IS ECONOMIC PERFORMANCE CONTRIBUTING TO ENVIRONMENTAL QUALITY? A CROSS-SECTIONAL ANALYSIS USING A GLOBAL DATASET

Abstract

The European Green Deal strategy aims to decarbonize the EU economy and achieve ambitious sustainability goals. By evaluating and promoting environmentally sound development practices, the EU strives to lead by example and inspire global efforts towards a sustainable future. Moreover, The EU and OECD countries, alongside international frameworks, are committed to supporting vulnerable nations and advancing sustainable development worldwide. Through collaborative efforts and innovative policies, the EU and OECD aim to mitigate the impacts of climate change and pave the way for a more resilient and sustainable world. Analyzing the ecological sustainability of development patterns within the EU is integral to enhancing the EU's initiatives under the European Green Deal. In the opinion of the present study, the feasibility of European Green Deal needs further assessment from the perspective of a cost – benefits analysis, as the methodology employed in computing the costs involved raises several questions. This study underlines the multiple dimensions of environmental quality and proposes a methodology for building an aggregated index of environmental degradation. Subsequent analysis uses structural equations framework to investigate the impact of economic performance on environmental degradation index. Results are in line with previous findings in the field. Thus, present research has documented a positive and statistically significant impact of economic performances at macroeconomic level on the environmental degradation index. However, we also have shown that, while economic activity can contribute to environmental degradation, it can also drive positive environmental outcomes through technological innovation, investment in environmental protection, improved policies, sustainable consumption and production, creation of green jobs, and increased education and awareness. Thus, we have shown that, from a policy perspective, it is important to harness economic growth in ways that promote sustainability and environmental quality.