How Do Economic Freedom and Technological Innovation Affect Green Total-Factor Productivity? Cross-Country Evidence

Green development has become a global concern. Using a panel of 67 countries from 1995–2019, the purpose of this study is to examine whether and how economic freedom and technological innovation affect green total factor productivity (GTFP), and the interaction effect of both on GTFP. The results show that economic freedom and technological innovation play a positive influence on GTFP in both the global panel and the regional panels at different income levels, and this significant effect should be particularly important for high-income countries. Interestingly, the interaction effect of economic freedom and technological innovation has a negative effect on the global GTFP. This negative effect is also present in the middle-income country panel, but is not significant in the high-income panel. This study reveals that the environmental significance of economic freedom should receive attention.