Investments, innovation and growth: a Panel-ARDL analysis of Southeast Asia’s blue economy

PurposeSoutheast Asia faces mounting environmental challenges that have necessitated sustainable pathways for economic growth. This study aims to survey the role of the blue economy in driving long-term economic growth while promoting sustainable practices. The research is conducted on eight Southeast Asian nations from the years 2010 to 2023. It provides significant policy implications that can induce foreign direct investment vis-à-vis growth while strengthening maritime sectors and advancing regional development.Design/methodology/approachTo assess the long-term relationship between the blue sector and economic growth, this study applies the pooled mean group (PMG) panel autoregressive distributed lag (Panel-ADRL) to account for cross-country heterogeneity across Southeast Asia. Various statistical estimation techniques include the panel unit root tests, cointegration check and cross-sectional independence. After conducting these tests, the Panel-ARDL model has been established with three specifications.FindingsThe findings indicate trade openness to be the most significant driver of growth in the blue economy. Aquaculture demonstrates a negative association with economic growth, which suggests institutional inefficiencies and overexploitation of natural resources, whereas fisheries exhibit a diminishing positive effect. Renewable energy investments impact economic growth negatively reflecting the initial assumption of the environmental Kuznets curve to hold. This reflects the need for improved governance, collaborative policies, technological advancements and sustainable investments across the region to harness the blue economy’s potential for economic expansion.Originality/valueThis study fills a crucial research gap by evaluating the economic potential of the blue economy in Southeast Asia through the PMG Panel-ARDL framework. Unlike existing literature which emphasizes ocean governance or green innovation, this paper broadens its focus toward trade, blue sector investments and renewable energy as catalysts for long-term growth. Therefore, this research is important to understanding the dynamic interplay between trade, investment and innovation in blue sectors, and the implications it provides for policymakers, and different Southeast Asian governments.