Breaking the Link: Does National Innovation Capacity Accelerate the Decoupling of Economic Growth from Carbon Emissions?

Breaking the Link: Does National Innovation Capacity Accelerate the Decoupling of Economic Growth from Carbon Emissions? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Breaking the Link: Does National Innovation Capacity Accelerate the Decoupling of Economic Growth from Carbon Emissions? Kassim Alabani, Dr. Benedict Afful Jr., Dr. Francis Taale, Dr. Eric Abokyi This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9011680/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper examines whether national innovation capacity accelerates the decoupling of economic growth from carbon dioxide (CO₂) emissions and how institutional quality and policy context condition this relationship. Moving beyond emissions-level analyses and Environmental Kuznets Curve reasoning, the study adopts a decoupling-index framework that captures changes in carbon intensity rather than emissions alone. Using a balanced panel of 47 countries over the period 2005–2024, the analysis employs fixed-effects estimation, dynamic System GMM, and panel quantile regression to account for unobserved heterogeneity, endogeneity, nonlinearity, and distributional differences in decoupling performance. The results show that innovation contributes to growth–emissions decoupling within countries, but its effects are neither uniform nor automatic. Innovation exhibits clear nonlinearities, with diminishing and, in some contexts, adverse marginal effects at higher levels of innovation capacity. Institutional quality improves decoupling in some settings but operates primarily as a complementary rather than mediating factor. Distributional estimates reveal substantial heterogeneity, with innovation exerting weak effects in low-decoupling regimes and increasingly negative marginal effects in high-decoupling regimes. Evidence from the post-2015 period further suggests that innovation becomes relatively more effective when embedded within a coordinated international climate policy framework. The findings challenge simplistic innovation-led decarbonization narratives and highlight the importance of policy alignment, institutional context, and innovation direction in achieving environmentally sustainable growth. Statements and Declarations Competing Interests: The authors declare no competing interests. JEL Classification O33, Q53, Q55, C23, Q01, O43 Carbon intensity Technological change Environmental efficiency Governance quality Climate policy alignment Sustainable growth Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Moving beyond emissions-level analyses and Environmental Kuznets Curve reasoning, the study adopts a decoupling-index framework that captures changes in carbon intensity rather than emissions alone. Using a balanced panel of 47 countries over the period 2005–2024, the analysis employs fixed-effects estimation, dynamic System GMM, and panel quantile regression to account for unobserved heterogeneity, endogeneity, nonlinearity, and distributional differences in decoupling performance. The results show that innovation contributes to growth–emissions decoupling within countries, but its effects are neither uniform nor automatic. Innovation exhibits clear nonlinearities, with diminishing and, in some contexts, adverse marginal effects at higher levels of innovation capacity. Institutional quality improves decoupling in some settings but operates primarily as a complementary rather than mediating factor. Distributional estimates reveal substantial heterogeneity, with innovation exerting weak effects in low-decoupling regimes and increasingly negative marginal effects in high-decoupling regimes. Evidence from the post-2015 period further suggests that innovation becomes relatively more effective when embedded within a coordinated international climate policy framework. The findings challenge simplistic innovation-led decarbonization narratives and highlight the importance of policy alignment, institutional context, and innovation direction in achieving environmentally sustainable growth. 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