Innovation, Economic Growth and Energy Intensity: A Comparative Analysis of Developed and Developing Countries

Abstract

This study examines the relationships between innovation, economic growth, and energy intensity in developing and developed countries. Annual panel data for 50 developing and 34 developed countries over 2008–2022 are analysed using separate two-step System Generalized Method of Moments models. Innovation is measured by the total number of resident and non-resident patent applications, while real GDP per capita serves as a proxy for economic growth. Both variables are significantly and negatively associated with energy intensity in both groups. The estimated reduction associated with economic growth is greater in developed countries, whereas that associated with innovation is greater in developing countries. Energy intensity exhibits persistence in both groups, with more gradual adjustment in the developed-country estimates. Among the control variables, urbanization is positively associated with energy intensity in both samples, trade openness displays contrasting relationships, and foreign direct investment is statistically insignificant. These findings highlight the relevance of technological improvement, capital renewal and energy-efficient infrastructure for reducing energy requirements per unit of output across different development settings.