Innovation, environmental sustainability and economic development: DEA-Bootstrap and multilevel analysis to compare two regions

Innovation and environmental sustainability are key elements in countries' development and essential to ensure their continuing competitiveness in an increasingly globalised market. Similarly, at the regional level, these elements mark the difference between higher/lower growth; as such, the evaluation of innovation processes is very useful to orient innovation policies towards those regions that need additional strategies to develop potential improvements. This study proposes the use, in the first stage, of DEA-Bootstrap and the Malmquist Index to analyse the innovation efficiency level in Spanish and Italian regions during the period 2004-2012. In the second stage, multilevel regression is used to analyse the relationship between efficiency, environmental sustainability and economic development. The results show great differences between the territories of the two countries analysed, confirming the need to establish differentiated policies that encourage the adoption of innovation practices in regions whose efficiency scores have shown a lack of rigour in the use of their resources, i.e. southern Italian and Spanish regions. Furthermore, we demonstrated that the stringency of environmental policies positively affects innovation efficiency, with a positive relationship identified among development, innovation, and environmental sustainability.