Relationship between renewable energy, technological innovation, and economic indicators of green growth: Comparative analysis of the OECD and Western Balkan Regions

Abstract

This study examines the role of renewable energy, technological innovation, and economic indicators in promoting green growth by conducting a comparative analysis between OECD countries and the Western Balkan region over the period 2010–2022. The research includes a sample of 5 Western Balkan countries and 38 OECD countries, aiming to understand the contributions of these factors to sustainable development in diverse economic contexts. This paper uses the Hausman Taylor Model instrumental variables (IV) economic model to address the potential endogeneity of the data, provides a strong assessment of the impact, and analyses how renewable energy, technological innovation in the green economy, and various economic indicators contribute to sustainable economic development. The study findings indicate that for Western Balkan countries, technological innovation, urbanization, trade, and economic growth positively influence green growth. On the other hand, the findings for OECD countries indicate that renewable energy consumption and technological innovation positively influence green growth, whereas economic indicators such as economic growth, inflation, domestic credit private by banks and trade have negative effects on green growth.Contrasting results between the OECD and the regions of the Western Balkans highlight the influence of the various stages of economic development and the importance of context-specific factors in determining the results of green growth. The study emphasizes the need for customized policy interventions that consider the unique economic conditions and environmental goals of each region to achieve a transition towards a more sustainable future. The implications of these findings suggest significant policy considerations for enhancing green growth effectively across different global contexts.