The relationship between economic growth and environmental technologies: analysis of G7 countries

There is a need for environmental technology to be developed to reduce and eliminate the pressure caused by the production and consumption cycle that has continued from the industrial revolution to the present day on the environment and natural resources. The investment of countries in environmental technology and the activities carried out in this field have a great importance in the context of sustainable green growth. In this context, patents on environment technologies are one of the most important indicators of technological developments related to the environment. Patents provide protection to the developer of the product, ensuring the continuation of both existing and future innovations. Technological innovations provide positive externality with their contribution to the well-being of countries both environmentally and economically. At this point, the level of development of countries and their legal and economic support for the development of new products is of great importance. In this direction, the Group of Seven (G7) which have more than two-thirds of global income, will be included in the scope of the analysis in the study. The main reason for choosing the G7 countries is that these countries, which experienced early industrialisation, are largely responsible for global warming. For this reason, this study aims to explain the interaction of economic growth with environmental patents in G7 countries. In the empirical analysis to be carried out within the scope of the study, panel data analysis was applied. In the panel study, GDP growth (annual %) as an indicator of economic growth and patents on environmental technologies as an indicator of environmental technology were used. The data handled for the analysis were drawn from the "World Bank" and "OECD" database. Datasets cover the years 1998-2019 as a balanced panel. In the panel data analysis, first of all, the cross-sectional dependence of the relevant data was examined with the CD test. According to the result, first generation panel unit root tests have been applied to test the unit root process of the data series. As a result of unit root tests, the series were found to be stationary at the level, and then were examined the causality relationship between the series. Consequently, it was determined that there was a one-way causality relationship from the GDP growth to the environmental patents. In this context, it can be interpreted that in the G7 countries much more should be contributed to environmental technology so as to progress on the path of green growth.