EXPLORING THE ROLE OF SMEs IN FOSTERING GREEN GROWTH ACROSS MEDITERRANEAN ECONOMIES

This study explores the essential role of Small and Medium-sized Enterprises (SMEs) in influencing the green growth index across ten Mediterranean countries from 2000 to 2022. The findings indicate a significant positive relationship between the number of SMEs and green growth, with a 1% increase in SMEs leading to a noteworthy 0.41% rise in the green growth index. Additionally, SMEs’ economic performance, as reflected by their share of Gross Domestic Product (GDP), positively affects green growth, resulting in an approximate 0.36% enhancement for every 1% increase. Positive associations with patent applications and internet access highlight the importance of digitalization and innovation as drivers of green growth. In contrast, the number of employees in SMEs has a negative effect on the green growth index, revealing difficulties in aligning workforce growth with environmentally sustainable practices. To promote green growth through the expansion of SMEs, practical policy recommendations include incentivizing eco-friendly practices, providing comprehensive sustainability education and investing in digital infrastructure.