Optimization of Green Economy Model to Accelerate Sustainable Development in Indonesia

Abstract

This study aims to analyze how the optimization of green economic models can accelerate sustainable development in Indonesia. Using quantitative methods based on secondary data for the period 2005–2023 and the Vector Autoregression (VAR) model approach, this study examines the simultaneous relationships between key economic variables which include green investment, inflation, energy consumption, human development index (HDI), and economic growth (GDP). The results of the Impulse Response Function (IRF) and Variance Decomposition analysis show that the contribution of green investment to economic growth and human development increases significantly in the medium and long term. Inflation has a negative impact on human development, while energy consumption shows stability but is beginning to be influenced by external factors in the long term. Economic growth is also increasingly dependent on social and environmental factors over time. These findings emphasize the importance of cross-sectoral integration, policy consistency, and strengthening the role of green investment in the national development framework. By adopting a measurable and sustainable green economy model, Indonesia can strengthen the foundation of economic transformation towards a more inclusive, equitable, and environmentally friendly economy.