Environmental innovations in the EU: A club convergence analysis of the eco-innovation index and driving factors of the clusters

Eco-innovation, which combines innovation and sustainable development, has become an essential instrument to strengthen economic growth and preserve the environment. Considering the eco-innovation index for the EU, we study the convergence of eco-innovation across countries for the period 2012-2021 through the club convergence approach. We evaluate if and to what extent EU countries are converging toward a homogenous eco-innovation dynamic pattern. Our results indicate three clubs of convergence in the overall eco-innovation index, while the number of clusters is higher -four or five- in the five dimensions of the indicator. The analysis of the determinants of clubs in the aggregated index highlights the relevance of GDP per capita and economic openness, while R&D investments, environmental taxation and firm size are nonsignificant in our study. The results are also discussed within the contexts of convergence of environmental policies and innovation in the EU.