Transition towards a low-carbon global economy: An integrated analysis of club convergence, catch-up and the agenda 2030

Abstract

This study employs the Biennial Malmquist-Luenberger (BML) productivity approach to measure Green Total Factor Productivity (GTFP) in 120 countries from 1990 to 2021. Next, the Phillips and Sul methodology is applied to investigate whether these countries have witnessed an absolute convergence process, or whether there has been a club convergence process. We also use an Ordered Logit method to identify the factors affecting the formation of clubs. Finally, the fuzzy regression discontinuity method is used to examine the exogenous shock of the 2030 agenda on the global GTFP. The key findings are presented as: (1) during the study period, the global GTFP on average has shown an upward trajectory. The European region performed better than the other regions, whereas Sub-Saharan Africa lagged in GTFP. Developed economies led in technological progress, while developing ones have achieved slightly higher carbon efficiency; (2) although the full sample divergence was supported, three clubs were identified with significant disparities in GTFP. We found that per capita GDP, industrial structure, energy structure, and particularly, indigenous and foreign innovations play major roles in explaining the formation of convergence clubs; (3) there was an apparent positive jump at the cut-off, indicating agenda 2030′s favorable treatment effect on the global GTFP. Therefore, all countries, poorer and richer alike, should use the half-way momentum to self-critically review and revise their national SDG strategies and commit to strengthening multilateralism.