The impact of green finance, r&d investment and energy efficiency on sustainable economic growth in regional comprehensive economic partnership

Loh, Shu Min (2025) The impact of green finance, r&d investment and energy efficiency on sustainable economic growth in regional comprehensive economic partnership. Final Year Project, UTAR.

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Abstract

The accelerating threat of climate change has intensified global efforts to pursue economic development that aligns with environmental sustainability, particularly within the Regional Comprehensive Economic Partnership (RCEP) economies, which collectively account for a substantial share of global emissions, energy consumption, and industrial activity. As these economies work toward carbon neutrality and the Sustainable Development Goals (SDGs), it becomes essential to understand how financial, technological, and energy-related drivers shape their sustainability trajectories. This study empirically examines the impacts of green finance, research and development (R&D) expenditure, renewable energy consumption, energy efficiency, and green technological innovation on two key sustainability outcomes, carbon emissions and SDG performance (SDG 7, SDG 8, SDG9, SDG12, and SDG13) across RCEPeconomies from 2016 to 2023. Guided by the Negative Externalities Theory, Porter Hypothesis, Ecological Modernization Theory, and Green Growth Theory, the study adopts a comprehensive theoretical lens to investigate how financial flows and technological advancement contribute to low-carbon and inclusive development. Using secondary panel data and the Random Effects Model (REM), supported by diagnostic tests including Breusch-Pagan LM, Hausman, and Variance Inflation Factor (VIF), the study accounts for cross-country heterogeneity and ensures the robustness of the empirical results. The literature suggests that green finance, R&D investment, renewable energy expansion, and energy efficiency improvements can significantly reduce emissions and enhance SDG performance, particularly for clean energy (SDG 7), decent work and growth (SDG 8), industry and innovation (SDG 9), responsible production (SDG 12), and climate action (SDG 13). Green technological innovation is widely recognised as a key enabling mechanism that transforms financial and technological inputs into tangible sustainability outcomes. However, the literature also highlights that structural constraints, such as fossil-fuel dependence and resource-intensive industrialisation, may weaken these relationships in some emerging economies. This research contributes to the literature in three keyways. First, it provides an integrated assessment of multiple sustainability drivers within a single analytical framework, addressing the fragmentation present in prior studies. Second, it focuses on the under-examined RCEP region, offering new empirical insights into the sustainability dynamics of one of the world’s largest economic blocs. Third, it delivers policy-relevant recommendations for strengthening green finance ecosystems, enhancing technological innovation, and improving governance structures to advance carbon reductions and accelerate progress toward SDGs 7, 8, 9, 12, and 13. The findings aim to support policymakers, financial institutions, and industry stakeholders in guiding RCEP economies toward a resilient, low-carbon, and sustainable future

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