to control for country fixed effects and to deal with heterogeneity among countries. Contrary to the induced innovation hypothesis, increased oil and electricity prices do not necessarily cause to more green innovation at the country-level. In line with scholars who emphasize the necessity of government intervention to tackle climate change, countries with more stringent policies, and bureaucratic quality perform better innovative activity in environment-friendly technologies. Finally, using instrumental variable strategy with control function approach confirms that the effect of policies on innovation is causal.