Towards Green Growth: Monitoring Progress and Investigating Its Determinants in South Asia

Abstract

Keeping in view the global environmental emergency Green Growth assessment will show policymakers how to maximize economic outcomes while ensuring environmental sustainability. This study aims to construct a Green Growth (GG) Index and empirically test its long-run and short-run determinants for the time series data from 1990 to 2021 in the case of Bangladesh, India and Pakistan. A set of nineteen indicators covering three dimensions, including resource productivity, environmental quality and economic and social aspects, is used to develop the GG index through the principal component methodology. Given the mixed order of integration, Autoregressive Distributed Lag (ARDL) method is utilized to check the co-integration relationship of variables. The results of this study depict that in the case of Bangladesh, there are three significant determinants in which urbanization and forest area are positively associated with GG and trade openness negatively. In India, GG is significantly and positively influenced by urbanization and forest area, while socio-economic conditions impair it. For the third country, Pakistan, urbanization, trade openness, law and order have significant and positive associations with GG, while socio-economic conditions have significant but negative relationships. Based on the study's outcomes, dependent variables show divergence from their short-run equilibrium with error correction terms -0.726, -0.914 and -0.439 for Bangladesh, India and Pakistan, respectively. Therefore, this study suggests implementing policies related to urbanization, trade openness, forest area, law and order and socio-economic conditions to stimulate GG.