Green innovation and green growth: Evidence from Indian economy

Abstract

The present study focuses on the major research questions: What kind of relationship exists between green innovation and green growth in India? And how far are the structural as well as the financial factors helpful in empowering this relationship? The study investigates the connection between green innovation and green growth in India using annual time series data from the period 1990 to 2022, collected from multiple sources that include World Development Indicators, Organisation for Economic Co-operation and Development for environment-related technologies, and globalization (LKOF) from the KOF Swiss Economic Institute. The Auto-Regressive Distributed Lag (ARDL) approach has been utilized to analyze short-run and long-run impacts, complemented by FMOLS, DOLS, and CCR estimators. The major findings confirm that green innovation, financial development, and income growth have a significant impact on green growth, but energy consumption and capital formation have a negative impact on green growth. The results demonstrate that a 1 percent rise in technological innovations promotes nearly 0.8 percent green growth. Further, the analysis also supports the positive effect on financial development (0.906) and per-capita income (4.518), but ICT expansion exerts a negative impact of (-0.399), implying the transitional environmental cost connected with digital expansion. The results offer actionable policy insights for India. To promote green growth, it is required to encourage green finance, facilitate the ICT infrastructure and green R & D ecosystem, foster renewable energy investments, and promote innovation-led strategies to achieve long-term environmental and economic resilience.