Higher education attainment, multinational corporations, and environmental sustainability: Isolating the carbon footprint in the European Union and the UK

The bilateral effects of foreign direct investment on green innovation efficiency: Evidence from 30 Chinese provinces

The global scene for foreign investment has changed significantly in the past decade. Along with a resumption of high rates of growth, there have been shifts in flows, destinations, determinants and policies. It is within this context that foreign direct investment (FDI) in South Asia will have to be considered in order to have a realistic picture of the prospects for future FDI in the region. The main features of the global FDI scene may be summarized as follows: FDI flows are rising faster than almost all other indicators of economic activity worldwide. FDI has grown at around 25 per cent per annum in the latter 1980s, while trade has grown at under 10 per cent and gross domestic product (GDP) and manufacturing output at around 2–3 per cent. Thus, the share of international production under the control of multinational corporations (MNCs) is increasing rapidly. This reflects the growing economic strength of MNCs in innovation, services and finance, apart from trade. Traditional MNCs remain powerful, but there are many new sources of FDI from the Organisation for Economic Co-operation and Development (OECD) countries as well as from developing countries. While the recent recession in leading investor countries such as the United States and the United Kingdom has led to declines in the rate of growth of FDI by these countries, the rate of growth of FDI still exceeds the rate of growth of their domestic activity. Other major capital-exporting countries, with the exception of Japan, have continued to invest increasing amounts abroad in 1991. This investment behavior shows growing independence of international investors from national economic conditions. The business cycle clearly affects FDI through its effect on demand conditions and business confidence more generally. However, the effects are not as direct and immediate as they are on domestic investment and activity. Thus, recipients of FDI, to the extent that their business cycles move differently from those in capital-exporting countries, may expect to be able to attract FDI flows that depend on their domestic economic conditions rather than conditions in capital-exporting countries. The share of global FDI going to developing countries, currently about 17 per cent, has declined from the early 1980s (25 per cent) and the 1970s (33 per cent). However, the value of such FDI (in current dollars) has risen sharply in the late 1980s by 22 per cent per annum. It amounted to $32 billion in 1990. This rise has been accompanied by a growing differentiation in the destination of investments in the developing world. East and Southeast Asian countries have become the largest recipients, accounting for about 60 per cent of all flows to developing countries. There is a sharp revival in FDI in Latin America (especially Mexico) in the past two years, after a long period in which the region lost its pre-eminent place as the recipient of FDI in the developing world. However, Asia seems set to retain its new role as the leading destination because of its economic dynamism. Africa is losing its (already small) share and shows no signs of reversing this trend despite considerable liberalization of policies. The policy context for international investment has changed dramatically in the last decade. Due to a constellation of factors, i.e., the debt crisis, the evident success of outward-oriented policies in East Asia, and disillusionment with traditional interventionist strategies, there has been widespread liberalization of economic policies towards greater trade orientation, private ownership and reliance on market forces in almost all developing countries. However, since most developing countries are opening up at the same time, only those that offer real economic advantages to the operations of international firms can hope to attract increased FDI on a sustained basis. The ability to attract FDI varies by the nature of activities undertaken. In most simple manufacturing activities, the host country does not need to possess much apart from a conducive policy regime, cheap trainable labor and good infrastructure: However, the location of production facilities for more complex activities increasingly reflects current technological trends and the need for investments to be competitive in world markets. The growing technological sophistication of manufacturing and services mean that investors, faced with an increasingly open trading environment, demand the complementary inputs that make their facilities efficient by world standards. These complementary inputs are rising levels of operator, technical and managerial skills, relatively free access to world-priced inputs, a good domestic base of suppliers and services, and excellent infrastructure. Large markets do remain a major attraction, even in liberalized environments, but in every country the need for local inputs of technology and skills is much more significant than in the days of inward-oriented FDI. MNCs from advanced OECD countries are moving up-market to sophisticated activities, while the more mature, less demanding activities are being increasingly taken over by investors from developing countries, especially in Asia. The East Asian newly industrializing economies (NIEs) are now leading investors in several labor-intensive export activities, and some are moving into more complex capital-intensive and technology-intensive areas. Their dynamism and specialization make them an important source of finance and technology for other developing countries in the region seeking FDI. This is clearly an important consideration for South Asia. With these background features of FDI, we can now turn to South Asia.

Nearly all developing countries actively seek capital and technology from the advanced countries. Although private direct foreign investment (mainly in the form of multinational enterprise) is viewed with ambivalence by many developing countries, it is nonetheless true that direct investment remains a substantial source of capital and is sometimes the only source of specific technologies. Indeed, given the slow growth in official external assistance, developing countries are becoming more, not less, dependent on direct foreign investment. While disbursements of official development assistance by the OECD countries rose 43% from 1961 through 1970, direct investment flows rose almost 90% over the same period. In the later year, the flow of direct investment was more than two-fifths of all official assistance, $3.2 billion compared to $7.8 billion.1 Furthermore, the United States and other major capital exporting countries would prefer, for economic as well as ideological reasons, to channel more of their capital outflows to developing countries through private investment. It is highly probable, therefore, that developing countries will continue to rely on direct foreign investment in the foreseeable future to carry out their development programs. It is against this background that the present study seeks to identify the empirical determinants of direct foreign-investment flows in the manufacturing sectors of developing countries. Our purpose is to select from the many economic, social, and political features of a developing country those features that are critical to making that country attractive or unattractive to private foreign investors. Available empirical studies are limited

Artificial intelligence (AI) has rapidly expanded across multiple industries and technologies, driving economic growth and offering innovative solutions to structural challenges. However, its environmental impact remains contested. While firms investing in AI aim to lower its carbon footprint, its widespread use continues to generate significant emissions. This study examines the environmental effects of AI investments, particularly on carbon emissions, while also accounting for human and economic development indicators. The analysis employs the Panel ARDL-PMG approach using data from 2012–2023 for nine technologically advanced economies characterized by extensive use of robotics (South Korea, Japan, Germany, the United States, China, Singapore, Sweden, Italy, and France). The findings reveal the existence of a stable long-run equilibrium among the variables. The negative and significant ECT indicates that about 32% of short-term imbalances are corrected each year, suggesting that the system steadily moves toward its long-run equilibrium. In the long run, per capita GDP and renewable energy consumption reduce carbon emissions, whereas AI investments (AIINV), Foreign Direct Investment (FDI), and the Human Development Index (HDI) increase them. The results show that AIINV and FDI do not contribute to reducing carbon emissions. In this context, the findings suggest that investments in the energy sector are not directed toward encouraging the transformation of energy sources. These results highlight the environmental risks posed by the growing prevalence of AI. However, AIINV and FDI have the potential to help reduce carbon emissions if they are aligned with the transformation of energy sources. Thus, aligning AI with green innovation and sustainable environmental policies is essential. This study emphasizes the importance of enabling the energy transition to reduce carbon emissions arising from AIINV and FDI in the sector. Promoting eco-efficient technologies and sustainable innovation processes can help mitigate the carbon-intensive effects of digital transformation.

The study aims to investigate how foreign direct investment (FDI) and green innovation (GI) impact environmental quality in South Asia. Moreover, this study examines the moderating role of GI between FDI and environmental sustainability. We use panel data from 1995 to 2018 for five South Asian nations namely, Pakistan, India, Bangladesh, Sri Lanka, and Nepal. For the empirical analysis, we used 1st generation cointegration like Pedroni and Kao, and 2nd generation cointegration tests like Westerlund. Moreover, for the long-run relationship, we employ fully modified least squares (FMOLS) and dynamic ordinary least squares (DOLS) estimation. The study’s empirical results suggest that GI significantly enhances ecological sustainability in South Asian economies; however, FDI degrades the environmental quality. Furthermore, the results suggest that GI significantly moderates the nexus of FDI and ecological sustainability in South Asia. It is recommended that South Asian countries increase green innovation with FDI so that environmental quality can be assured for the region’s sustainable development.

The study aims to investigate how foreign direct investment (FDI) and green innovation (GI) impact environmental quality in South Asia. Moreover, this study examines the moderating role of GI between FDI and environmental sustainability. We use panel data from 1995 to 2018 for five South Asian nations namely, Pakistan, India, Bangladesh, Sri Lanka, and Nepal. For the empirical analysis, we used 1st generation cointegration like Pedroni and Kao, and 2nd generation cointegration tests like Westerlund. Moreover, for the long-run relationship, we employ fully modified least squares (FMOLS) and dynamic ordinary least squares (DOLS) estimation. The study's empirical results suggest that GI significantly enhances ecological sustainability in South Asian economies; however, FDI degrades the environmental quality. Furthermore, the results suggest that GI significantly moderates the nexus of FDI and ecological sustainability in South Asia. It is recommended that South Asian countries increase green innovation with FDI so that environmental quality can be assured for the region's sustainable development.

Financial development and green innovation, the ultimate solutions to an environmentally sustainable society: Evidence from leading economies

Hasan, Siraj, Tarazi, and Wu (2021) examine the association between country-level expropriation risk and the pricing of foreign earnings in multinational corporations (MNCs). They contend and find that, when subsidiary country expropriation risk declines, the value relevance of foreign earnings increases. Hasan et al. (2021) view their evidence as consistent with the idea that investors discount foreign earnings when they perceive the risk of expropriation and unfair treatment by foreign governments to be high.The study of Hasan et al. (2021) aims to contribute to the longstanding stream of the literature that examines the pricing and value relevance of foreign earnings (e.g., Thomas 1999; Callen, Hope, and Segal 2005; Hope, Kang, Thomas, and Vasvari 2009), as well as to the nascent literature that investigates the within-MNC determinants of financial reporting transparency (e.g., Dyreng, Hanlon, and Maydew 2012; Beuselinck, Cascino, Deloof, and Vanstraelen 2019).My discussion focuses on three key issues. First, related to the study's theoretical underpinnings, a maintained assumption of Hasan et al. (2021) is that the pricing of foreign subsidiary earnings is only explained by investors discounting foreign subsidiary earnings to account for subsidiary country risk of expropriation in their investment decisions—that is, investors rely less (more) on foreign subsidiary earnings when subsidiary country risk of expropriation is high (low). I argue that Hasan et al.'s (2021) maintained assumption is rather strong, as it neglects the realistic possibility that the pricing of foreign subsidiary earnings is also a function of subsidiary earnings quality. Second, the evidence in Hasan et al. (2021) mainly relies on a cross-sectional identification strategy and thus their findings are to be interpreted with this caveat in mind. Third, while Hasan et al. (2021) are careful in designing a number of sensitivity tests to account for the influence of confounders, potential alternative explanations for their documented findings are hard to rule out.The remainder of my discussion unfolds as follows. Section II provides some perspectives on the theoretical underpinnings of Hasan et al. (2021). Section III focuses on the empirical challenges. Section IV discusses potential alternative explanations for the documented findings. Section V concludes.The central tenet of Hasan et al. (2021) is that, when pricing the earnings of MNCs, investors discount the foreign earnings of subsidiaries domiciled in countries with high risk of expropriation. Accordingly, Hasan et al. (2021) hypothesize a negative association between the degree of subsidiary country expropriation risk and the value relevance of foreign subsidiary earnings.The maintained assumption of Hasan et al.'s (2021) theoretical development—that is, the pricing of foreign subsidiary earnings is only determined by investors discounting foreign subsidiary earnings to account for subsidiary country risk of expropriation—neglects, however, the realistic possibility that the pricing of foreign subsidiary earnings may also be a function of subsidiary earnings quality.I believe the maintained assumption of Hasan et al. (2021) to be challenging because the multiplicity of factors that influence MNCs' decisions to invest abroad are also likely to shape MNCs' financial reporting strategies and thus subsidiary earnings quality (Dyreng et al. 2012; Beuselinck et al. 2019).MNCs' foreign direct investment policy—that is, the decision to invest in subsidiaries domiciled in foreign countries—is certainly not random. In fact, MNCs may seek to invest abroad, among other reasons, to increase the scope of their geographic and industrial diversification, to take advantage of a cheaper (or differentially skilled) labor force, or to benefit from more convenient tax regulations. MNCs may deliberately invest in countries with high risk of expropriation if they find it net beneficial overall. Furthermore, the very same factors that influence MNCs' foreign direct investment decisions are also likely to shape subsidiary earning quality.The political cost hypothesis (Watts and Zimmerman 1978, 1986), for example, would predict that MNCs that establish subsidiaries in countries posing expropriation risks likely exercise their financial reporting discretion to manipulate these subsidiaries' earnings downwards when they perceive the risk of expropriation (i.e., a political cost) to be high.1 More generally, MNCs may manipulate the earnings of their subsidiaries domiciled in countries with lax financial reporting enforcement as a part of a deliberate financial reporting strategy orchestrated at the MNC headquarters level (Dyreng et al. 2012; Beuselinck et al. 2019).2In light of the above discussion, it is reasonable to assume that the quality of subsidiary earnings is likely determined by both (1) the foreign direct investment policy of MNCs, and (2) the financial reporting choices made by MNCs. As such, it is unclear whether the lower value relevance of foreign subsidiary earnings documented by Hasan et al. (2021) reflects investors' expropriation risk considerations or, instead, investors' lower reliance on subsidiary earnings because of transparency considerations, or a combination of both.3At a conceptual level, Hasan et al. (2021) examine whether subsidiary country risk of expropriation affects the pricing of earnings reported by foreign subsidiaries. Empirically, however, Hasan et al. (2021) measure: (1) subsidiary country risk of expropriation using a proxy for the strength of contract viability; and (2) investors' reliance on foreign subsidiary earnings information using the value relevance of the foreign earnings reported by MNCs. I believe the two chosen proxies for the constructs of interest likely limit the inferences of the study for several reasons.First, a potential drawback associated with the choice of value relevance as a proxy for the usefulness of foreign subsidiary earnings to MNC investors is that the ensuing value relevance regressions likely capture MNC investors' assessments of both subsidiary country expropriation risk and subsidiary earnings quality.Second, because Hasan et al. (2021) proxy for subsidiary country risk of expropriation using a country-level measure of the strength of contract viability—that is, the extent to which a country enforces private contracts—a more natural earnings attribute to examine would be one that captures the usefulness of accounting information for contracting (e.g., conservatism) as opposed to the usefulness of accounting information for equity valuation (i.e., value relevance).Third, the empirical measure of strength of contract viability does not appear to exhibit substantial time-series variation and, moreover, is likely associated with other—potentially confounding—country-level factors. As such, it is unclear the extent to which the documented value relevance effects can be (entirely) attributed to changes in the strength of contract viability. Relatedly, the cross-sectional nature of Hasan et al.'s (2021) identification strategy prevents the authors from establishing a causal link between expropriation risk and the value relevance of foreign subsidiary earnings. Thus, future research could perhaps exploit plausibly exogenous changes in strength of contract viability provided by country-level "expropriation events" (Lin, Mihov, Sanz, and Stoyanova 2019) to better isolate the effect of subsidiary country expropriation risk on the pricing of foreign subsidiary earnings.Fourth, Hasan et al. (2021) do not observe reported foreign subsidiary earnings directly. In contrast, because of data limitations, they simply use MNCs' foreign earnings as a proxy for foreign subsidiary earnings. However, because MNCs may generate foreign earnings even absent a direct investment in a foreign country (i.e., MNCs may also generate foreign earnings by means of selling directly from their home countries), the findings of Hasan et al. (2021) should be interpreted with this data limitation in mind.Lastly, as the main model specification in Hasan et al. (2021) does not include MNC fixed effects, the documented value relevance estimates are not purged from the effect of MNC-level variation. Thus, the reported effect of expropriation risk on subsidiary earnings value relevance may be explained, at least in part, by fundamental financial reporting quality differences across subsidiaries of different MNCs.Although Hasan et al. (2021) conduct a series of sensitivity tests to mitigate the possibility that their estimates could be biased because of (unobservable) confounders, the discussion of the research design limitations in the preceding section highlights that potential alternative explanations for their documented findings are inherently hard to rule out.First, as previously mentioned, MNCs choose destination countries for their foreign direct investments for a variety of reasons. Often, MNC foreign direct investment decisions are motivated by the degree of proximity between the MNC country and the subsidiary country (e.g., the MNC country and the subsidiary country may have the same legal origin, share a common language, or have a similar judicial system). Therefore, the documented extent of foreign earnings value relevance may reflect factors associated with MNC foreign direct investment choice rather than subsidiary country expropriation risk.Second, subsidiary country expropriation risk is likely to vary depending on the degree of political hostility between the MNC country and the subsidiary country. Therefore, to the extent that the documented findings in Hasan et al. (2021) are solely based on a sample MNCs headquartered in the United States, it is hard to say whether the results would generalize to MNCs headquartered in other countries. This is especially important since prior research has shown that factors associated with specific MNC/subsidiary country-pair combinations are important determinants of subsidiary earnings quality (Beuselinck et al. 2019).Third, as subsidiary earnings quality is largely affected by MNC-level reporting policies, and MNCs may have incentives to obfuscate reported numbers in subsidiary countries with high expropriation risk, the documented value relevance effects may, at least in part, be driven by MNC headquarters' financial reporting policies.Hasan et al. (2021) present evidence of a negative association between subsidiary country risk of expropriation and value relevance of foreign subsidiary earnings. While Hasan et al. (2021) are careful in designing a number of tests to support their main findings, the evidence they document should be interpreted with caution. The inherent data availability limitations, the cross-sectional nature of their identification strategy, and the potential alternative explanations for the findings that Hasan et al. (2021) document call for future research to identify more suitable settings and sharper empirical designs to further improve our understanding of the pricing determinants of foreign subsidiary earnings.

The purpose of this study is to analyze the interdependencies among economic growth, energy consumption, foreign direct investment (FDI), environmental sustainability, and research & development (R&D) in green innovation behavior from 2000-2020 for 49 countries across the globe. The study tests these predictions using the Generalized Method of Moments (GMM) for robust analysis and investigates how financial development mediates these relationships, which is moderated by environmental regulation. They find that FDI, energy consumption, and R&D all have a significant role in driving green innovation. Financial development, in contrast to common intuition and hypothesis, meddles not a lot among monetary growthenergy utilization, FDI, ecosystem sustainability, R&D, green innovation relationship. The remarkable impact of environmental regulations may partially cause a considerable reduction in the relationship between financial development and green innovation. These findings do indicate the importance of policy targeted at continuing to direct and effect green innovation. In summary, the direct effects of FDI and energy consumption as well as R&D are important for policymakers to consider in relation to financial development such that environmental regulations serve a moderating role in ensuring sufficient economic growth while maintaining an acceptable level of sustainable environment

The relevance of environmental sustainability has grown significantly among academics, professionals, and the general public. A variety of factors influence an economy's ability to support its environmental sustainability. Foreign direct investment (FDI), financial development (FD), green technological innovation (GTI), and green finance (GF) are pillars that hold the key to accomplishing sustainability goals. Despite extensive studies on the factors influencing green finance, there remains a gap in grasping the impact of green finance and various investment factors on environmental sustainability. The study's objective is to analyze the relationship between ecological sustainability, green financing, FDI, innovative green technologies, and FD in developing countries. The study employed a fixed effect and random effect model with robustness analysis to gain an empirical understanding of the relationship. The findings highlighted that green finance plays a crucial role in green technologies and encourages economies to embrace sustainability. It also supports the pollution haven hypothesis (PHH) and the understanding that an increase in FDI has a positive relationship with carbon emission. The study makes a significant novel contribution by analyzing the combined influence of financial and green technological development on environmental sustainability. The numerous theoretical and practical implications for addressing the constraints posed by the PHH include tightening domestic legislation, developing international cooperation, and pushing the adoption of cleaner technology throughout industries. It helps governments enact effective environmental regulations to encourage green investment and technological innovation to have a beneficial knock‐on effect on cutting ecological sustainability.

This study investigates the multifaceted interplay between carbon dioxide emissions, population dynamics, foreign direct investment (FDI), and renewable energy (RE) within the unique context of Thailand. Amidst rapid economic growth and urbanization, Thailand faces pressing environmental challenges, making it an ideal case study for understanding the complex relationships between these variables. As a nation experiencing rapid economic growth and urbanization, Thailand provides a compelling case study for understanding the complex relationships between these variables. The paper uses the unrestricted random panel data method. Data is gathered from the World Bank from 2000 to 2022. The research addresses several critical issues using a mixed-methods approach and drawing data from national statistical agencies and environmental databases. The paper's primary objective is to explore how population dynamics, FDI, and RE adoption influence carbon emissions in Thailand. The rigorous analysis unveils key insights: a positive correlation between population growth and carbon emissions, nuanced relationships between FDI and emissions across sectors, and the significant impact of RE adoption on emissions reduction, particularly in high-emission sectors. This work contributes to the existing literature by offering novel findings and policy recommendations tailored to Thailand's environmental challenges. By addressing identified issues, such as sector-specific emissions patterns and the influence of FDI on emissions, the study provides actionable insights for policymakers striving to balance economic growth with environmental sustainability. Significantly, this manuscript advances the field by emphasizing the need for an integrated approach to environmental policymaking and highlighting the potential of RE as a critical driver of emissions reduction. The study's originality lies in its comprehensive analysis of the intricate nexus between carbon emissions and socio-economic factors within the Thai context. In conclusion, this research underscores the importance of informed environmental policymaking and offers practical implications for fostering sustainable development in Thailand and beyond. By leveraging the innovative insights and recommendations presented in this manuscript, policymakers can navigate the complexities of environmental stewardship while driving positive change towards a greener and more sustainable future.

The U.S. Tax Treatment of Foreign Source Income Earned in Developing Countries

Confirming, Infirming, and “Falsifying” Theories of Human Rights: Reflections on Smith, Bolyard, and Ippolito Through the Lens of Lakatos William H. Meyer (bio) Some scholars of human rights have turned their attention to a relatively new issue. A limited number of studies have sought to establish the causal impact of multinational corporations (MNCs) on human rights in the third world. 1 These studies, conducted at several different levels of analysis, have produced some interesting (but not always consistent) results. 2 My own work in this area first appeared in the Human Rights Quarterly (HRQ) in May of 1996. 3 A follow-up study by Jackie Smith, Melissa Bolyard, and Anna Ippolito (Smith et al.) appears in this issue of HRQ. 4 My work tended [End Page 220] to support theoretical claims that MNCs have an overall beneficial impact on both first- and second-generation human rights at the international level. 5 The study by Smith et al., produced results to the contrary. Smith’s research argues that MNCs have a negative effect on rights in the developing world. 6 The editors of HRQ have invited my response to Smith’s article. While I do not dispute the validity of Smith’s conclusions, I stand by the results of my own research. In order to understand how both studies provide useful additions to our knowledge of the causes of human rights violations, this article will discuss them (along with my subsequent research) within the larger context of theory testing and theory building in the social sciences. With a proper grasp of the nature of human rights theory, one can easily understand how such conflicting results are not unusual. Indeed, they are to be expected. Furthermore, the existence of inconsistent and even conflicting results from empirical testing of human rights theories does not, in and of itself, negate the validity of those theories. A brief review of Imre Lakatos’ description of theories as research programs will help to make these points clear. 7 Before discussing Lakatos, however, the article will summarize the combined results from this body of literature. In the new edition of his textbook on human rights, Jack Donnelly briefly considers MNCs as an important new topic for human rights research. 8 Donnelly illustrates his discussion with an example taken from an advertisement placed by the Mobil Corporation in The Economist. 9 This ad defends MNC investments and operations in countries that have repressive governments. 10 According to the Mobil ad, if one of our goals is to promote [End Page 221] civil and political reforms in repressive nations, then “great global companies can be a positive force for change.” 11 The results of my 1996 HRQ article could be interpreted as lending support to these claims. My research showed that when the concept of first-generation rights is operationalized as Freedom House rankings on civil liberties and political rights, and then those Freedom House rankings are compared to direct foreign investment (DFI) by US MNCs, the results show strong positive correlations between rising MNC investment and better civil and political rights. 12 Similarly, when I operationalized second-generation rights via the Physical Quality of Life Index (PQLI), and then compared PQLI scores to DFI by MNCs, I once again found strong positive correlations between increased DFI and improved human rights. 13 As DFI increased, literacy, life expectancy, and infant survival rates all improved as well. 14 My research argues that civil and political rights (as measured by Freedom House) correlate positively with DFI. 15 My research also shows strong positive correlations between DFI and second-generation socioeconomic rights (the PQLI). 16 The follow-up study by Smith’s team argues that my conclusions are in error. 17 When they measured civil and political rights by means of Amnesty International’s reports, or by means of the US State Department’s reports on human rights, they found weak negative correlations between first-generation rights and DFI by MNCs. Smith’s team also substituted data on DFI as measured by the World Bank for my data on US DFI (as reported by the Commerce Department). 18 They found a negative relationship between the PQLI and net DFI. 19 Has Smith’s...

The manuscript tests the interconnected links between electricity consumption (EC), fossil fuel (FF) use, renewable energy (RE) adoption, foreign direct investment (FDI), population growth (PG), gross domestic product (GDP), and environmental pollution (EP) in Korea. Using time series data from 1990 to 2023, we employ vector autoregression (VAR) and Granger causality tests (GCT) to analyze the dynamic interactions among these parameters. Our findings indicate significant bidirectional causality between GDP and EC, unidirectional causality from FFC to EP, and a notable impact of RE adoption on reducing pollution levels. The fresh findings underscore the necessity of integrated policy recommendations that balance economic growth (EG) with sustainable energy practices to mitigate environmental degradation. The manuscript provides valuable insights for policymakers aiming to harmonize economic development (ED) with environmental sustainability (ES) in Korea. The new findings underscore the necessity of integrated policy approaches that balance EG with sustainable energy practices to mitigate environmental degradation.

Purpose Amid the pressing global need for sustainable development and environmental protection, exploring effective pathways to foster green innovation has become crucial. This study aims to examine the impact of digitalization on green innovation by analyzing its interactions with micro and macro factors. Design/methodology/approach This paper adopts a multi-level perspective (MLP) with a multi-agent framework to study how different factors impact green innovation efficiency. This paper uses fuzzy-set qualitative comparative analysis (fsQCA) on 30 Chinese provinces from 2012 to 2021 to identify key conditions and pathways for green innovation efficiency. Findings The findings reveal that digitalization alone does not constitute a necessary condition for green innovation. Rather, digitalization needs to be configured with other factors to form dynamic causal paths. In 2012–2016, a single path type (digitalization coupled with regional innovation and marketization) exists. In 2017–2021, two causal path types [digitalization and foreign direct investment (FDI), digitalization and regional innovation] emerge. Research limitations/implications The study has three theoretical contributions. First, while previous research studies often focus on single factors, the study examines the complexity of green innovation from a configurational perspective. Using the fsQCA method, this paper explores complex interactions and asymmetric causal relationships among multi-level factors. Second, this paper presents a novel theoretical framework that integrates the MLP framework with the multi-agent framework, facilitating a multi-dimensional analysis of green innovation. This synthesis elucidates the complex network of relationships, interactions and dependencies that propel green innovation. Third, responding to the call in international dynamic QCA research, this paper uses the multi-period QCA method. This allows for a detailed stage-by-stage comparative analysis, elucidating green innovation paths and revealing evolutionary trends of “configurational diversity” and “factor concentration.” This research offers practical insights for policymakers and stakeholders to develop more effective, tailored strategies for promoting green innovation. Practical implications Digitalization alone cannot fully drive green innovation; it must be combined with factors such as marketization, regional innovation and FDI. To achieve this, promote market-oriented reforms to enhance market mechanisms and encourage participation in green innovation projects through incentives. Increase investment in regional innovation, establish platforms for resource sharing and technological exchange and support cooperation between local governments and businesses. Additionally, it attracts FDI by creating favorable policies and a conducive business environment. Adapting policies to evolving conditions is crucial. Regularly assess and update policies to ensure their effectiveness and relevance in the face of changing technological and market landscapes. Optimize approval processes, reduce bureaucratic hurdles and improve policy implementation efficiency. Regions should also tailor strategies to their specific needs: those with high digitalization but lacking FDI should focus on building a robust research and development (R&D) personnel base, while regions with high FDI but insufficient local talent should attract skilled professionals through talent attraction programs and partnerships with international universities. Continuously adapting strategies ensures that regions can effectively drive sustainable development and green innovation. Social implications The research advances the understanding of green innovation by examining multi-level configuration effects, introducing an integrated framework and conducting stage-by-stage comparative analysis. These contributions collectively enhance the theoretical foundation and practical applicability of promoting green innovation in an increasingly digitalized world. Originality/value This study offers invaluable theoretical insights and practical pathways for policymakers and decision-makers, providing tailored strategies to promote green innovation. By understanding the complex interactions between digitalization and other factors, decision-makers can better leverage digitalization for sustainable development and environmental protection.