DOES GREEN FINANCING AFFECT THE SUSTAINABLE ECONOMIC GROWTH OF EMERGING ECONOMIES? EVIDENCE FROM PANEL ARDL MODEL

Abstract

This study examines the nexus between green finance determinants
and sustainable economic growth in Brazil, India, China, and South

Africa using a panel Autoregressive Distributed Lag (ARDL) ap-
proach. These rapidly developing countries face the dual challenge

of maintaining economic growth while addressing environmental sus-
tainability. The analysis focuses on five key independent variables:

Comparative Advantage in Low Carbon Technology Products, Total
Trade in Low Carbon Technology Products, Trade Balance in Low
Carbon Technology Products, Annual CO2 Emissions, and Lack of
Coping Capacity. Short-run results indicate that Total Trade in Low
Carbon Technology Products negatively affects GDP, suggesting that

while green trade is expanding, it currently lacks stable, revenue-gen-
erating mechanisms. Annual CO2 Emissions and Lack of Coping Ca-
pacity positively influence GDP in the short term, reflecting continued

dependence on emission-intensive industries and limited infrastruc-
ture for resilience. Comparative Advantage and Trade Balance in Low

Carbon Technology Products are statistically insignificant in the short
run, implying delayed economic benefits. In the long run, none of
the green finance indicators show a significant relationship with GDP,
possibly due to the substantial upfront investments required for green
projects, which delay economic returns. The study underscores the

need for strategic investments in technology, infrastructure, and gov-
ernance to align economic growth with long-term sustainability goals.