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Institutional quality, green innovation and energy efficiency
This paper examines the energy efficiency performance of a sample of 71 developed and developing countries
between 1990 and 2014. In most current energy literature, the transition to green technology is seen as a
sustainable way to achieve a low-carbon or carbon-free environment. Bearing this in mind, we argue further that
adopting green technology needs a strong backing and funding of reliable government institutions to shift the
country's paradigm. Considering this issue, we adopt the parametric stochastic frontier approach built on the
shepherd distance function to evaluate the effects of both governmental institutions and green technologies on
energy efficiency. We find evidence of a significant positive influence of both green innovation and institutional
quality on energy efficiency enhancement having controlled for some variables. Regarding energy efficiency
levels of the individual countries- USA, Japan, Germany and Australia lead the chart while Belize, Panama,
Singapore, Malta, Sierra Leone, Iceland, Jamaica, Bahrain and Ghana are the least energy efficient countries.
Policy implications are further discussed.
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