Drivers of Green Innovation in Nigeria: Evidence from Governance Quality

Governance as a multidimensional concept provides a framework for evaluating the effectiveness of utilization of human, material and even natural resources, including innovations in a country. Therefore, in exploring the nexus between governance quality and green innovation in Nigeria, Pearson correlation and Toda-Yamamoto causality techniques were applied to the annual time series data obtained from the World Bank’s Worldwide Governance Indicators and World Development Indicators during the period, 1996-2023. Empirical evidence from Pearson correlation test indicates that, except rule of law, and voice and accountability which are negatively correlated with green innovation, the other four indicators of governance quality (control of corruption, government effectiveness, regulatory quality, and political stability) are positively correlated with green innovation in Nigeria. Furthermore, Toda-Yamamoto causality analysis reveals the existence of a unidirectional causality flow from regulatory quality to green innovation in Nigeria. However, causality runs from green innovation to control of corruption in Nigeria. The study concludes that regulatory quality is a driver of green innovation in Nigeria. There is therefore the need to improve regulatory quality in order to stimulate the level of green innovation in the country. Also, control of corruption as a governance quality could also be enhanced when there is a higher level of green innovations in Nigeria.