Green Investment as a Driver of Sustainable Economic Growth: Evidence from Developed Economies

Authors : Emre Gökçeli
Pages : 953-967
Doi:10.17218/hititsbd.1745982
View : 51 | Download : 77
Publication Date : 2025-12-31
Article Type : Research Paper
Abstract :During the Industrial Revolution, a significant increase in output was achieved through the use of machines in the production process. However, operating these machines required substantial energy and inputs, which resulted in increased pollution and consequently accelerated environmental degradation. Over time, these environmental issues have become a global threat, taking the form of natural disasters such as droughts, heavy rainfall, and extreme weather conditions. Within this context, the determinants of environmental quality have attracted growing attention from researchers and have been widely studied. As it became widely accepted that economic activity contributes to environmental pollution, the concept of sustainable economic growth emerged as a new objective for many countries. One key factor influencing sustainable economic growth is green investment, which promotes environmentally friendly economic activities. Despite its importance, the impact of green investment on sustainable economic growth has been largely overlooked in the literature. This study aims to examine the effect of green investment on sustainable economic growth in 17 developed countries over the period 2014–2022, using the two-step System Generalized Method of Moments. The results show that higher levels of green investment are associated with a higher rate of sustainable economic growth. In addition, several control variables are included in the analysis. These are inflation, trade openness, foreign direct investment, and government expenditure. The findings suggest that inflation has a growth-enhancing effect on sustainable economic growth, whereas the other variables have a negative impact. To ensure the robustness of the findings, one-step System Generalized Method of Moments technique was also conducted, which confirmed the initial results. Based on these findings, the study offers policy recommendations. In particular, it emphasizes the need for targeted strategies that encourage green investment as a means to achieve long-term sustainable economic growth and also suggests some directions for future research on this topic.
Keywords : Yeşil yatırım, sürdürülebilir ekonomik büyüme, gelişmiş ülkeler

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