The Role of Green Infrastructure Investment in Promoting Sustainable Regional Economic Growth in Developing Economies
Abstract
This study examines the role of green infrastructure investment in promoting sustainable regional economic growth in developing economies, with a case study in Mimika Regency, Indonesia. The research employs a quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS. Data were collected from 100 respondents representing diverse stakeholder groups, including small and medium enterprises (SMEs), industrial workers, local communities, academics, and transportation and logistics actors. The measurement model demonstrates strong reliability and validity, with all constructs exceeding recommended thresholds for Cronbach’s alpha, composite reliability, and average variance extracted (AVE). The structural model shows high explanatory power, with R² values of 0.987 for economic productivity, 0.983 for environmental quality, and 0.984 for sustainable regional economic growth. The results reveal that green infrastructure investment has a significant positive effect on both environmental quality and economic productivity. However, its direct effect on sustainable regional economic growth is negative. Environmental quality exhibits a strong positive effect on sustainable growth, while economic productivity shows a negative relationship. Mediation analysis indicates that environmental quality plays a dominant mediating role, with a substantial positive indirect effect, whereas economic productivity contributes a negative indirect effect. These findings suggest that, in developing regions such as Mimika, the benefits of green infrastructure investment are primarily realized through environmental improvements rather than immediate economic productivity gains. The study highlights the importance of prioritizing environmental quality as a key pathway toward achieving sustainable economic growth and provides policy implications for regional development strategies.