Green Technology Innovation, Green Financing, and Economic Growth in G7 Countries: Implications for Environmental Sustainability

Elhassan Tomader ()
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Elhassan Tomader: Business Administration Department, Jouf University, Saudi Arabia

Economics, 2025, vol. 13, issue 1, 69-91

Abstract: This study examines the relationships among green technology innovation, green financing, economic growth, and environmental sustainability 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 indicators: ecological footprint and carbon dioxide (CO2) emissions. The CO2 emissions model indicates that green financing negatively affects 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 technology 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 sustainability policies, technological advancements, and effective environmental legislation. These findings underscore the importance of balanced policies that prioritise green finance in the short-term to mitigate environmental impacts while fostering long-term investments in green technology innovation. Additionally, enhancing international cooperation and aligning investments with green objectives are crucial for achieving sustainable prosperity and minimising environmental harm.

Keywords: Carbon dioxide (CO2) emissions; RGDP; Ecological Footprints; CS-ARDL; Energy Consumption (search for similar items in EconPapers)
JEL-codes: C23 O44 P18 Q43 Q55 Q56 Q57 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:econom:v:13:y:2025:i:1:p:69-91:n:1022

DOI: 10.2478/eoik-2025-0023

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