The effect of innovation on C02 emission in emerging markets

The research sought to investigate the effect innovation has on C02 emission in emerging markets. The study examined the relationship between innovation and C02 emissions in emerging markets and examined the presence of innovation Environmental Kuznets Curve (EKC). The research design employed in the study was an explanatory and quantitative study. The research considered the emerging markets as classified by the S&P Dow Jones indices. There are a total of 23 emerging markets according to this index. The sample of 15 countries were used for the study due to data availability. This research mainly used secondary data from the World Development Indicators (WDI) database respective to each of the 15 countries. The study used a panel data to estimate the model, which comprises of time series and cross-sectional data to deal with variations across countries and over time. The empirical relations were analysed using the fixed effects model. The study found that the relationship between innovation and C02 emission yielded a negative result which implies that advancement in innovation leads to a reduction in C02 emission. After squaring innovation to establish the presence of innovation Environmental Kuznets Curve, the results shows that investment in innovation does not lead to an inverted "U" shaped curve, thus it leads to a reduction in emissions however after a certain threshold, further investments may result in diminishing returns. Keywords: Environmental Kuznets Curve, C02 emission, Fixed Effect Model