Green Innovation and Economic Growth Balancing Development and Environmental Protection

Abstract

Sustainable economic development plays a crucial role in enhancing social welfare. This emphasizes that economic progress should not be a cost of environmental degradation. Instead, it encourages a kind of development that sustains the environment in the present and well into the future to guarantee the enjoyment of a healthy environment now and in the future. To evaluate this relation, Autoregressive Distributed Lag has been used to capture the impact of various economic and environmental predictors. Surprisingly, the findings dispel the hypothesis of green economic growth in correlation with the Environmental Kuznets Curve which states that environmental deterioration rises with economic development and declines after the framework point. Nevertheless, the results show a good convergence of the study with the EKC hypothesis for non-green or conventional growth models, suggesting that there can be a decrease in breath on the environment as economies transition to higher levels of development, given that sustainable consumption patterns are incorporated. The subsequent analysis also corroborates that stimuli like environmentally friendly technological innovation, the use of renewable energy resources, the use of environmental taxes, or investing in human capital are beneficial towards mitigating negative environmental impacts. All these indicate that when growth embraces ecological factors or fosters innovations in environmental conservation then growth is made more sustainable. While there is a statistical nonsignificance of the impact of domestic policies and institutions on environmental degradation, there is evidence pointing to the domestic policies and institutions as facilitating foreign direct investment and accommodating trade openness. This highlights the importance of monitoring these factors and implementing regulatory frameworks that ensure that economic benefits from FDI and trade do not undermine environmental sustainability. Achieving a balance between economic growth and ecological preservation requires a focused policy approach that supports green innovation and energy transition while managing the ecological impacts of foreign investments and open trade.