Green Technology Adoption and Industrial Competitiveness in Emerging Economies: The Moderating Effect of Institutional Quality

As the world faces environmental challenges and the urgent need for sustainable development, the adoption of green technology stands at the forefront in shaping the future of various industries in the world. This study contributes to the literature by investigating the impact of GTA measured through the Environmental Performance Index (EPI) and Renewable Energy Consumption (REC), and Industrial Competitiveness (IC), while examining the moderating role of Institutional Quality (IQ). Using the Balance of Panel data from 24 emerging economies covering 2002 to 2021. The study employed the System Generalized Method of Moments (SYS-GMM) estimator to address endogeneity concerns and Panel Quantile Regression to capture heterogeneous effects across the competitiveness distribution. The results indicate a nuanced relationship. EPI positively and significantly enhances Industrial Competitiveness, supporting the Porter Hypothesis that stringent yet well-designed environmental policies stimulate innovation and competitiveness. Conversely, REC exhibits a negative effect on Industrial Competitiveness, reflecting structural bottlenecks, transitional costs and energy system constraints within emerging economies. Further, Institutional Quality demonstrated mixed effects. Rule of law and political stability enhance competitiveness, whereas Control of corruption negatively affects it, implying that governance weakness undermines the gains associated with green technology adoption. The study underscores the need for emerging economies to strengthen the institutional framework, prioritize innovation-driven environmental policies, and address renewable energy system inefficiency. These measures are essential for leveraging green technologies to enhance industrial competitiveness and support sustainable development.