Green Technology and Urbanization as Catalysts of Sustainable Economic Development in Malaysia’s Emerging Economy
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The emergence of a new phase of urbanization, characterized by innovation, green development, and smart transformation, is increasingly shaping Malaysia’s economic trajectory. Green technological innovation has become a critical driver in addressing sustainability challenges and strengthening the developmental momentum of urban construction. This study therefore examines the role of capital accumulation, labor force participation, human capital, financial development, urbanization, green technology, information and communication technology (ICT), and foreign direct investment (FDI) in promoting Malaysia’s economic growth. Using annual data from 1991 to 2024, the analysis employs the Autoregressive Distributed Lag (ARDL) model, supported by robustness checks through Fully Modified OLS (FMOLS) and Canonical Cointegrating Regression (CCR). The findings indicate that urbanization, labor, capital, and green technology significantly contribute to economic growth in both the short and long run. Conversely, human capital and financial development show negative long-term effects, while ICT and FDI display limited or statistically insignificant impacts. Overall, the results highlight that although Malaysia has benefited from urban expansion, capital deepening, and the adoption of green technologies, structural weaknesses, particularly in education quality, financial sector efficiency, and effective FDI integration, continue to hinder the country’s prospects for sustained long-term growth.
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