Green finance, green innovation, and industrial development in Africa

Abstract

The issue of promoting green industrial productivity has emerged as a pivotal concern in economic development, attracting substantial attention from scholars and policy makers alike. This study aims to scrutinize the impact of green finance on Africa’s industrialisation, and further explore the potential moderating role of green innovation within the relationship between green finance and industrialisation in the African context, i.e., assessing the extent to which green innovation can influence the effect that green finance has on industrialisation. This study encompasses 41 African nations, spanning the period from 2000 to 2020. The research methodology employs the fixed effect model as proposed by Driscoll and Kraay (1998), in conjunction with the system Generalized Method of Moments (GMM) regression analysis. The results show that green finance enhances industrialization in Africa, while green innovations through renewable energy have a negative effect. Policy recommendations are discussed.