Impact of Green Innovation on the Economy: Mediation of Environmental Sustainability, Moderation of Electric Vehicle Utilization

This study aims to investigate the effect of green innovation (GI) on the economy, focusing on environmental sustainability and the moderating effects of electric vehicle (EV) utilization in selected six countries from 2019 until 2023. GI is crucial for sustainable economic growth amid climate change concerns. Panel data are utilised through quantitative data analysis methods like GARCH, EGARCH, and Data Envelopment Analysis (DEA) to test the relationships. The findings show GI links to economic growth in the selected six countries. Mediation analysis indicates that environmental sustainability boosts GI's impact on economic growth. The moderating analysis revealed that the extent of EV utilization enhances the positive relationship between GI and economic growth, suggesting that countries with higher EV adoption rates may experience stronger positive economic effects from GI. Nevertheless, the moderating analysis also revealed that EV adoption enhances the negative relationship between GI and economic volatility risk, such that higher electric vehicle usage reduces the negative impact of GI on financial risk. Countries with better environmental sustainability lead to better economic growth; with more EV adoption lead to economic stability and promotes growth.