Rule of law, corruption and transparency impacts on green growth of East Asian economies

Abstract

This paper highlights the necessity for nations to adopt green growth strategies to achieve economic prosperity, social equity, and environmental sustainability. By examining governance indicators in six East Asian economies from 1995 to 2021, it finds that a 1% increase in the rule of law boosts green energy deployment by 0.33%, while a 1% rise in corruption reduces it by 0.25%. Similarly, a 1% increase in transparency leads to a 0.45% rise in green energy. Higher income levels encourage green energy adoption, with a 1% increase in income resulting in a 0.19% boost, whereas a 1% rise in income inequality decreases deployment by 0.32%. The paper suggests policies to enhance the rule of law, promote transparent governance, reduce income inequality, and encourage inclusive growth to support green growth objectives.

Introduction

The precarious state of human life on Earth is starkly highlighted by the pervasive threat of environmental pollution. This critical situation results from the relentless exploitation of natural resources, driven by humanity’s pursuit of capital and wealth through industrialization, urbanization, and globalization (Wang and Tian, 2023; Ren et al., 2024). The unchecked growth of industrial activities, combined with rapid urban development and an incessant push for economic growth, has severely disrupted the delicate balance of our planet’s ecosystems (Rasoulinezhad, 2020; Phung et al., 2023; Luo et al., 2023). Various forms of pollution poison the air, contaminate water sources, and degrade the soil, which are essential for life. As noted by Farrukh et al. (2023) and Wang et al. (2024), the specter of environmental degradation casts a long shadow over the future viability of life on Earth. Therefore, Xie et al. (2024) emphasize the urgent need for coordinated action to address this crisis and ensure the well-being of current and future generations.

The need for nations to adopt green growth strategies has never been more urgent, as it provides a comprehensive approach to achieving economic prosperity, social equity, and environmental sustainability (Abid et al., 2022). By focusing on investments and policies that support renewable energy, sustainable infrastructure, and eco-friendly technologies, countries can drive strong economic growth while preserving ecosystem health (Telukdarie et al., 2024). Green growth not only reduces the negative effects of environmental degradation but also opens up opportunities for job creation, innovation, and inclusive development (Mahat et al., 2019; Rasoulinezhad and Eksi, 2024). Additionally, by building resilience to climate change and decreasing reliance on limited resources, nations can strengthen their economies against future shocks and uncertainties. Ultimately, pursuing green growth is a forward-thinking strategy that aligns economic advancement with environmental protection, ensuring a prosperous and sustainable future for all (Shirazi et al., 2020).

The study of green growth in East Asian economies presents a compelling and unique opportunity due to several key factors. With a combined population of 1.6 billion people, constituting approximately 20% of the global population, East Asian countries wield significant influence on the global stage. However, this demographic prowess is coupled with the pressing challenge of escalating CO2 emissions. As rapid industrialization and urbanization drive economic expansion in the region, East Asian nations face the imperative of addressing environmental degradation and climate change without compromising their developmental goals. Therefore, examining the strategies, policies, and initiatives undertaken by East Asian economies to foster green growth offers invaluable insights into navigating the complex interplay between economic advancement, environmental sustainability, and social welfare on a large scale.

Good governance, characterized by robust institutions, adherence to the rule of law, transparency, and the effective management of corruption, plays a pivotal role in promoting green growth. The rule of law ensures that environmental regulations are enforced consistently and fairly, providing a conducive environment for sustainable practices to flourish (Debbarma and Choi, 2022). Transparency fosters accountability and public participation in decision-making processes related to environmental policies and investments, enhancing the effectiveness and legitimacy of green initiatives (Ullah et al., 2023). Additionally, reducing corruption ensures that resources are directed towards projects that support sustainable development, rather than being misappropriated (Li and Tong, 2024). Sustainable governance incorporates inclusivity, equity, and long-term planning, acknowledging the interconnectedness of social, economic, and environmental aspects of development (Salihi et al., 2024). It requires involving various stakeholders in decision-making, balancing differing interests, and prioritizing policies that protect ecological health while promoting equitable growth (Murshed, 2024).

This paper aims to explore the complex relationship between key governance indicators—namely, the rule of law, corruption, and transparency—and green growth in East Asian economies. By investigating these governance aspects, the study aims to clarify their effects on promoting and sustaining environmentally friendly economic development in the region.

While previous research has extensively examined the overarching impact of good governance on sustainability, our study represents a novel contribution by focusing specifically on the nuanced effects of each good governance sub-indicator—namely, the rule of law, corruption, and transparency—on the green growth trajectory of East Asian economies. By disaggregating the components of good governance and analyzing their individual influences, we aim to provide a more granular understanding of how governance quality shapes the pursuit of environmentally sustainable economic development in the region. This approach allows us to uncover subtle yet significant nuances in the relationship between governance dynamics and green growth outcomes, thereby offering valuable insights that can inform targeted policy interventions and strategies aimed at enhancing both governance effectiveness and environmental sustainability in East Asia.

This paper is structured into distinct sections to methodically explore the influence of good governance sub-indicators on green growth in East Asian economies. Section 1 serves as an introduction, setting out the research objectives and providing a roadmap for the paper’s organization. Moving forward, Section 2 conducts a thorough review of the literature, synthesizing existing studies to establish a foundation for our analysis while identifying gaps to be addressed. Section 3 develops a conceptual framework, articulating the theoretical framework that underpins our investigation and elucidating the mechanisms through which the rule of law, corruption, and transparency impact green growth. In Section 4, we outline the variables utilized in our empirical model and detail the methodological approach employed to assess the relationship between governance dimensions and green growth outcomes. Section 5 presents the empirical findings, offering insights into the specific effects of each governance sub-indicator on green growth in East Asia. Finally, Section 6 concludes the paper by summarizing key findings, discussing their implications, and suggesting avenues for future research in the realm of sustainable governance and economic development.

Table 1 outlines the research framework as follows:

Table 1. Research outline.

Research aim	To explore the impacts of good governance sub-indicators on green growth in East Asian economies.
Section 1	Introduction: Provides an overview of the paper’s aim and organization.
Section 2	Literature Review: Conducts a comprehensive review of existing scholarship on governance and green growth.
Section 3	Conceptual Framework: Develops a theoretical framework outlining the relationship between governance and green growth.
Section 4	Variables and Model: Outlines the variables and methodology utilized in the empirical analysis.
Section 5	Findings: Presents the empirical findings regarding the influence of governance sub-indicators on green growth.
Section 6	Conclusion: Summarizes key findings, discusses implications, and suggests future research directions.

Source: Authors’ compilation.

Related literature discussion

Numerous scholars have directed their focus toward the significance of sustainable growth across various countries, aiming to delve into diverse facets of implementing sustainable growth objectives. In this study, we present the most recent research findings within the literature, seeking to identify any existing gaps and areas requiring further exploration.

Sustainable economic growth

The literature on sustainable economic growth spans various dimensions, reflecting the multidimensional nature of this concept. One crucial aspect is the integration of environmental sustainability into economic development strategies. Scholars such as Rasoulinezhad and Taghizadeh-Hesary (2022), Tao et al. (2023), and Garcia-Monleon et al. (2024) emphasize the importance of accounting for ecological limits and natural resource constraints in economic policymaking to ensure long-term viability. Another facet of sustainable growth pertains to social inclusivity and equity. Sen’s capability approach (Wu et al., 2023) underscores the need to prioritize human well-being and ensure equitable access to resources and opportunities. Additionally, institutional frameworks play a vital role in fostering sustainable economic growth. Taghizadeh-Hesary et al. (2022), Zhao and Rasoulinezhad (2023), and Wang et al. (2023) argue that inclusive institutions, characterized by political stability, property rights protection, and rule of law, are conducive to sustainable development outcomes. Furthermore, technological innovation and green entrepreneurship have emerged as critical drivers of sustainable growth (Lin, 2020). By fostering innovation in renewable energy, resource efficiency, and sustainable production practices, economies can decouple growth from environmental degradation.

Transparency and corruption, and sustainability

Transparency and the mitigation of corruption are pivotal elements in ensuring the sustainability of economic growth. Transparency, as exemplified by open governance mechanisms and accessible information, promotes accountability and trust in institutions (Liu and Lyu, 2024). When decision-making processes are transparent, stakeholders can hold authorities accountable for their actions, reducing the likelihood of corruption and mismanagement of resources (Kinda and Mien, 2024). Conversely, corruption undermines sustainability by distorting resource allocation, inhibiting investment, and eroding public trust in institutions (Triatmanto and Bawono, 2023). Empirical studies demonstrate the detrimental effects of corruption on various aspects of sustainability, including economic growth, environmental protection, and social equity (Shayan et al., 2022). Therefore, efforts to enhance transparency and combat corruption are essential for fostering a conducive environment for sustainable development, where resources are allocated efficiently, investments are directed towards environmentally sound projects, and the benefits of growth are equitably distributed among society (Cai et al., 2022).

East Asian economies and sustainability

East Asian economies present a complex and dynamic landscape in terms of sustainability. Rapid economic growth in countries such as China, Japan, South Korea, and Singapore has propelled the region into global prominence. However, this growth has been accompanied by significant environmental challenges, including air and water pollution, deforestation, and biodiversity loss (Xiaoping and Yanqiu, 2024). As a response, East Asian governments have increasingly prioritized sustainability in their policy agendas, aiming to balance economic development with environmental conservation and social equity (Ilyas et al., 2024). Key initiatives include investments in renewable energy, green technology innovation, and sustainable urban planning (Guo et al., 2024). Moreover, regional cooperation mechanisms such as the Association of Southeast Asian Nations (ASEAN) and the East Asia Summit (EAS) have facilitated dialog and collaboration on sustainable development issues (Li et al., 2023). Despite these efforts, significant challenges remain, including the need to address energy security, promote circular economy practices, and enhance resilience to climate change impacts (Herrador and Van, 2024).

Gap and hypothesis

This study aims to fill gaps in the literature by investigating the relationship between transparency, corruption, and sustainability in East Asian economies. While prior research has looked at the impacts of transparency and corruption separately on economic development and sustainability, few studies have examined their combined effects in East Asia. The hypothesis posits that greater transparency and reduced corruption will improve sustainability outcomes. Specifically, increased transparency is expected to enhance accountability, promote efficient resource allocation, and support the adoption of sustainable policies and practices. Reduced corruption is anticipated to mitigate resource misallocation, lower transaction costs, and build greater institutional trust, thereby enhancing overall sustainability.

Conceptual framework

The conceptual framework of this study elucidates the transition channels through which good governance, encompassing the dimensions of the rule of law, corruption, and transparency, influences green growth in East Asian economies.

First and foremost, the rule of law plays a crucial role as a foundational element supporting sustainable economic growth. It establishes clear and consistent legal frameworks that provide regulatory certainty and stability necessary for fostering an environment conducive to sustainable economic activities. Protecting property rights ensures secure ownership of assets for individuals and businesses, encouraging long-term investments in green technologies, sustainable infrastructure, and renewable energy projects. Additionally, rigorous enforcement of environmental regulations is essential in efforts to mitigate environmental degradation and promote environmentally friendly practices, thereby safeguarding natural resources for future generations. Furthermore, strong mechanisms for enforcing contracts enhance investor confidence by reducing transaction risks and ensuring the fulfillment of contractual obligations, thereby facilitating the flow of capital into sustainable development initiatives.

Secondly, corruption represents a formidable barrier to the advancement of green growth, exerting detrimental effects on economic and environmental sustainability alike. By undermining market mechanisms, corruption distorts competition and impedes the efficient allocation of resources, diverting funds away from environmentally beneficial endeavors towards rent-seeking activities. Moreover, the corrosive influence of corruption erodes public trust in institutions, hindering effective governance and impeding progress towards sustainable development goals. However, reducing corruption levels can catalyze transformative change by promoting fair competition, fostering transparent decision-making processes, and enhancing accountability mechanisms. In an environment characterized by reduced corruption, businesses are more likely to invest in green technologies and sustainable practices, buoyed by the confidence that their efforts will be met with equitable treatment and fair market conditions. Additionally, transparent governance processes enable stakeholders to hold authorities accountable for their actions, facilitating the emergence of green industries and encouraging innovation in sustainable practices.

Thirdly, transparency emerges as a pivotal factor in the promotion of green growth, serving as a linchpin for accountability and participatory governance. By fostering an environment of openness and accessibility, transparency empowers stakeholders to actively monitor government actions and hold decision-makers accountable for their environmental stewardship efforts. Through transparent governance processes, information regarding environmental policies, regulations, and their implementation becomes readily available, enabling informed decision-making among policymakers, businesses, and civil society organizations. Moreover, transparency promotes public participation in environmental policymaking, ensuring that diverse perspectives are considered and environmental priorities are aligned with societal needs and aspirations. By actively engaging citizens in the decision-making process, transparent governance mechanisms enhance the legitimacy and effectiveness of environmental policies and initiatives. Furthermore, transparency instills confidence among investors by providing clarity and certainty regarding the regulatory landscape, thus fostering a conducive environment for investment in green initiatives and sustainable development projects.

Data discussion and empirical model

The global imperative for nations to embrace green growth has surged, offering a holistic approach to fostering economic prosperity, social equity, and environmental sustainability concurrently. This study aims to investigate the intricate relationships among key governance indicators—specifically the rule of law, corruption, and transparency—and green growth within six East Asian economies (China, Hong Kong, Japan, Mongolia, South Korea, and Taiwan) from 1995 to 2021. Green energy deployment serves as a proxy for measuring green growth, serving as the dependent variable in the analysis. Metrics for the rule of law, corruption, and transparency are sourced from a global governance database and included as explanatory variables in the model. Additionally, income level and income inequality (measured by the GINI index) are introduced as mediating variables. Table 2 presents a detailed overview of the variables analyzed in this study.

Table 2. Variables’ information.

Variable	Definition	Unit	Source	Expected impact
Green Energy Deployment	Indicator of renewable energy adoption and utilization.	Gigawatt-hours	IEA	Dependent variable
Rule of law	Measure of the extent to which the legal system is transparent, predictable, and accountable.	Index	World Bank Governance Indicators	Positive association with economic stability and investment attractiveness.
Corruption	Assessment of the prevalence of corruption within governmental institutions and society.	Index	World Bank Governance Indicators	Negative impact on economic development and social equity.
Transparency	Degree of openness and accessibility of governmental processes and information.	Index	World Bank Governance Indicators	Positive influence on investor confidence and public trust.
Income level	Average per capita income within the respective economy.	USD	World Bank	Expected positive relationship with economic growth and consumption.
Income inequality	Measure of income distribution within a population, with higher values indicating greater inequality.	GINI index	World Bank	Negative association with social cohesion and economic stability.

Source: Authors’ compilation.

The anticipated impacts of the independent variables on green energy deployment vary based on their respective nature and influence within the framework of the study. The rule of law, characterized by its transparency, predictability, and accountability, is expected to positively influence green energy deployment by fostering an environment conducive to investment and innovation in renewable energy projects. Conversely, corruption, which denotes the pervasiveness of corrupt practices within governmental institutions and society, is likely to hinder green energy deployment by impeding the effectiveness of policies and discouraging private sector involvement in sustainable energy initiatives. Transparency, representing the accessibility and openness of governmental processes and information, is anticipated to bolster green energy deployment by enhancing public trust and facilitating informed decision-making in energy-related matters. Additionally, income level, reflecting the economic prosperity of a nation, is expected to positively correlate with green energy deployment, as higher income levels typically afford greater financial resources for investment in renewable energy infrastructure and technologies. Conversely, income inequality, as measured by the GINI index, may have a mixed impact on green energy deployment, with greater income inequality potentially exacerbating disparities in access to and adoption of renewable energy solutions within society.

Equation 1 represents the relationship between variables in function form.

1

$$Greengrowthindex=Function\left[Ruleoflaw,transparency,corruption,incomeinequality,incomelevel\right]$$

Equation 2 represents Eq. 1 in econometric form.

2

$${\mathit{Green\; growth\; index}}_{\mathit{it}}={\alpha }_1{\mathit{Rule\; of\; law}}_{\mathit{it}}+{\alpha }_2{\mathit{Transparency}}_{\mathit{it}}+{\alpha }_3{\mathit{Corruption}}_{\mathit{it}}+{\alpha }_4{\mathit{Income\; inequalilty}}_{\mathit{it}}+{\alpha }_5{\mathit{Income\; level}}_{\mathit{it}}+{\epsilon }_{\mathit{it}}$$

To determine the coefficients linked to the independent variables, conducting a thorough analysis of the consistency of slope coefficients is crucial, following the guidelines laid out by Pesaran and Yamagata (2008). This examination of slope uniformity has a dual purpose: firstly, to confirm the presence of cross-sectional dependency among the selected East Asia countries, using methods outlined by Frees (1995), and Breusch–Pagan (1980), and secondly, for subsequent detailed scrutiny employing Pesaran’s (2007) approach to address the identified cross-sectional dependency. The focus then shifts to Westerlund’s (2007) framework, providing valuable insights into understanding the complexities of panel co-integration. Implementing the CUP-BC (continuously updated bias-corrected) approach during estimation offers numerous advantages, particularly in addressing cross-sectional dependence and clarifying long-term associations.

Research estimation results

In this section, we meticulously elucidate the interpretation of results using a systematic estimation approach. Beginning with the methodology outlined by Pesaran and Yamagata (2008), we then utilize Bresuch–Pagan’s method (1980) and Frees’ technique (1995) to identify potential cross-sectional dependence (CD). The findings from these tests are concisely summarized in Table 3. Remarkably low p-values observed at a significance level of 5% furnish a robust foundation for decisively rejecting the null hypothesis. This leads to a definitive conclusion that both cross-sectional dependency and uniformity of slopes are prominently evident in the analyzed dataset.

Table 3. Cross-section dependency, and slope homogeneity status of the panel.

Variable	Frees		Breusch–Pagan
	Statistic	Prob.	Statistic	Statistic
Green Energy Deployment	664.30	0.00	164.03	0.00
Rule of law	784.87	0.00	149.24	0.00
Corruption	547.60	0.00	158.78	0.00
Transparency	600.70	0.00	167.64	0.00
Income level	437.40	0.00	143.45	0.00
Income inequality	578.70	0.00	158.90	0.00
Slope homogeneity test: $\begin{array}{c}\mathit{Delta}\\ {\mathit{Delta}}_{\mathit{Adjusted}}\end{array}$	16.79 (prob. 0.00) 14.28 (Prob. 0.00)

Source: Authors’ compilation.

Afterwards, the stationary nature of the variables is evaluated utilizing the CADF technique. The results of this assessment are elaborated in Table 4, confirming the stationarity of the variables through the initial differencing of the series.

Table 4. Stationarity examination by CADF.

Variable	CADF examination
	I(0)		I(1)
	Value	Prob.	Value	Prob.
Green Energy Deployment	−1.43	0.65	−4.59	0.00
Rule of law	−1.28	0.89	−5.89	0.00
Corruption	−2.47	0.94	−9.55	0.00
Transparency	−1.74	0.73	−6.03	0.00
Income level	−0.94	0.84	−3.79	0.00
Income inequality	−1.08	0.80	−5.37	0.00

Source: Authors’ compilation.

Following this, the investigation into the co-integration status among the variables is carried out by applying the four statistics introduced by Westerlund (2007). The results, explicated in Table 5, provide evidence supporting the presence of co-integration among the variables over a prolonged period.

Table 5. Long-term association outcomes.

Statistic	Value	Z-value	P-value	Robust p-value
$G_{\tau }$	−4.66	−3.68	0.024	0.000
$G_{\rho }$	−13.79	−5.63	0.062	0.025
$P_{\tau }$	−5.64	−4.79	0.025	0.011
$P_{\rho }$	−6.15	−4.69	0.002	0.000

Source: Authors’ compilation.

The next step involves employing the CUP-BC estimator, a panel cointegration model, to analyze the impacts of independent variables, as outlined in Table 6.

Table 6. Estimated coefficients report.

Variable	Findings
	Coefficient	t-statistic	Prob.
Rule of law	0.335	6.507	0.036
Corruption	−0.257	−9.053	0.005
Transparency	0.453	4.352	0.029
Income level	0.197	10.304	0.002
Income inequality	−0.326	−6.550	0.034

Source: Authors’ compilation.

The study’s findings reveal that a 1% improvement in the rule of law correlates with a 0.33% increase in green energy deployment across East Asian economies. This positive relationship is supported by several critical factors. Firstly, a robust rule of law creates a regulatory environment that supports investment and innovation in renewable energy projects. Clear and consistent legal frameworks boost investor confidence and mitigate risks associated with renewable energy ventures, thereby encouraging greater involvement in the green energy sector. Moreover, effective rule of law diminishes corruption and promotes transparent governance, facilitating efficient resource allocation towards sustainable energy initiatives. Additionally, legal mechanisms safeguarding property rights and enforcing contracts provide stability and assurance for investments in renewable energy infrastructure.

Moreover, the analysis indicates that a 1% increase in corruption correlates with a 0.25% decrease in green energy deployment within East Asian economies. This negative relationship stems from several underlying factors. Corruption undermines the efficiency and effectiveness of government policies and regulatory frameworks designed to promote the adoption of renewable energy. Bureaucratic obstacles, bribery, and rent-seeking behaviors distort market mechanisms, impeding the development and implementation of green energy projects. Furthermore, corrupt practices erode public trust in governmental institutions, discouraging private sector investment in renewable energy. Additionally, the misallocation of resources due to corruption diverts funds from sustainable energy initiatives, perpetuating reliance on conventional energy sources.

Furthermore, the estimation results affirm the positive impact of transparency on renewable energy deployment in East Asian economies, with a 1% increase in transparency leading to a 0.45% increase in green energy development. This favorable relationship can be elucidated by several underlying mechanisms. Firstly, transparency fosters an environment of accountability and openness within governmental institutions, enhancing public oversight and scrutiny of energy policies and projects. Clear and accessible information regarding regulatory processes and investment opportunities promotes investor confidence and facilitates decision-making in the renewable energy sector. Additionally, transparent governance practices reduce the likelihood of corruption and rent-seeking behavior, ensuring fair and equitable access to renewable energy resources and opportunities. Furthermore, transparency promotes competition and efficiency in the energy market, driving innovation and technological advancements in renewable energy technologies.

Additionally, the analysis reveals that a 1% improvement in income level within East Asian countries motivates green energy deployment by 0.19%. This positive correlation can be attributed to several key factors. Firstly, as income levels rise, there is generally an increase in consumer purchasing power and disposable income, which can lead to greater demand for environmentally friendly products and services, including renewable energy. Individuals and businesses with higher incomes may be more inclined to invest in renewable energy technologies such as solar panels or energy-efficient appliances, either for economic reasons or to demonstrate their commitment to sustainability. Additionally, higher income levels may facilitate access to financing options for renewable energy projects, such as loans or subsidies, making it more feasible for individuals and companies to invest in green energy initiatives. Moreover, as economies develop and income levels rise, governments may allocate more resources towards renewable energy infrastructure and incentives, further stimulating green energy deployment.

The findings illustrate that a 1% increase in income inequality corresponds to a 0.32% reduction in renewable energy deployment in East Asian economies. This negative correlation can be elucidated by several underlying factors. Firstly, higher levels of income inequality often indicate disparities in access to resources and opportunities, with marginalized communities facing barriers to participating in renewable energy initiatives. As a result, income inequality may exacerbate socio-economic inequalities, hindering widespread adoption of renewable energy technologies and solutions. Additionally, income inequality can lead to political and social instability, which may undermine long-term planning and investment in renewable energy infrastructure. Moreover, greater income inequality may contribute to environmental degradation and resource depletion, as wealthier individuals and corporations with disproportionate access to resources may prioritize short-term gains over sustainable development.

The analysis of three governance sub-indicators demonstrates varied impacts on green energy deployment across East Asian economies, with transparency emerging as the most influential factor, while corruption acts as a significant barrier. Transparency shows the largest positive effect on green deployment, underscoring the importance of clear and accessible governance practices in facilitating the adoption of renewable energy technologies. Transparent governance promotes accountability and trust, thereby stimulating investment and innovation in green energy initiatives. Conversely, corruption is found to hinder green deployment, emphasizing its negative impact on sustainable development efforts. Bureaucratic inefficiencies, bribery, and opaque decision-making processes impede the effectiveness of renewable energy policies and discourage private sector investment in the sector.

In the robustness analysis, we employ Fully Modified OLS (FMOLS) as an alternative estimator, and Table 7 presents the outcomes of its estimation. The robustness analysis reveals that corruption exhibits a negative coefficient, indicating its adverse impact on green deployment in East Asian economies. Conversely, transparency and the rule of law emerge as two significant drivers for green deployment, with positive coefficients suggesting their positive influence on the adoption of renewable energy technologies.

Table 7. FMOLS analysis output.

Variable	Findings
	Coefficient	t-statistic	Prob.
Rule of law	0.435	8.045	0.021
Corruption	−0.327	−17.530	0.002
Transparency	0.632	3.896	0.036
Income level	0.205	5.487	0.045
Income inequality	−0.174	−16.320	0.003

Source: Authors’ compilation.

Conclusion and practical policies

This paper explores the critical imperative for nations to adopt green growth strategies to simultaneously advance economic prosperity, social equity, and environmental sustainability. Analyzing key governance indicators—specifically the rule of law, corruption, and transparency—across six East Asian economies from 1995 to 2021 reveals several noteworthy findings. A 1% increase in the rule of law correlates with a 0.33% rise in green energy deployment, attributed to its role in fostering a regulatory environment supportive of renewable energy investment and innovation. Conversely, a 1% increase in corruption corresponds to a 0.25% decrease in green energy deployment, highlighting corruption’s detrimental effects on effective governance and market dynamics. Furthermore, a 1% increase in transparency leads to a 0.45% increase in green energy development, underscoring the importance of accountable governance in advancing renewable energy initiatives. Additionally, a 1% improvement in income levels correlates with a 0.19% increase in green energy deployment, emphasizing economic prosperity’s role in promoting sustainable energy adoption. However, a 1% increase in income inequality results in a 0.32% reduction in green energy deployment, revealing socio-economic disparities as barriers to widespread adoption. Lastly, transparency emerges as the most influential factor, while corruption significantly impedes green energy deployment according to the comparison of governance sub-indicators.

The findings of this study have substantial policy implications for East Asian economies aiming to advance green growth and attain sustainable development goals. Firstly, prioritizing the strengthening of the rule of law and fostering transparent governance practices should be pivotal in policy agendas. Enhancing legal frameworks, ensuring transparency in decision-making, and combating corruption are critical to creating a conducive environment for renewable energy investment and innovation. Governments should streamline regulatory processes, enhance accountability, and involve the public in energy policy formulation to facilitate the shift towards a sustainable economy. Additionally, policies should address income inequality and promote inclusive economic growth by investing in education, skills development, and social safety nets to ensure equitable distribution of green growth benefits. Furthermore, providing incentives like subsidies, tax breaks, and financial support to encourage private sector investment in renewable energy projects is essential. Collaborative efforts involving governments, businesses, civil society, and international organizations are indispensable for advancing the green growth agenda and achieving sustainable development in East Asia.

Future contributions to the insights gleaned from this paper could be made through further exploration of sustainable governance concepts in East Asian economies. This could involve conducting in-depth studies to examine the effectiveness of governance frameworks in promoting sustainable development and green growth initiatives. By analyzing the implementation of policies related to environmental regulation, resource management, and climate change mitigation, researchers can assess the impact of governance practices on sustainability outcomes and identify areas for improvement. Additionally, there is a need for research on the assessment of carbon accounting transparency among Small and Medium Enterprises (SMEs) in East Asian economies. SMEs play a significant role in the economy and are increasingly recognized as key drivers of sustainable development. However, their carbon emissions and environmental impact are often overlooked due to limited resources and capacity for environmental management. By evaluating the level of carbon accounting transparency among SMEs and identifying barriers to adoption, researchers can develop targeted interventions to enhance environmental reporting and promote sustainable practices within this sector.

Acknowledgements

The author gratefully acknowledges the financial support provided by the National Social Science Foundation of China(19VXJ007).

Author contributions

Weiyu Gu: conceptualization, supervision, resources, writing review and editing; Weifeng Yan: data curation, writing original draft preparation; Shiqin Yu: competing interests, supervision.

Data availability

For inquiries regarding access to the datasets generated or analyzed in the current study, please do not hesitate to reach out to the corresponding author.

Competing interests

The authors declare no competing interests.

Ethical approval

This article does not encompass studies involving human participants conducted by any of the authors.

Informed consent

This article does not include any studies involving human participants conducted by the authors.

Supplementary information

The online version contains supplementary material available at https://doi.org/10.1057/s41599-024-03659-1.

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

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