Navigating green growth: Insights from resource efficiency, eco-innovation, and digital transformation in the N-11 economies

Sustainable Development Goal 12.2 aims to ensure efficient natural resource use, which is a significant challenge for emerging economies with high rates of industrialization and urbanization. Digitalization and technological innovation are considered means of enhancing the use of resources and environmental sustainability in this context. This study analyzes the impact of green growth, digital governance, financial development, eco-innovation, industrialization, and urbanization on natural resource efficiency for the N-11 economies between 2003 and 2023. The study uses the cross-sectionally augmented autoregressive distributed lag approach to account for the cross-sectional dependence, the presence of slope heterogeneity, and the mixed order of integration. The preliminary results verify the existence of the cross-sectional dependence, slope heterogeneity, and the long-run cointegration relationship between the variables. The empirical results show that digital governance has a significant positive effect on natural resource efficiency both in the short run and the long run, and that eco-innovation has a positive effect in the short run. On the other hand, industrialization has a negative impact on natural resource efficiency, highlighting the resource-consuming aspect of industrial growth in N-11 economies. Green growth, financial development, and urbanization do not show a statistically significant relationship. The robustness of the findings is further validated through Augmented Mean Group and Common Correlated Effects Mean Group estimators. The study highlights the importance of strengthening digital governance systems, promoting eco-innovation, and advancing resource-efficient industrial transformation to improve natural resource efficiency and support sustainable development in emerging economies.