Balancing profit and sustainability: Investigating the eco‐innovation strategies of G20 polluting industries

Abstract

AbstractThe present study investigates the impact of environmental stringency and strategic behavior of G20 countries for the period of 1990–2019 using Porter and Pollution‐Haven hypotheses as frameworks to understand the potential for eco‐innovation or pollution‐paradises. Mediation Effect of Research and Development and Foreign Direct Investment are investigated between exports of environmentally sensitive goods and environmental stringency with DOLS method of estimation. Environmental Kuznets Curve (EKC) is used to analyze the relationship of growth and environmental degradation with reference to strategic behavior of the G20. Results show that majority of G20 countries are practicing the Porter Hypothesis. Overall, the findings suggest that sustainability is a critical consideration in balancing trade potential and environmental impact. The article offers a novel contribution to the field of environmental economics by comprehensively analyzing the connections between environmental regulations and strategic behaviors of the G20 countries with special reference to trade of sensitive goods.