Impact of Energy Price on Technological Innovation through the channel of Human capital: The Case of Developed and Developing Economies

Abstract

This Study investigated the moderating role of human capital in the relationship between energy price and technological innovation for 81 developed and developing countries from the period 1990-2019. For empirical investigation, we have employed fixed effect, random effect, and generalized method of moments (GMM). This study analyzed the conditional effect of energy price on technological innovation at different levels of human capital. According to findings, both developed and developing countries experience an increase in technological innovation when energy prices are high. The moderating role of human capital, confirms that energy price and human capital are substitutes in explaining the relationship with technological innovation. It is proposed for policy implications that financial support is required to increase technological innovation because it is an expensive investment to pursue. Furthermore, to build the absorptive capacity of the country, which in turn increases factor productivity, nations need to develop their human capital.