<![CDATA[Research Originality: Departing from studies that assume a linear or monotonic innovation–sustainability link, this study is among the first to provide global panel evidence of a nonlinear, income-differentiated innovation–sustainability paradox, using an SDG index adjusted to avoid conceptual overlap with human development measures, and finds robust results from lagged identification. Research Objectives: This study examines whether innovation consistently promotes sustainable development across 88 countries from 2018 to 2023, testing for nonlinearity and income-group heterogeneity. Research Methods: A balanced panel fixed-effects framework estimates three specifications using an adjusted SDG index, namely linear, quadratic, and interaction models. Robustness is assessed via lagged GII, with structural heterogeneity examined through income-group subgroup analysis. Empirical Results: GDP per capita positively predicts SDG performance with diminishing returns. GII follows an inverted U-shaped pattern (GII* ≈ 21.25), confirming the innovation–sustainability paradox. Most countries already operate past the turning point. Among Middle- and Low-Income economies, the threshold is higher (GII* ≈ 40.50), whereas High-Income economies exhibit a structural plateau. Implications: Innovation policy must be calibrated to the stage of development. Advanced economies should redirect mature innovation systems toward sustainability objectives, while developing economies should expand capacity with directionality embedded from the outset. JEL Classification: O31, O44, Q01, C33 How to Cite:Setianingrum, D. A., & Istiqomah. (2026). The Innovation–Sustainability Paradox: Nonlinear Evidence from a Global Panel. Signifikan: Jurnal Ilmu Ekonomi, 15(2), 543-556. https://doi.org/10.15408/sjie.v15i2.50944.]]>
