Green Economic Growth and Environmental Governance: A Panel Analysis of G-20 Countries

Abstract

Green economic development is an important solution to the burns because it is the only solution to both sustaining economic growth and offsetting the effects of environmental degradation. In that regard, green finance is at the center stage as it helps to attract funds toward renewable energy, low-carbon infrastructure, and environmentally responsible industries, but in many cases, how effective it would be can hinge on the strength of institutional structures. The current paper explores the co-relationship among green finance, green economic development within G-20 economies in the years 1995 to 2023, and how this is mediated by environmental governance. The analysis based on secondary panel data is conducted using the data provided by OECD, WDI, and World Bank, and applies econometric models that use direct and interaction effects. Descriptive outcomes provide insight into whether G20 economies vary in their financial outlays of environmental projects, quality of governance, and green growth outcomes. Correlations show that there are affirmative correlations among green finance and its governance and income levels, with surprisingly appearing negative correlations between both finance and governance, implying potential policy flaws or misalignment inherent in both policies. The results of the regression indicate that green finance and also the variable environmental governance have positive but statistically non-significant effects on green economic growth, whereas the cross-effect variable is negative in value and statistically non-significant as well, which integrates the complexity of linking financial flows to green results. The assumption that a sustainable, economic prosperity can and will be spawned by green finance alone is unsustainable; the inadequacy is attributable to the absence of unified governance structures, the absence of harmonized policies, and the inefficient development of the institutions. The paper also argues that the substantive resolution of sustainability transitions witnessed in G-20 economies is inevitably limited by how green fiscal tools are integrated into the dataset encompassing strong measures of governance, innovation volume, and economic balance to minimize climate-changing effects on both the environment and the economy.