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Toward low‐carbon emissions and green growth for sustainable development in emerging economies: Do green trade openness, eco‐innovation, and carbon price matter?

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  • Muhammad Tariq
  • Yingzhi Xu
  • Kifayat Ullah
  • Biying Dong

Abstract

Due to substantial development in emerging economies over the last three decades, climate complexities are increasing which have posed serious threats to environmental quality and sustainability. To this end, eco‐innovation, green trade openness (GTO), and carbon price have been recognized as effective tools for environmental mitigation and promotion of green growth (GG) in the core of COP 26, Sustainable Development Goals 2030, and Carbon Neutrality by 2060. Considering this, the aim of this study is to investigate the influence of eco‐innovation, GTO, and carbon price on GG and low‐carbon emissions in emerging economies over the period 1996–2021. The current study provides a standard green Solow growth model by introducing a new GG index using the entropy weight method. This index incorporates 30 indicators across five dimensions which emphasizes the essential roles of the investigated factor. Additionally, the current study provides a new index for GTO utilizing an extensive green trading basket of 255 commodities. Due to the cross‐sectional dependency, and slope heterogeneity in the models, this study used dynamic heterogeneous panel data estimation techniques that is, cross‐sectional based augmented nonlinear autoregressive distributed lag, and nonlinear augmented mean group to probe the asymmetric effects. The outcomes from the empirical analysis reveal that positive shocks in environmental innovation, GTO, carbon price, and green energy mitigate carbon emissions and promote green economic growth while the negative shocks in these variables cause environmental degradation and reduce GG in emerging economies. Finally, from policy insight, this study suggests that policy makers in emerging economies should invigorate GTO, stimulate environmental innovation and green energy, implement carbon price mechanisms, and establish a balance between environmental protection and economic growth.

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  • Muhammad Tariq & Yingzhi Xu & Kifayat Ullah & Biying Dong, 2024. "Toward low‐carbon emissions and green growth for sustainable development in emerging economies: Do green trade openness, eco‐innovation, and carbon price matter?," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 959-978, February.
    • Handle: RePEc:wly:sustdv:v:32:y:2024:i:1:p:959-978
    DOI: 10.1002/sd.2711
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    Cited by:

    1. Thanh Phuc Nguyen & Trang Thi-Thuy Duong, 2025. "Asymmetric Effects of Fiscal Policy and Foreign Direct Investment Inflows on CO 2 Emissions—An Application of Nonlinear ARDL," Sustainability, MDPI, vol. 17(6), pages 1-21, March.
    2. Muhammad Zubair Chishti & Arshian Sharif & Qi Xu & Gagan Deep Sharma, 2024. "Toward sustainable development: Revealing the dynamic impacts of the belt and road initiative on energy transition," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 7069-7095, December.
    3. Chong Xiao & Riya Tabish, 2025. "Green Finance Dynamics in G7 Economies: Investigating the Contributions of Natural Resources, Trade, Education, and Economic Growth," Sustainability, MDPI, vol. 17(4), pages 1-24, February.

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