How Green Investments and Energy Consumption Shape Sustainable Growth?

Green growth integrates economic progress with environmental sustainability by reducing the ecological costs of development. It promotes green technologies and renewable energy to limit the negative impacts of industrialization and fossil fuel reliance. This study examines the long-term link between green investments, energy structure, and sustainable growth in Eurasian Economic Union countries (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia) and Turkey from 2000 to 2021. The dependent variable, Green GDP, adjusts per capita GDP for environmental damages such as carbon emissions, air pollution, resource depletion, and deforestation. Explanatory variables include renewable energy’s share in final energy consumption, foreign direct investment (FDI), trade deficit, fossil-fuel-based electricity, R&D spending, and climate finance received. To address cross-country dependence, the analysis uses second-generation panel unit root and cointegration tests. Long-run coefficients are estimated via the Fully Modified Ordinary Least Squares (FMOLS) method. Results show renewable energy use and R&D spending significantly boost green growth, while trade deficits and fossil fuel dependence hinder it. Surprisingly, FDI negatively affects green growth, suggesting that capital inflows often target environmentally harmful sectors rather than sustainable ones. The study highlights the importance of transforming energy systems, enhancing regional cooperation in environmental innovation, and aligning policies to attract green investments. These findings provide empirical evidence for policymakers aiming to balance economic growth with environmental protection and advance the Sustainable Development Goals (SDGs) through environmentally conscious strategies.