Title : The nexus between global value chains, skill intensity and green innovation: Evidence from firms in ECA and MENA countries
Abstract:
As global environmental concerns rise, firms face increasing pressure to adopt sustainable solutions that reduce their ecological footprint while enhancing their competitive positioning. This paper examines the impact of skill intensity and firms’ integration into global value chains (GVCs) on the adoption of green technologies. It uses firm-level data from the World Bank Enterprise Surveys (WBES) for 28,000 firms across 41 countries in the Middle East and North Africa (MENA) and Eastern Europe and Central Asia (ECA) regions, collected over the period 20182020. First, probit models investigating the relationship between skill intensity and green technology adoption are estimated. Then, we control for any potential endogeneity by applying an instrumental variable (IV) approach combined with a control function method. The findings show a significant positive association between skill intensity and the adoption of green technologies, suggesting that firms with more skilled workers are better equipped to implement these technologies effectively. Participation in GVCs is also positively associated with green innovation across most levels of integration, with the effect intensifying as firms become more deeply engaged. However, one level of integration involving exporting, importing, and foreign ownership without international certification does not show a significant relationship. Our results remain robust to alternative definitions of GVCs and to the inclusion of innovation covariates. These findings highlight the importance of investing in workforce upskilling and supporting firms participating in GVCs as effective policy strategies to promote green innovation in MENA and ECA countries.
Keywords: Green Technology Adoption, Global Value Chains, Workforce Skills, Environmental Innovation.
