The effect of green economic growth on the foreign investment behaviour of heterogeneous enterprises

PurposeThe development of green economy is of academic and policy importance to governments and policymakers worldwide. In the light of the necessity of renewable energy to sustain green economic growth, this study aims to examine the relationship between renewable energy consumption and green economic growth, controlling for the impact of trade openness for Organization for Economic Co-operation and Development countries over the period 1990-2015, within a multivariate panel data framework.Design/methodology/approachTo investigate the long-run relationship between variables, panel cointegration tests are performed. Panel Granger causality based on vector error correction models is adopted to understand the short- and long-run dynamics of the data. Furthermore, ordinary least square (OLS), dynamic OLS and fully modified OLS methods are used to confirm the long-run elasticity of green growth for renewable energy consumption and trade openness. Moreover, system generalized method of moment is applied to eliminate serial correlation, heteroscedasticity and endogeneity problems. The authors used the panel Granger causality test developed by Dumitrescu and Hurlin (2012) to infer the directionality of the causal relationship, allowing for both the cross-sectional dependence and heterogeneity.FindingsThe results suggest that renewable energy consumption and trade openness exert positive effects on green economic growth. The results of long-run estimates of green economic growth reveal that the long-run elasticity of green economic growth for trade openness is much greater than for renewable energy consumption. The estimated results of the Dumitrescu and Hurlin (2012) test reveal bidirectional causality between green economic growth and renewable energy consumption, providing support for the feedback hypothesis.Practical implicationsThis paper provides strong evidence of the contribution of renewable energy consumption on green economy for a wide range of countries. Despite the costs of establishing renewable energy facilities, it is evident that these facilities contribute to the green growth of an economy. Governments and public authorities should promote the consumption of renewable energy and should have a support policy to promote an active renewable energy market. Furthermore, the regulators must constitute an efficient regulatory framework to favor the renewable energy consumption.Social implicationsMany countries focus on increasing their GDP without taking the environmental impacts of the growth process into account. This paper shows that renewable energy consumption points to the fact that countries can still increase their economic growth with minimal damage to environment. Despite the costs of adopting renewable energy technologies, there is still room for economic growth.Originality/valueThis paper provides evidence on the contribution of renewable energy consumption on green economic growth for a wide range of countries. The paper focuses on the impact of renewable energy on economic growth by taking environmental degradation into consideration on a wide scale of countries.

Assuring economic growth and development without neglecting the requirement for environmental sustainability has become the most debatable topic in recent international forums. As a result, researchers and decision-makers are now focusing on green growth instead of traditional economic growth. Several factors that influence green growth have been studied in the literature to date, however, the impact of foreign direct investment, trade openness and financial development is relatively unexplored. Therefore, this study employs a fully modified ordinary least squares (FMOLS) estimator to investigate the impact of foreign direct investment, trade openness, and financial development on green economic growth for ASEAN-5 countries from 2010 to 2021. The empirical results show that foreign direct investment and financial development have a positive impact on green growth, whereas trade openness has a negative impact on green growth. Considering the results, this study recommends that policymakers to encourage environmentally responsible foreign investment to invest in the home nation and enhance financial market competitiveness through domestic and international liberalization and privatization in order to promote green growth. We also suggest that policymakers to strengthen and enforce environmental regulations to prevent environmental degradation brought on by increased trade to support green economic growth.

The Green Deal policy and Sustainable Development Goals require that the economic development of a country should be reoriented towards ‘green‘ economic development. Currently, the globalisation and intensification of production boosts urbanisation in many countries, which may stimulate economic growth and improve citizen well-being, but may also lead to excessive consumption of resources and negative environmental impacts. Against the backdrop of these challenges, it is expedient to estimate the effects of urbanisation on the green growth of a country and define the relevant changes and instruments for achieving green growth in a country in view of urbanisation. The research covers the EU countries and Ukraine (as an official candidate for European Union membership) in the period of 2005–2020. Applying the Global Malmquist–Luenberger productivity index (to estimate green economic growth); a fixed and random effects model, GMM modelling (to evaluate the impact of urbanisation on green economic growth), this study aimed to contribute to the theoretical framework of green economic growth by extending input and undesirable output parameters of a country’s productivity. The findings revealed that, in 2020, as compared to 2005, green economic growth went into a decline in all countries analysed, this decline stemmed from accelerated urbanisation. However, industrial structure and research and development appeared to be conducive to green economic growth, which justifies the idea that countries should focus on implementing structural reforms for the technological modernisation of infrastructure and industrial complexes to dispose of the shortcomings caused by urbanisation. To compensate for this negative impact, the findings of this research prompt a set of policy implications concerning dissemination of the green knowledge and technologies, green project implementation, reinforcement of incentive instruments and achievement of a synergistic balance of economic and ecological targets underlying the SDGs.

Green energy, green innovation, and political stability led to green growth in OECD nations

Green economic growth is the best alternative strategy for sustainable development. Existing literature investigated the determinants of green economic growth in China and provides mixed results. Thus, our study explores the impact of green environmental technology, financial innovation, and environmental regulations on green economic growth by controlling the impact of renewable energy consumption, trade, and education. The study explores the symmetric and asymmetric associations by employing ARDL and NARDL approaches. The ARDL long-run findings display that green environmental technologies, environmental regulations, and financial innovations positively and significantly contribute to green economic growth. However, the NARDL long-run findings infer that positive shock in green environmental technology, financial innovation, and environmental regulation exerts a significant and positive impact on green growth, while negative shock in green environmental technology, financial innovation, and environmental regulation has an insignificant impact on green growth. Based on the findings, the study delivers important policy implications to promote green economic growth in China.

In view of the current domestic research on green economy and investment behaviour, it is still lacking. This article will innovatively combine the two, and use a new perspective to study the impact of foreign investment by heterogeneous companies on China's green economic growth. First of all, this article has an in-depth understanding of the theoretical knowledge of green economy; then established the evaluation index system and experimental model of the impact of foreign investment banks of heterogeneous enterprises on the growth of green economy. This article uses four core factors for analysis and statistics of the differences in status factors. Finally, it is concluded that foreign-funded enterprises with heterogeneous behaviour will affect the local green economic growth, and this effect is regular and bidirectional.

Is resource abundance a curse for green economic growth? Evidence from developing countries

Green growth is deliberated as an effective way for attaining environmental sustainability, but the nexus between fiscal spending and green growth is ignored in highly polluted Asian economies. To fill this gap, this study attempts to investigate the impact of public sector education and research and development expenditures on green economic growth for selected Asian economies for the period 1991–2019. The study employed FMOLS and DOLS methods to assess the association between public expenditures on education and research and development sectors and green economic growth. The study found that education and research and development expenditures both contribute significantly to enhancing green economic growth in most of the selected Asian economies. The study proposed some important policy implications for fostering green economic growth and environmental sustainability by mitigation of pollution emissions.

Very few studies exist in rationalizing comprehensively the relationship between market integration and green economic growth in China. This paper tries to answer the question whether and how market integration influences regional green economic growth in China. Based on the panel data of 285 city-level regions from year 2004 to 2018 in China, this paper develops explanatory mechanism and discusses the influence theoretically and empirically. To advance the analysis, we construct market integration indicator through relative price variance method based on commodity retail price index and employ the Malmquist–Luenberger (ML) productivity index and DEA-SBM (data envelopment analysis–slacks-based measure) model to evaluate green total factor productivity (GTFP) as indicator for green economic growth. Our empirical findings are: (1) Apparent regional imbalance exists in both the development of market integration and green growth and gaps are expanding from year 2004 to 2018. (2) Market integration promotes regional green growth significantly. (3) Mechanism analysis illustrates that market integration fosters green growth through economies of scale effect, composition effect and spillover effect, respectively. (4) Heterogeneous analysis suggests that the influence from market integration on green growth varies depending on region’s difference in traffic situation and in overall development level.

As the answer to sustainability concerns, green economic growth has gradually attracted considerable attention. Notably, the optimization of the institutional environment contributes to green economic growth from the perspective of new institutional economics. However, few studies have systematically explained the connection between the institutional environment and green growth. In this study, the institutional environment was divided into three dimensions: governmental, legal, and cultural subenvironments. We adopted econometric models with the effect of every dimension on green growth and empirically analyzed with the generalized method of moments, based on Chinese provincial panel data from the years 2000–2016. The results indicated that there was an inverted U‐shaped relationship between China’s institutional environment and its green growth. That is, the institutional environment can initially promote China’s green growth but, if it is not changed, will eventually inhibit it. In addition, the analysis on the three dimensions of the institutional environment highlighted that the role of the cultural subenvironment in green growth is greater than those of the governmental and legal subenvironments.

Purpose This study aims to fill the research gap related to green economic growth in the Organization of Islamic Cooperation (OIC) countries by validating the environmental Kuznets curve (EKC) theory through the role of fiscal policy, the use of natural resources, sukuk and Islamic banking, as well as the interaction of institutional quality on green economic growth. Design/methodology/approach Using first-difference generalized method of moments dynamic panel data and fully modified ordinary least squares on 17 selected OIC countries with data obtained from the World Bank, SESRIC, IIFM and WGI during 2014–2023. Findings The study found that fiscal policy has a significant negative impact on green economic growth in the short term, especially in low-income countries. Meanwhile, the use of natural resources has a positive and significant effect overall, both in the short- and long term. In high-income countries, the use of natural resources suppresses green economic growth. Sukuk and Sharia financing have a positive but not significant impact on short-term green economic growth, but they become essential in the long term. Sukuk is more effective in developed economies, while Islamic bank financing has a negative impact in weak economies. Furthermore, the role of institutional quality moderation mitigates the adverse effects of fiscal policy and strengthens natural resource management, although it remains limited to low-income countries. This finding confirms the existence of an Inverted U-shaped relationship in the context of EKC. Research limitations/implications This research highlights the need for more environmentally friendly fiscal policies, efficient natural resource management and the development of sukuk and Sharia financing to support sustainable projects in OIC countries. In addition, improving the quality of institutions is needed to strengthen governance and regulations that encourage green economic growth and more effective economic diversification. Originality/value To the best of the authors’ knowledge, this research is the first to explore the growth of the green economy in OIC countries, comprehensively integrated with the role of government policies, natural resources, Islamic finance and institutional quality.

In the world where natural resources are already limited, balancing the environmental aspect with economic growth has become necessary. Otherwise the consequences will be severe. The Green Growth Masterplan of South Sumatra has outline the strategies and action toward achieving sustainability. The masterplan consist of seven strategies aimed at achieving 5 sustainable development goals: (1) sustainable economic growth; (2) inclusive and equitable growth; (3) socio, economic and environmental resilience; (4) healthy and productive ecosystem, and (5) greenhouse gas emission reduction. The masterplan also implied that the only way South Sumatra will be able to achieve the green economic growth is through collaboration and cooperation among all stakeholders in the province. All of the enabling condition in green growth strategy were pointed toward the importance to build a strong partnership with all stakeholders. They need to work together and combine their knowledge and resources to achieve the green growth vision. One of the enabling condition is a strengthened capacity to conduct and implement green growth action. At this point, the issues of knowledge management became important. In order to collaborate effectively in managing the South Sumatra Landscape, a strong basis of knowledge is required. A knowledge society need to be formed in South Sumatra for this purpose. This knowledges need to be manage in such a way that any stakeholders in South Sumatra will be able access, utilize and improve. The SECI (Socialize-Externalize-Combine-Internalize) framework of Nonaka and Takeuchi (1995), fit nicely into the context of South Sumatra green growth implementation. Tacit knowledge from local wisdom of community needs to be combined with explicit knowledge that has been produced by so many research project in South Sumatra. The only problem with SECI framework is in institutionalization of the framework itself. Knowledge sharing on sustainable development needs to be facilitated by a body who can work with multiple stakeholders and at the same time implement the knowledge management system. In South Sumatra, this was addressed through the Green Growth Partnership Institution. KOLEGA SUMSEL is a form knowledge society which strive to achieve green growth vision through cooperation and collaboration. The cooperation models itself is an important contribution from South Sumatra to the development practitioners in other places.

Climate change has emerged as a major threat for developed as well as emerging nations. In order to effectively address this matter, it is imperative to undertake a transition towards a sustainable and environment‐friendly economic model. From an economic standpoint, it is worth noting that green economic growth serves as a mechanism to enhance income levels while preserving the integrity of the environment. Therefore, there is a significant interest among researchers and policymakers to identify the determinants of green growth (GG), with the aim of formulating effective policies to promote sustainable development. In light of this, we probe the impact of education and natural resources on GG in China. The novel augmented autoregressive distributed lag approach reports the long‐run co‐movement between education, natural resources, and GG. Moreover, the results derived from the novel wavelet quantile correlation method indicate that education positively affects GG in both the short‐ and long‐term, across different quantiles. However, in the medium‐term, the impact of education on GG is negative. In both the short‐ and long‐term, natural resources hinder GG, thus providing support for the natural resource curse theory. We present policy recommendations aimed at fostering GG in the Chinese economy. For example, there should be a substantial increase in investment in education to boost GG. Next, access to education is inevitable to attain higher GG; therefore, quality education should be provided at a lower cost.

This study examines the effect of environment tax and renewable energy transition on the green economic growth of 37 OECD countries from 1990 to 2021. The empirical results show that environmental tax has a non-linear impact on green economic growth. The nonlinearity is characterised by a U-shape relationship, indicating that at the initial stage, environmental taxes negatively impact green growth. The impact then becomes positive and significant at a later stage when environment tax reaches a threshold of 3.53 % for production-based green growth and 2.46 % for demand-based green growth. By replacing fossil fuels in electricity generation, heating, transportation, and industrial processes, the study finds that transitions to renewable energy improve air pollution and the green economy. The estimated results are reassuringly robust to alternative measures of green economic growth (production-based and demand-based Co2 productivity) and various estimators such as instrumental regression, fixed effect instrumental regression, Machado and Silva quantile regression and JKS Granger non-causality results. The study recommends that since environmental taxes do not improve green economic growth immediately, it is important to gradually implement these taxes to allow industries and consumers time to adjust and invest in green alternatives.

Contribution of Islamic Social Capital on Green Economic Growth in Malaysia