Impact of nations’ green behavior on green growth by considering the moderating role of environmental policy stringency

Abstract

Purpose

Protecting the planet from unprecedented environmental crises in the presence of economic expansion has become a critical global concern. Hence, the current study aims to analyze the impact of nations’ green behaviors that they adopt to protect the planet while promoting economic expansion. Additionally, the study explores the moderating role of ES in the nexus of GI and green growth.

Design/methodology/approach

Data were collected over a period of 1990–2019. Analysis was conducted by employing panel data analysis techniques and various robustness tests, including multicollinearity, serial correlation and spatial correlation, for a sample of 33 nations by categorizing in Organization for Economic Co-operation and Development (OECD) and Brazil, Russia, India, China, and South Africa (BRICS) economies as well as in the pre- and post-financial crisis period.

Findings

Analysis of the composite sample reveals a significant positive impact of green investments and green innovations on green growth. Further analysis reveals a significant moderating role of environmental policy stringency in OECD economies, especially in the pre-financial crisis period. The interaction slope shows that the contribution of green innovations to green growth is positive at high and medium levels of ES. However, in the case of BRICS economies, this moderating role is insignificant.

Practical implications

Study findings signify the importance of stakeholder environment and urge governments to prioritize funds for sectors practicing environmentally friendly behaviors to foster green growth and stresses for more effective infrastructure of policy implementation, monitoring and evaluation.

Originality/value

The relationship of green investments, innovations and green growth has been established largely in existing literature; however, there is a dearth of studies to analyze the moderating role of ES. Hence the current study investigates this moderating role in the nexus of nations’ green behavior and green growth in different stakeholder environments and contexts.

Citation

Awan, A., Hussain, K., Zafar, M., Butt, M.J. and Yaghmour, S. (2024), "Impact of nations’ green behavior on green growth by considering the moderating role of environmental policy stringency", Management of Environmental Quality, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MEQ-05-2024-0200