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The globalization of financial systems can play a vital role in protecting the environment and boosting the green revolution by increasing investment in renewable energy, cleaner technologies and other environmentally sustainable innovations, according to a new study published in the journal Letters in Spatial and Resource Sciences.
The study examined 41 of the world's largest carbon-emitting economies over a 23-year period and found a robust link between financial globalization and environmentally sustainable investment.
"The main finding is encouraging. It proves that financial globalization is associated with more green investment both in the short term and over the longer term," said Ilhan Ozturk, professor of economics and the study's lead author. "The study estimates that a 1% increase in financial globalization is associated with a 3.14% increase in green investment in the long run and a 2.81% increase in the short run."
The research also found that economic growth supports green investment over the longer term, while advances in information and communication technology make a positive contribution to environmentally sustainable investment. "Our results confirm that financial globalization positively fosters green investment," the authors write.
The study finds that higher GDP levels are associated with increased green investment. Likewise, the research identifies information and communication technology (ICT) as playing a positive role in advancing green investment, particularly in the long term.
The findings are important because they suggest that international financial markets can do more than support conventional economic activity.
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