Assessing the Saudi and Middle East Green Initiatives: The Role of Environmental Governance, Renewable Energy Transition, and Innovation in Achieving a Regional Green Future

The transition to sustainable, innovation-driven economies has become a global imperative, particularly for resource-dependent regions like the Middle East, where environmental challenges, fossil fuel reliance, and economic diversification pressures intersect. In this context, green innovation plays a pivotal role in mitigating environmental degradation while supporting long-term economic growth. This study examines the short-term and long-term drivers of green innovation across 13 Middle Eastern countries from 1990 to 2023, with a focus on environmental governance, environmental pollution, economic growth, and natural resource abundance. Using a balanced panel dataset, this study applies Frees, Friedman, and Pesaran CSD tests to address cross-sectional dependency and second-generation unit root tests for data stationarity. Both first- and second-generation cointegration tests confirm long-run relationships among variables. The empirical analysis employs the cross-sectional autoregressive distributed lag (CS-ARDL) model, alongside Pooled Mean Group (PMG-ARDL), Average Mean Group (AMG), and Common Correlated Effects CCEMG estimators, ensuring robustness. The findings indicate that, in the long term, environmental governance, economic growth, population size, and natural resource abundance significantly promote green innovation, with respective coefficients of 0.3, 0.01, 0.02, and 0.4. Conversely, human development and environmental pollution exert a negative influence on green innovation, particularly over the long term. These results suggest that, while economic and governance factors drive innovation, human capital development may prioritize immediate growth over sustainability, and pollution may hinder long-term innovation. Enhancing environmental governance, accelerating renewables, using strategic resource revenue for green projects, integrating green growth, and regional collaboration can position Middle Eastern economies as green innovation leaders.