Green Economic Growth in CASA: Understanding the Drivers and Their Transformative Impact

In recent decades, there has been an unprecedented proliferation of economic dividends that are compromising the axioms of environmental sustainability. Under such circumstances, driving and focusing on green economic growth (GEG) is vital for sustainable development. In this regard, the current study endeavours to enhance the understanding of the determinants of GEG in Central Asia and South Asia (CASA), by examining the impact of green innovation and technology (GIT), green energy (GE), green investment (GI), green trade (GT), environmental regulations (ER), energy efficiency (EE), and globalisation (GLO) on GEG in CASA from 2005 to 2021. The study employs the Pesaran CD 2007 cross-sectional dependence test to assess the cross-dependency of CASA economies, relying on pairwise correlation coefficients. It is appropriate for scenarios with a limited number of cross-sections and an extensive time span. Unit root tests were conducted to verify the stationarity properties of the data. In light of cross-sectional dependence among the panel units, the study employed the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) approach to estimate both short-run and long-run coefficients. For robustness, the Common Correlated Effects Mean Group (CCEMG) estimator was utilised. The empirical findings reveal that green energy and green investment exert a statistically significant and positive influence on green economic growth (GEG) in both the short and long term. In contrast, the impact of green technology is more substantial in the long run, indicating a delayed but meaningful contribution to sustainable economic development. To foster GEG, CASA countries are advised to implement legislative and policy frameworks that support the expansion of green energy and technology, while enhancing the investment climate to attract greater inflows of green capital and promote long-term sustainability. The findings suggest that environmental restrictions negatively correlate with sustainable economic development, whereas GIT, GT, GE, and EE have a significant positive impact on GEG in CASA regions.