What Factors Influence Sustainable Growth Worldwide? The Role of Green Finance and Technological Development

HRMARS - This study examines the impact of green finance and technological development on sustainable growth in 86 countries, including 40 developed and 46 developing countries, from 2010 to 2024. The study utilizes pooled Ordinary Least Squares (OLS), Fixed Effects (FE), Random Effects (RE), and the Generalized Method of Moments (GMM) to address endogeneity and the dynamics of panel data. Analysis is conducted using two main models, respectively, to assess the direct impact of green finance and technological development on sustainable growth. The study uses control variables including trade openness, foreign direct investment, total natural resources rents, and domestic credit to the private sector. Results from the GMM models show that sustainable growth is highly resilient, as indicated by the Adjusted Net Savings index. Technological development has a positive impact on sustainable growth in both groups of countries, highlighting the crucial role of clean technology in improving resource efficiency. Meanwhile, green finance presents challenges regarding short-term structural transformation costs. Control variables, including trade openness, significantly support sustainable growth; over-reliance on natural resources; and undirected private credit reflect potential macroeconomic risks. These findings underscore the need for flexible policies to promote technological development and effectively manage capital flows toward global sustainable development goals.