Interrelation between eco-innovation and intra-industry trade- a proposal for a proxy indicator of sustainability in the EU countries

The “innovation–trade” interrelation has been a subject of research for decades. Nowadays, in the context of the growing importance of sustainable development, the role of eco-innovation is essential for promoting a rapid economic growth in each country. In this sense, eco-innovation influences the level of intra-industry trade stimulating international trade to adopt environmentally-friendly technologies. In general, the evaluation of eco-innovation in EU countries is done through indicators of their degree of performance and their impact on the welfare of nations. Using Eurostat data and WITS (World Integrated Trade Solution) database for the period 2010–2018, the authors of this paper give empirical evidence of a linkage between the two indicators. The Grubel–Lloyd index is selected as an appropriate tool to show that socio-economic performance has a significant weight in eco-innovation scoreboard measurement. The results confirm that intra-industry trade of each EU country is closely related to the level of its eco-innovation index. To our knowledge, this is the first attempt to test for such a type of interrelation and to show that by verifying the usefulness of eco-innovation performance in EU countries through an intra-industry trade indicator (IIT) such as the Grubel–Lloyd index.