Balancing Economic Growth and Environmental Harm: finding the Best mix

The significance of this research lies in balancing economic expansion with environmental protection. The subject concerns the relationship between GDP growth from manufacturing investment and environmental harm. The research aims to establish a framework for selecting the preferred investment option among manufacturing industry choices, based on the “increase in environmental damage / increase in GDP” ratio. The authors implemented a method that completely considers the effect of investments on economic dynamics and the resulting environmental harm, including both direct and indirect effects of investments. Consequently, mathematical models were created to facilitate this goal. The authors concluded that when the optimal investment allocation model in terms of the “increase in environmental damage / increase in GDP” ratio cannot be achieved because of resource limitations and all other feasible options must be employed.

1. Margolin A. M., Vyakina I. V. Risks, threats and mechanisms of management systems ESG-transformation. MIR (Modernizaciya. Innovacii. Razvitie) = MIR (Modernization. Innovation. Research). 2022;13(3):352-368. (In Russ.). DOI: 10.18184/2079-4665.2022.13.3.352-368

2. Korshunov I. V. Sustainable development and green growth in regional strategies: Stated intentions and financial support. Ekonomika. Nalogi. Pravo = Economics, taxes & law. 2023;16(3):98-108. (In Russ.). DOI: 10.26794/1999-849X-2023-16-3-98-108

3. Semenova N. N. ESG-transformation of Russian companies in the interests of sustainable development. Ekonomika. Nalogi. Pravo = Economics, taxes & law. 2023;16(3):57-65. (In Russ.). DOI: 10.26794/1999-849X-2023-16-3-57-65

4. Blagov Yu.E. ESG: Transformation of interpretations. Rossijskij zhurnal menedzhmenta = Russian Management Journal. 2024;22(2):289-301. (In Russ.). DOI: 10.21638/spbu18.2024.206

5. Nazarova V. V., Kozlova S. A., Pustynnikova A. A., Lodiagin B. A., Alekseeva O. V. Green bonds in Russia: Market and macroeconomic factors of returns. Journal of Applied Economic Research. 2025;24(4):1249-1279. DOI: 10.15826/vestnik.2025.24.4.041

6. Hu G., Li X., Cao Z. Do tax incentives make firms greener? Evidence from the accelerated depreciation policy in China. The British Accounting Review. 2025;57(5):101-118. DOI: 10.1016/j.bar.2024.101517

7. Peiserich J. Fractured & Fraught — but still potentially profitable: The State of ESG in 2025. Corporate Compliance Insights. URL: https://www.corporatecomplianceinsights.com/the-state-of-esg-2025/

8. Choi S. Y. Climate policy reversal under the second Trump Administration: Implications for global sustainable finance. Korea Capital Market Institute URL: https://www.kcmi.re.kr/en/publications/pub_detail_view?syear=2025&zcd=002001017&zno=1850&cno=6550

9. Jackson S., Finn M., Scheepers K. The use of replacement cost method to assess and manage the impacts of water resource development on Australian indigenous customary economies. Journal of Environmental Management. 2014;135:100-109. DOI: 10.1016/j.jenvman.2014.01.018

10. Gusev A. A. Modern economic problems of environmental management. М.: Mezhdunarodnye otnosheniya Publ.; 2004. 208 p. (In Russ.).

11. Mityakov E. S., Mityakov S. N. Methodological approach to the efficiency analysis of regional industrial ecosystems. Ekonomika regiona = Economy of regions. 2024:20(3);836-850. (In Russ.). DOI: 10.17059/ekon.reg.2024-3-15

12. Potravny I. M., Novoselov A. L., Novoselova I. J. The development of economic assessment methods of damage from environmental pollution and their practical application. Ekonomicheskaya nauka sovremennoj Rossii = Economics of Contemporary Russia. 2018;(3):35-48. (In Russ.).

13. Barbier E. B. Wetlands as natural assets. Hydrological Sciences Journal. 2011:56(8);1360-1373. DOI: 10.1080/0-2626667.2011.629787

14. Kurakina N. I. Questions of the environmental risks assessment in the Arctic region. Rossija v global’nom mire = Russia in the global world. 2016;9(32):298-306. (In Russ.).

15. Minx J. C., et al. Input–output analysis and carbon footprinting: An overview of applications. Economic Systems Research. 2009. URL: https://richardw.folk.ntnu.no/papers/Inputoutput-analysis-and-carbon-footprinting-An-overview-of-applicationsEconomic-Systems-Research.pdf

16. Belousov D. R. Inflation mechanism in the modern Russian economy (financial and reproduction aspect): dis. … Cand. Sci. (Econ.): 08.00.05. Moscow: Institute of Economic Forecasting Russian Academy of Sciences; 1998. 108 p.

17. Eremin V. V., Sil’vestrov S. N. Methodology for assessing the direct and indirect impact of sanctions on the resource potential of national and regional economies. Studies on Russian Economic Development. 2025;36(1).103-112. DOI: 10.47711/0868-6351-208-162-174