Innovative environments and sustainability: Impacts on economic growth and environmental performance

This study examines the associations among national innovative environments, economic development, and environmental performance across 65 countries using secondary data from 2022 and Structural Equation Modeling. The innovative environment is modeled as a multidimensional latent construct composed of the Global Innovation Index, school life expectancy, and R&D investment as a percentage of GDP. Economic development is represented by GDP per capita, while environmental performance is measured by the Environmental Performance Index. The results indicate positive and statistically significant associations between the innovative environment and GDP per capita, between GDP per capita and environmental performance, and between the innovative environment and environmental performance. These findings suggest that countries with stronger innovation-related conditions tend to exhibit higher income levels and better environmental performance. The study contributes to the literature by shifting the analytical focus from isolated innovation indicators to the systemic configuration of national innovative environments and their relationship with sustainable development outcomes. From a policy perspective, the findings suggest that strengthening education systems, R&D capacity, and innovation-oriented institutional conditions may support strategies aimed at aligning economic development with environmental performance. However, given the cross-sectional nature of the data, the results should be interpreted as associations rather than causal relationships. Limitations include the overrepresentation of European countries in the sample, possible endogeneity and omitted variable bias, and the absence of direct measures of educational quality, institutional quality, energy transition, and green innovation.