Impact of Fiscal Decentralization on Sustainable Development – The Role of Green Innovation and Geopolitical Risks

Abstract

The article utilizes data from 19 developed nations from 2010 to 2022 to investigate the moderating role of green innovation and geopolitical risk on the linkage between fiscal decentralization (FD) and sustainable development (SD). The Bayesian regression outcomes suggest that FD and green innovation promote SD, while geopolitical risk (GPR) has a negative impact. Green innovation not only directly affects SD but also plays a moderating role, helping to enhance the positive impact of FD on SD. On the contrary, GPR weakens this positive impact. In addition, the paper also provides evidence that economic growth, trade openness, and government size have a positive impact on the sustainable development process. The findings also provide some policy implications to promote SD in the studied countries.