The role of technological innovation in sustainable growth: Exploring the economic impact of green innovation and renewable energy

Abstract

This study investigates the evolving association between green innovation, technological development, renewable energy, and sustainable economic growth through using econometric technique aimed at minimizing environmental impacts and improving economic growth. Utilizing annual data from 1990 to 2023, this study employs a rigorous econometric framework to ensure robust analysis. The methodology includes Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests to assess stationarity, followed by Autoregressive Distributed Lag (ARDL) modeling to capture both short- and long-run dynamics. To further validate the findings, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimations are conducted, enhancing the reliability of the results. Our model demonstrates stability, validity, and reliability by the implementation of serial autocorrelation LM, Breusch-Pagan-Godfrey heteroskedasticity, CUSUM, and CUSUM squared. The findings indicate that green innovation, technological innovations, Foreign Direct Investment, and medium-high-tech exports enhance both short and long-run economic growth. These findings substantiate Sustainable Development Goals (SDGs) seven and furnish evidence that expands theoretical frameworks, emphasizing the significance of green innovation, technological innovation, and export competitiveness in economic development. The study further indicates that the long-term effects of renewable energy on economic growth are adverse, suggesting inefficiencies or sector-specific issues. Furthermore, the economy demonstrates resilience as exogenous shocks progressively stabilize at 36% over time. The country requires a holistic strategy to enhance technological innovation and export competitiveness, foster green infrastructure and advanced industries, address inefficiencies in the renewable energy sector, and implement regulatory measures to ensure sustainable economic growth and drive green innovation.