Common Correlated Effects Mean Group Research Articles

Exploring the impact of green finance and technological innovation on green economic growth: Evidence from emerging market economies

AbstractThe sustainable future of emerging market economies (EMEs) lies within achieving sustainable development goals (SDGs), specifically SDG 8, which is linked with green economic growth (GEG) and its determinants, such as green finance (GF) and technological innovation (TI), along with some control variables. However, the current literature has insufficiently addressed these determinants in the context of emerging and developing economies. In this regard, this study deployed the most effective and advanced techniques like cross‐sectional auto‐regressive distributed lags, augmented mean group, and common correlated effects mean group to handle the issues of endogeneity, cross‐sectional dependence, and heterogeneity, which is not an easy task for conventional methods used in existing studies. This study has compiled a panel data set spanning from 2000 to 2019, across 13 EMEs. The main outcomes revealed that GF, TI, and human capital (HC) help in fostering significant GEG, whereas financial development (FD) and economic globalization (ECOGLB) fail. The study underscores the need for policymakers to focus on the promotion of diffusion of GF and enhancement of TI and HC while regulating the FD and ECOGLB process to steer emerging nations toward sustainable development.

Is artificial intelligence technology innovation a recipe for low-carbon energy transition? A global perspective

Against the background of global warming, the low-carbon energy transition (LCET) has become one of the top concerns of governments around the world. Artificial intelligence (AI) is serving an increasingly relevant role in the energy sector by facilitating the development of cleaner energy. Thus, based on the panel data of 44 countries from 2000 to 2022, this study employs the Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG) methods to explore the impact of AI technology innovation on LCET. Moreover, we explore the moderating and spatial spillover effects between AI technology innovation and LCET. The main results show that: (1) AI technology innovation significantly promotes LCET. A 1 % increase in the AI technology innovation index causes a 0.176 % increase in the level of LCET using the AMG method, and a 0.198 % increase using the CCEMG method. (2) Financial incentives and energy efficiency effectively amplify the positive influence of AI technology innovation on LCET. (3) AI technology innovation generates discernible spillover effects on LCET through bilateral trade influence, particularly in countries with closer “trade distances.” This study recommends that countries adequately strengthen AI technology resources to realize new situations for the synergistic development of technology and green energy.

Reconsidering the Long-Term Impacts of Digitalization, Industrialization, and Financial Development on Environmental Sustainability in GCC Countries

Gulf Cooperation Council (GCC) countries have faced environmental challenges in recent decades. This study aims to identify the contribution of digitalization, industrialization, and financial development to the ecological footprint (EF) in GCC countries between 2000 and 2021. The empirical investigation involves estimating the STochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model using the augmented mean group (AMG), common correlated effects mean group (CCEMG) and cross-sectionally augmented autoregressive distributed lag (CS-ARDL) estimators. The findings reveal the existence of long-term linkages between EF and the factors mentioned above. Furthermore, there is evidence that adopting digitalization and information and communication technologies (ICT) improves long-term environmental quality. In contrast, both industrialization and financial development exert detrimental effects on the environment. Finally, the JKS Granger non-causality test revealed that all variables, except financial development, predict environmental degradation in GCC countries. These findings can assist in formulating efficient strategies to reduce ecological degradation and achieve environmental sustainability in GCC countries.

Impact of green technology and energy on green economic growth: role of FDI and globalization in G7 economies

With the increase in economic growth, the world is facing serious challenges concerning environmental sustainability. Hence, the green economic growth is imperative for sustainable and inclusive development. The objective of this study is to contribute to the existing literature about the factors that influence green economic growth. The study investigates the role of green technology, green energy, foreign direct investment, and globalization on green economic growth in G7 countries. The data of the study is collected from WDI, KOF Swiss Economic Institute, and OECD database and the data period ranges from 1995 to 2020. The existence of cointegration between the variables of the study was tested by Westerlund’s (Oxford Bull Econ Stat 69(6):709–748) cointegration test. Due to the presence of cross-sectional dependency, the study employed the cross-sectional autoregressive distributed lag (CS-ARDL) method to estimate the coefficients in the long and short run. The study also used a common correlated effect—mean group (CCEMG) estimator for robustness check. The findings of the study reveal that green energy and FDI positively contribute to green economic growth in the long and short run. The green technology also contributes positively to enhance green economic growth but only in long run. To accelerate green economic growth, G7 countries should incorporate policies promoting green energy and technology, while acquiring more foreign investments to ensure a sustainable development.

Economic strategies for efficient use of natural resources: The impact of carbon taxation and fiscal policy

This study examines the efficacy of fiscal policies and carbon taxation as mechanisms to promote the efficient utilization of natural resources within the BRICS economies, against the backdrop of environmental sustainability challenges. Analyzing data from 1995 to 2018, the study incorporates Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG), to provide robust empirical evidence. These methodologies adeptly address unobserved heterogeneity across cross-sections, offering insightful analyses into the impact of fiscal tools and carbon taxes. By leveraging a comprehensive dataset and engaging in a detailed policy analysis, the paper highlights the pivotal role of these economic instruments in mitigating environmental externalities associated with resource-intensive industries. Furthermore, it delineates how fiscal interventions complement market-based incentives like carbon taxes to enhance resource efficiency and curtail greenhouse gas emissions. We contribute valuable insights to the discourse on policy development and sustainable resource management within the BRICS economies.

Examining the relationship between the economic growth, energy use, CO2 emissions, and water resources: Evidence from selected MENA countries

Water shortage and food security concerns are amplified by the spread of irrigated cultures within the context of climatic unpredictability. In the hot, arid MENA area, the frequent drought periods and the continuous deterioration of water resources limits the ecological system's functioning and the sustainable agricultural productivity. Thus, this study aims to evaluate the potential impacts of the evolution of water resources management on the environmental components, using Westerlund’s (2007) panel cointegration and the Common Correlated Effects Mean Group (CCE-MG) estimator for a sample of six MENA economies over 35 years ((1990–2015). In the short run, there is unidirectional causality from agricultureadded value to CO2 and from water productivity to CO2 without any feedback. while, a bidirectional causality nexus was detected between energy consumption and CO2 emission In the long run, however, a feedback causality has been obtained between CO2 emissions, agriculture added value, water productivity, and energy consumption.Sustainable water management, smart water systems, and energy transition in the water related activities are highly recommended as priorities towards a NetZero carbon global economic trend

Evaluating Environmental Sustainability in Africa: The Role of Environmental Taxes, Productive Capacities, and Urbanization Dynamics

This study examines the complex relation among environmental taxes, productive capacities, urbanization, and their collective effects on environmental quality in Africa, drawing on two decades of data from twenty African countries. It situates the study within the broader discourse on sustainable development and economic growth, emphasizing the Environmental Kuznets Curve (EKC) framework to examine the relationship between economic development, characterized by urban expansion and increased productive capacities, and the adoption of environmental taxes amidst the continent’s diverse economic and environmental environments. Using advanced econometric techniques, including the Cross-Section Augmented Autoregressive Distributed Lag (CS-ARDL) model and the Dynamic Common Correlated Effects Mean Group (DCCEMG) estimator, the study addresses data challenges such as cross-sectional dependence and slope heterogeneity. The results provide important insights into the dynamics of environmental quality in relation to economic and urban growth and the role of environmental taxation. The study proposes tailored policy strategies aimed at strengthening sustainable development initiatives in line with international agreements such as the Paris Agreement and the Sustainable Development Goals. These strategies advocate for a nuanced application of environmental taxes and the promotion of productive capacities to enhance environmental sustainability across the African continent.

Revisiting the EKC framework concerning COP-28 carbon neutrality management: Evidence from Top-5 carbon embittering countries

In the aftermath of the 28th Conference of the Parties (CoP) climate summit in the UAE, the majority of developing countries encounter challenges in attaining their objectives of carbon neutrality for a sustainable economy. The association of economic factors such as economic growth, governance structures, forest area, renewable energy consumption, technological innovation, and urbanization with environmental elements (carbon footprint) is vital for sustainable economic development and environmental management strategies. Therefore, this research reveals this association in five selected high-emitting countries spanning from 1990 to 2022. This research utilizes the Environmental Kuznets Curve (EKC) framework to investigate the interrelationship between these variables. To do so, this study employs the cross-sectional autoregressive distributed lags (CS-ARDL) statistical technique to determine the short- and long-term impacts of the variables under investigation on carbon footprint. In contrast, the mean group (MG) and common correlated effect mean group (CCEMG) have been applied for robustness. The findings revealed that GDP, urbanization, and forest area have positive associations with carbon footprints, whereas GDP square, renewable energy consumption, technological innovation, and governance effectiveness have inverse relationships with carbon footprints. These findings provide all stakeholders with valuable policy recommendations and management advice for accelerating the transition of renewable energy to low-carbon and green growth.

A regenerative agenda for economic recovery: Nurturing natural resource efficiency to foster environmental, social, and economic well-being

This study investigates the impact of green finance investments on sustainable development across 30 regions in China from 2005 to 2020, focusing on the role of technological advancement and natural resource efficiency in the context of mineral resource investments. Employing Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCE-MG) methodologies, we explore the complex interactions between technology development, renewable energy integration, and their implications for sustainable development. Our analysis delves into the nuanced relationship between technological progress in natural resource management and its contributions to economic growth and environmental sustainability. The findings underscore the necessity of a holistic resource utilization strategy, highlighting the critical importance of investments in natural resources for enhancing industrial efficiency and fostering socio-economic advancement. We advocate for a comprehensive investment approach that melds green finance principles with technological innovations to ensure sustainable development throughout the mineral resource exploitation process.

Can ESG disclosures promote firms going concern? Evidence from BRICS countries

AbstractThis study examines the moderating role of managerial ownership on environmental, social and governance (ESG) disclosures and the going concern of chemical manufacturing firms in Brazil, Russia, India, China, and South Africa (BRICS) countries. We employed a quantitative research methodology, using panel data from 236 listed firms operating in the chemical manufacturing sector between 2007 and 2022. For the analysis, we utilized the Augmented Mean Group and the Common Correlated Effects Mean Group estimators. The results showed that ESG disclosures significantly impact the continued existence of chemical manufacturing companies in BRICS nations. Additionally, high managerial ownership exerts a significant positive influence on the association between ESG disclosures and the going concern of chemical manufacturing firms. The findings affirm the need for businesses to disclose their ESG issues to stakeholders to ensure carbon neutrality goals for BRICS. Hence, it is recommended that policymakers and business owners promote and incentivize managerial ownership, recognizing its pivotal role in enhancing the positive relationship between ESG disclosure and firms' continuity, thereby contributing to the realization of carbon neutrality goals in the BRICS region.

Assessing the Role of Sustainability Disclosure on Firms’ Financial Performance: Evidence from the Energy Sector of Belt and Road Initiative Countries

This study examines the influence of sustainability disclosure on a firm’s financial performance in the energy sector, taking into account the role of ownership concentration as a moderating factor. This study utilized secondary data from 239 energy companies from the Belt and Road Initiative (BRI) nations from 2009 to 2022. This study employed the Common Correlated Effect Mean Group and the Pooled Mean Group estimators for the analysis. To determine which component of sustainability disclosure influences a firm’s financial performance, this study divided the measurement of sustainability into three themes: environment, social, and governance. The findings revealed a positive relationship between environmental disclosure and financial performance. Similarly, we found a positive relationship between social disclosure and financial performance. However, governance disclosure does not contribute to financial performance. Furthermore, we found that ownership concentration positively moderates the association between environmental disclosure and financial performance, as well as social disclosure and financial performance. The results suggest that energy firms in developing countries should prioritize disclosing their environmental and social policies to ensure long-term financial performance.

Assessing the roles of green innovations and renewables in environmental sustainability of resource‐rich Sub‐Saharan African states: A financial development perspective

AbstractEnvironmental literature keeps expanding on the natural resources‐environmental sustainability conundrum. However, most studies examine this conundrum in different geographical locations other than resource‐rich Sub‐Saharan African (SSA) countries while also neglecting the criticality of issues like green innovations, financial development, and renewable energy. Besides, the likelihood of a nonlinear relationship has often been jettisoned in the framework. Thus, the resources‐sustainability nexus was examined in the SSA using robust econometric techniques, while underscoring the roles of green innovations, renewable energy, and financial development. Using the cross‐sectional augmented auto‐regressive distributed lag (CS‐ARDL), cross‐sectional augmented distributed lag (CS‐DL), and the common correlated effect mean group (CCEMG) approaches that conciliate with residual cross‐sectional dependence and heterogeneity amongst others, we discovered that (i) the natural resources‐sustainability nexus is nonlinear in SSA. (ii) unlike the environmental gains from green innovations and renewables in the SSA, natural resource harms their environmental sustainability (iii) the interaction between financial development and natural resources worsened the ecosystem of the countries (iv) the interaction between natural resources and the duo of green innovations and renewable energy enhances SSA's ecological quality (v) urbanization damage environmental sustainability by spurring ecological footprints. Furthermore, one‐way causality paths were observed from the trio of natural resources, financial development, and green innovations to ecological footprints. But renewable energy and urbanization had a feedback causal relationship with ecological footprints. The findings are robust to CO2 emissions as an alternative environmental quality measure. Policy implications to foster SDGs‐related pollution mitigation agenda were thereafter extensively discussed for the SSA.

Do financial development, urbanization, economic growth and renewable energy promote the emission mitigation agenda of Africa? Evidence from models that account for cross-sectional dependence and slope heterogeneity

Carbon emissions from anthropogenic human activities are viewed as the major cause of pollution in the environment. The Paris Treaty came into effect to help minimize the galloping rate of global ecological pollution. The surge in global emissions has prompted other nations to change their environmental regulations to help them to attain their emission mitigation agenda. For instance, China, United States and India have improved their Nationally Determined Contributions they pledged as signatories to the Paris Accord to help them to achieve their sustainable development goals But, despite nations committing to the guidelines of this accord, ecological contamination continues to rise in the globe. To help curb the above menace, a study on the connection between financial development, urbanization, economic growth, renewable energy consumption, and environmental quality of 27 countries from North, South and East Africa over the period 1990 to 2019 was conducted. In attaining this goal, econometric techniques that are robust to heterogeneity and residual cross-sectional dependence were deemed appropriate. From the preliminary analysis, the panel was heterogeneous and cross-sectionally dependent. Also, all the series were stationary after first difference and cointegrated in the long-run. On the regression estimates via the common correlated effects mean group technique, financial development improved environmental quality in the North, South and Eastern regions by 0.56%, 0.42%, and 0.44% respectively. Also, renewable energy promoted ecological safety in the Northern and Eastern regions by 0.24% and 0.08% respectively, but degraded environmental sustainability in the Southern region by 0.66%. Besides, economic growth deteriorated the environment in the North by 0.66%, South by 0.41%, and East by 0.25%. However, urbanization enhanced ecological safety in the East by 0.63%, but had immaterial effect on environmental quality in the North and Southern regions of Africa. Some of the aforestated results are consistent to those under the dynamic common correlated effects mean group (DCCEMG) technique as an alternative estimator. Policy recommendations to help advance the carbon-neutrality target of the regions were proposed.

Promoting carbon neutrality and green growth through cultural industry financing

This study delves into the influence of green financing within the cultural industry on the green growth trajectories of China’s 32 provinces spanning the years 2010 to 2021. Employing the Common Correlated Effects Mean Group (CCEMG) estimator, the research comprehensively assesses the impact of various independent variables on green growth. The findings indicate that a 1% rise in cultural sustainability investment correlates with a 0.63% upswing in green growth, whereas a 1% increase in carbon dioxide emissions corresponds to a 0.14% decline in green growth. Additionally, the study posits that shifts in the scale of the financial market do not exert a significant influence on green growth. Moreover, the negative coefficient of −0.25% for the variable “ICT diffusion index” suggests that heightened use of ICT devices is associated with a reduction in green growth. Given these insights, proposed strategies involve advancing the digitalization of the cultural industry through fintech and big data, establishing supportive regulatory frameworks, and fostering collaborations between financial institutions and cultural organizations.

Is natural resource dependence a blessing or curse for sustainable energy blueprint? An empirical insight towards achieving sustainable environment

AbstractNatural resources have become the centerpiece of global discussion recently in an effort to achieving sustainable development. There are arguments that as much as natural resources are inevitable for development; they are disastrous to factors that promote sustainability of the global environment of which the transition to sustainable energy stands out. That notwithstanding, studies have been largely engrossed in verifying the roles natural resources on economic growth and the environment. Consequently, this research provides the first empirical evidence on the impacts of natural resources on sustainable environment in a global dataset for 73 countries from 1997 to 2019. To extend the frontier of knowledge, the roles of technological advancement, structural change, regulatory quality, and foreign direct investment are considered in the empirical model. The empirical evidence relies on cross‐sectional autoregressive distributed lag, augmented mean group; common correlated effects mean group and method of moment quantile regression. The preliminary analyses show that the world is presently in a renewable energy deficit while recording a gradual shift from relying on natural resources. Feedbacks from the model evaluated expose that natural resource dependence curses sustainable energy through its militating impacts. Besides, technological advancement, structural change, regulatory quality, and foreign direct investment significantly and positively drive sustainable energy. Besides, the quantile regression analysis provides diverging magnitudes. Policies that promote sustainable energy are suggested.

Exploring the impact of social capital, institutional quality and political stability on environmental sustainability: New insights from NARDL-PMG

The social aspect of sustainable development is often considered the least strong component, particularly in terms of its analytical and theoretical foundations. Although there has been a recent increase in focus on social sustainability, the relationship between the environmental aspect and social capital is still not well understood. This research seeks to explore initial concepts on frameworks for analyzing the interface between environmental and social capital. However, to demonstrated the core connection of social capital, institutional quality, income and renewable energy consumption with sustainability level (CO2 emissions) in the BRICS economies from 1996 to 2021. Specifically, this study uses advanced techniques such as Non-ARDL, Pooled Mean Group, the Augmented Mean Group and Common Correlated Effect Mean Group. However, under the linear outcomes, social capital, law & order, government stability, political stability and income decline the emissions levels. However, renewable energy consumption shows the positive association with rising emissions in BRICS countries. Interestingly, under the non-linear form, study outcomes describe social capital, and law & order contribute to environmental quality, while government & political stability spur the level of emissions in the long-run. Also, this study provides some core implications to meet the desired sustainability level.

Enhancing natural resource rents through industrialization, technological innovation, and foreign capital in the OECD countries: Does financial development matter?

The value of natural resource exploitation increased because of economic advancement, which drives industrialization. When natural resources are overexploited through farming, mining, or deforestation, it can negatively impact the environment and have financial repercussions for the nation in the long run. Therefore, this study examined the impact of technological innovation, industrialization, foreign direct investment (FDI), and financial development on natural resource extraction. This study utilized the augmented mean group (AMG), common correlated effect mean group (CCEMG), and Dumitrescu and Hurlin causality methods to analyze a panel of OECD countries from 1990 to 2021. The paper discovered that innovation significantly decreases natural resource extraction while financial development expands it. However, when controlling for interactive relationships among the variables, this study discovered that innovation independently increases resource extraction. The study also discovered through our causality tests that resource extraction has bidirectional relationships with all its determinants, except for FDI, where it exhibits a unidirectional relationship. Our findings have significant implications for the environment. Extractive activities, though necessary for industrialization, hamper the environment. Yet, the expectation that innovation and foreign capital might introduce efficiency in resource extraction or even reduce reliance on resource wealth in financially developed economies garners no clear empirical support.

Energy transition as a solution for energy security risk: Empirical evidence from BRI countries

This study investigates the effect of energy transition on energy security risk for 41 BRI during 1995–2018 using second generation panel econometric techniques. First this study computes total energy share from renewable resources and then analyses their effects on energy security risk. According to the results of augmented mean group (AMG) and common correlated effect mean group (CCEMG) estimates, renewable resources significantly decrease energy security risk. Energy transition as variable of interest significantly decreases energy security risk with renewable energy resources. This study recommends that a structural change in the form of energy transition reduce energy security risk for selected BRI countries. This is because non-renewable resources although fulfil domestic energy requirements but degrades the environment and still there exists energy security in the form of energy demand and supply, affordability, cleanability sustainability and availability. Corresponding to these findings, BRI countries must implement policies to invest more in renewable energy resources and less utilization of non-renewable resources to prevent themselves from energy security risk in the long run.

Kırılganlığın Ekonomik Büyüme Üzerindeki Etkisinin İncelenmesi: Sahra Altı Afrika'dan Yeni Görüşler

This research examines fragility impact on Sub-Saharan Africa's economic growth from 2006 to 2019. The variables of interest for this study include economic decline, economic inequality, human flight, brain drain, external intervention, and economic growth. The research objectives are to empirically investigate the connection between fragility indices and economic growth and determine the impact of fragility indices on economic growth. The existence of cointegration was ascertained in our variable using the Westerlund cointegration test. A fully modified ordinary least squares estimation technique was adopted for the first objective, and the findings showed that only external intervention indices positively impacted economic growth. In achieving our second objective, we adopted mean group, augmented mean group, and common correlated effect mean group estimation technique and found that the coefficients of economic decline, economic inequality, and human flight and brain drain had negative impacts on economic growth. In contrast, the external intervention had a positive impact. The research study recommends that fragile countries' governments develop corrective measures to remove these indicators to ensure progressive growth. Also, state administrations must ensure that suitable policies are implemented to encourage research and development. This will limit the problem of human flight and brain drain, which are significant problems in fragile countries.

Influence of fiscal decentralization, fintech, and mineral resources on green productivity of G5 countries

The study explores how regional financial autonomy, financial technologies, and resource management strategies intersect to influence sustainable practices and environmental efficiency in G5 economies. The yearly data from 1990 to 2021 has been taken for Canada, Japan, Germany, the United Kingdom, and the United States of America. Empirical analysis of the Cross-sectional Augmented Distributed Lag (CS-ARDL) modeling framework has been performed after a preliminary investigation regarding the variables' cross-sectional dependence, slope heterogeneity, and unit root properties. The outcomes of long-run estimation reveal the positive impact of fintech and revenue decentralization, while mineral resources and expenditure decentralization negatively influence green productivity. Similar results are observed in the short-run; however, their marginal effects are relatively lower. Moreover, the error correction term is negative and significant, indicating an 81.4% speed of adjustment annually to restore the obtained model's equilibrium system. These estimates are validated by the Augmented Mean Group (AMG) and Common Correlated Effect Mean Group (CCEMG) estimators. A bi-directional causality of fintech and revenue decentralization is observed, which offers valuable policy implications.