GREEN TECHNOLOGY INNOVATION, GREEN FINANCING, AND ECONOMIC GROWTH IN G7 COUNTRIES: IMPLICATIONS FOR ENVIRONMENTAL SUSTAINABILITY
DOI:
https://doi.org/10.2478/eoik-2025-0023Keywords:
Carbon dioxide (CO2) emissions, RGDP, Ecological Foot- prints, CS-ARDL, Energy ConsumptionAbstract
This study examines the relationships among green technology in-
novation, green financing, economic growth, and environmental sus-
tainability in G7 countries using annual data from 1990 to 2022. It
uses the cross-sectionally augmented autoregressive distributed lag
model to estimate environmental sustainability through two indica-
tors: ecological footprint and carbon dioxide (CO2) emissions. The
CO2 emissions model indicates that green financing negatively af-
fects emissions, highlighting the need to reduce them and promote
sustainable practices. Conversely, energy consumption and real GDP
per capita (RGDP) positively impact CO2 emissions. Green technol-
ogy innovation also reduces CO2 emissions, but its short-term effects
may be limited owing to initial energy consumption and regulatory
challenges. The ecological footprint model demonstrates that, in the
long term, green technology innovation helps lower the ecological
footprints of G7 countries by promoting infrastructure development
and reducing resource consumption. However, short-term constraints
and high initial costs hinder this progress. Green financing is essential
for achieving long-term sustainability. Energy consumption positively
influences the ecological footprint, while short-term RGDP growth
increases it. However, long-term RGDP may decline owing to sus-
tainability policies, technological advancements, and effective envi-
ronmental legislation. These findings underscore the importance of
balanced policies that prioritise green finance in the short-term to mit-
igate environmental impacts while fostering long-term investments in
green technology innovation. Additionally, enhancing international
cooperation and aligning investments with green objectives are cru-
cial for achieving sustainable prosperity and minimising environmen-
tal harm.
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