Law and Economic Performance: An Analysis of Regulatory Frameworks and Market Efficiency

This study examines the drivers of sustainable regional economic growth and economic performance through two complementary structural models analyzed using SmartPLS. Model 1 evaluates the role of Green Infrastructure Investment (GII) in influencing Environmental Quality (EQ), Economic Performance (EP), and Sustainable Regional Economic Growth (SREG). Model 2 explores how Regulatory Framework Quality (RFQ), Legal Certainty (LC), and Market Efficiency (ME) affect Economic Performance. A quantitative approach based on Partial Least Squares Structural Equation Modeling (PLS-SEM) is employed to assess both measurement and structural relationships. The results indicate that all constructs demonstrate strong reliability and convergent validity. The structural model demonstrates strong explanatory power, with -square values exceeding 0.98 across endogenous variables in Model 1, and ranging from 0.898 to 0.966in Model 2. In Model 1, green infrastructure investment has a strong positive impact on environmental quality and economic performance, while environmental quality significantly enhances sustainable growth. However, economic performance and the direct effect of green investment on sustainable growth show negative relationships, indicating short-term trade-offs. In Model 2, regulatory framework quality strongly influences legal certainty and indirectly improves economic performance through market efficiency. Overall, the findings highlight the importance of integrating environmental investment and institutional quality to achieve sustainable and efficient economic development.