Green Economy and Innovative Investments:

Evidence from the Nakhchivan Autonomous Republic

Mahsati Askarova

Abstract. In recent years, the transition toward a green economy has become a global priority due to increasing concerns over climate change, environmental degradation, and the growing scarcity of natural resources. The green economy framework emphasizes sustainable economic growth by integrating environmental protection, efficient resource use, and social well-being into development strategies. Within this context, innovative investments play a crucial role by supporting the diffusion of renewable energy technologies, enhancing resource efficiency, and fostering environmentally friendly production processes. This study examines the impact of innovative investments on green economic development in the Nakhchivan Autonomous Republic, a geographically constrained and peripheral region with significant potential for sustainable growth. Using annual time-series data covering the period 2005–2023, the study applies an Autoregressive Distributed Lag (ARDL) modeling approach to explore both short-run and long-run relationships between green economic development and its key determinants. The empirical model incorporates innovative investments, renewable energy production, resource efficiency, and green employment as explanatory variables. The results of the ARDL bounds testing procedure confirm the existence of a long-run cointegration relationship among the variables. Empirical findings indicate that innovative investments have a statistically significant and positive effect on green economic development in the long run, highlighting their structural importance for sustainable regional growth. Renewable energy production also emerges as a key driver of green economic performance, while improvements in resource efficiency and green employment contribute positively to economic and environmental sustainability. In contrast, short-run effects are found to be weaker, suggesting that the benefits of green and innovative investments materialize gradually over time. The findings provide important policy implications for regional development strategies, emphasizing the need to strengthen innovation-oriented investment policies and green finance mechanisms to support long-term sustainable development in the Nakhchivan Autonomous Republic.

Keywords: green economy, sustainable development, regional development, Nakhchivan Autonomous Republic, innovative investment