Frontier Technology Adoption and Inclusive Green Growth in the EU: A Double-edged Sword?

Abstract As the EU Commission strategises towards a more technologically advanced region, a critical question arises: Does frontier technology adoption (FTR) truly foster inclusive green growth (IGG)? This study answers this question by empirically examining the impact of FTR on IGG, while accounting for the contingency role of electricity access. Applying pooled least squares, Driscoll-Kraay standard errors, and the dynamic generalised method of moments techniques, we uncover a paradox: while FTR accelerates economic growth and lowers greenhouse gas emissions, it exacerbates income inequality. The second lesson from this study is that although electricity access enhances the growth and environmental sustainability benefits of FTR, it only mitigates (but does not nullify) the downside of income inequality. These findings underscore the crucial need for the EU Commission to establish complementary and compensatory mechanisms to ensure that the EU’s technological leap delivers greener and more inclusive growth.