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ESG, innovation, and economic growth: an empirical evidence

Author

Listed:
  • Siti Nurazira Mohd Daud
  • Nur Syazwina Ghazali
  • Nur Hafizah Mohammad Ismail

Abstract

Purpose - This paper aims to examine the relationships among environmental, social and governance (ESG) practices, innovation and economic growth in five Asian countries from 1990 to 2020. Design/methodology/approach - The study innovatively constructed the ESG index at the country level by using frequency statistics on text mining and factor analysis for each country over time. In addition, this study used the autoregressive distributed lag method to establish a long-term relationship. Findings - The authors discovered that ESG practices among corporate entities significantly impact economic growth in Malaysia, the Philippines and Singapore. Specifically, the environmental component positively affects the growth of Malaysia, Thailand and the Philippines, while the governance components of ESG contribute to Thailand’s economic growth. The authors also discovered that innovation improves countries’ economic growth, thus offering policy insights into promoting ESG practices and stimulating the ecosystem for innovation. Originality/value - The paper fills the gap left in previous inconclusive findings on the association between ESG practices and country growth.

Suggested Citation

  • Siti Nurazira Mohd Daud & Nur Syazwina Ghazali & Nur Hafizah Mohammad Ismail, 2024. "ESG, innovation, and economic growth: an empirical evidence," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 41(4), pages 845-870, May.
    • Handle: RePEc:eme:sefpps:sef-11-2023-0692
    DOI: 10.1108/SEF-11-2023-0692
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    More about this item

    Keywords

    ESG; Asian countries; Principal component analysis; Economic growth; C22; E02; O40; Q01;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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