The Impact of Blue Economy on Sustainable Industrialization in Saarc Countries

Abstract

This study analyzes the impact of Blue Economy on sustainable industrialization among selected SAARC countries. A composite index was constructed for Blue Economy and Sustainable Industrialization. Trade Openness, Governance index and Foreign Direct investment were taken as controlled variables. The study spans over the period 2000 to 2023. Cross-sectional dependence test was used to determine the cross-sectional dependence along with Second-generation CIPS unit root tests and the Westerlund (2007) cointegration test. Subsequently, the CS-ARDL model is employed to estimate both short- and long-run dynamics. Findings suggest that the Blue Economy, trade openness, and governance exert a modest but positive effect on sustainable industrialization in the short run, while their impact becomes significantly stronger in the long run. Foreign Direct Investment shows a weak and negative influence in the short term—possibly due to crowding-out effects—but turns significantly positive over time, indicating delayed spillover benefits such as technology transfer and job creation. The error correction term, confirms nearly 28.5% of deviations is corrected each period. Together, these findings provide robust empirical support for integrating Blue Economy strategies into long-term industrial development planning across South Asia.