Balancing Growth and Sustainability: Can Green Innovation Curb the Ecological Impact of Resource-Rich Economies?

Abul Hassan (), Ridwan Lanre Ibrahim (), Lukman Raimi, Olatunde Julius Omokanmi and Abdul Rahman Bin S Senathirajah
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Abul Hassan: Department of Finance, School of Business, King Faisal University, Hofuf 31982, Saudi Arabia
Ridwan Lanre Ibrahim: Advanced Research Centre, European University of Lefke, Lefke, Northern Cyprus, TR-10, Mersin 99010, Turkey
Lukman Raimi: Department of Business (Entrepreneurship), Universiti Brunei Darussalam, Seri Begawan BE1410, Brunei
Olatunde Julius Omokanmi: Department of Economics, Ekiti State University, Ado-Ekiti 362103, Nigeria
Abdul Rahman Bin S Senathirajah: Faculty of Business and Communication, INTI International University, Nilai 71800, Malaysia

Sustainability, 2025, vol. 17, issue 10, 1-35

Abstract: The global economy faces a critical challenge: balancing economic survival through natural resource utilization with the imperative of long-term environmental sustainability. Green innovation presents a viable solution, yet its effectiveness hinges on establishing well-structured legislative frameworks. This study, covering the period 1996 to 2022, examines the moderating effect of green innovation on the relationship between natural resource rents and ecological footprint while also considering the roles of globalization, financial development, and energy transition in the ten most resource-abundant countries. Utilizing the augmented mean group (AMG) estimator, the findings indicate that natural resource rents significantly contribute to ecological footprint, reinforcing concerns about resource-driven environmental degradation. However, green innovation mitigates these adverse effects, promoting sustainable resource management in alignment with SDG 12 (Responsible Consumption and Production). Additionally, renewable energy and globalization positively influence environmental conditions, reinforcing the drive toward clean and affordable energy (SDG7), while economic growth, financial development, and non-renewable energy exacerbate environmental harm. Furthermore, foreign direct investment (FDI) increases ecological footprint, reinforcing the Pollution Haven Hypothesis for resource-rich economies. Rigorous robustness checks using CCEMG, FMOLS, and DOLS methodologies, along with country-specific analyses, affirm the empirical validity of these results. In light of these conclusions, the paper advocates for legislative reforms to enhance sustainability and optimize resource utilization, ensuring a balanced approach to economic development and environmental preservation.

Keywords: environmental footprint; natural resources; green innovation; energy transition; financial development; globalization; energy consumption (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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