OECD Economies Research Articles

Carbon omission and financial market sustainability via government effectiveness: a cross-culture comparison of OECD and Asian emerging economies

PurposeFinancial market sustainability is gaining attention as investors and stakeholders become more aware of environmental, social and governance issues, pushing demand for responsible and ethical investment practices. Therefore, this study aims to investigate the impact of carbon (CO2) emissions from three sources, oil, gas and coal, on the stock market sustainability via effective government policies.Design/methodology/approachThe eight countries belong to two different regions of world: Asian economies such as Pakistan, India, Malaysia and China, and OECD economies such as Germany, France, the UK and the USA are selected as a sample of the study. The 22-year data from 2000 to 2022 are collected from the DataStream and the World Bank data portal for the specified countries. The generalized methods of movement (GMM) and wavelet are used as the econometric tool for the analysis.FindingsOur findings show that the CO2 emission from coal and gas significantly negatively impacts stock market sustainability, but CO2 emission from oil positively impacts stock market sustainability. Moreover, all the emerging Asian economies’ CO2 emissions from coal and gas have a much greater significant negative impact on the stock market sustainability than the OECD countries due to the critical situation. However, the government’s effective policies have a positive significant moderating impact between them, reducing the effect of CO2 emission on the stock market.Research limitations/implicationsThis study advocated strong implications for policymakers, governments and investors.Practical implicationsEffective government policies can protect the environment and make business operations suitable, leading to market financial stability. This study advocated strong implications for policymakers, governments and investors.Originality/valueThis study provides fresh evidence of the government’s effective role to control the carbon environment that provide the sustainability to the organizations with respect to OECD and emerging economy.

Strategy towards sustainable energy transition: The effect of policy uncertainty, environmental technology and natural resources rent in the OECD nations

The stupendous increase in environmental pollutants alongside climate alterations are calling for integrated tasks at the global level to meet the Paris Agreements. Energy conversion from fossil fuel to renewable energy sources is an important step to address the adverse effects of extreme climatic conditions. This study explores the key contributors of energy transition in the context of the OECD countries during the period 1991 to 2019. To this end the major determinants chosen include natural resources rents, policy uncertainty, environmental technologies, environmental policies, income and globalization. The quantile regression technique is used to explore heterogeneous role of the contributory factors of energy transition across its different levels. This study applies method of moments quantile regression (hereafter MM-QR) by Machado and Silva (2019) that provides evidence on how the covariates affect the integral conditional distributions of energy transition. The study documents interesting findings. (i) Natural resources rents reduce the pace of the progress of sustainable energy transition in OECD economies. (ii) An escalation in the world uncertainty index leads to an improvement in energy transition index. (iii) Environmental technologies support the transition concerning cleaner and more efficient energy sources. (iv) Finally, as natural resources, uncertainty, environmental technologies, and globalization impacts energy transition differently, their effects need to be rationalized with varying environmental policy instruments. The study concludes that energy transition process requires the task of upgrading the quality of implementation of policies related to energy technology.

Sustainable energy consumption and finance in the presence of risks: Towards a green economy

Moving towards a green economy, sustainable energy consumption and financial development amid mounting risks moved to center stage of policymaking and academia. Strengthening energy consumption from renewable sources is integral to the attainment of the overarching sustainable development goals of the Paris Agreement. The study employs data from 19 OECD economies spanning from 1990 to 2020 to explore the effect of risks on sustainable energy consumption. Using a multifaceted empirical approach -- comprising Panel OLS, MG estimators, quantile regression analysis and local projection approach -- results establish a key role for political, economic and financial risks in determining energy consumption from renewable sources. Results for the impact of finance indicators on sustainable energy consumption provide robust, though mixed, findings on how to bridge the climate financing gap. Our findings underscore the significant positive influence of human capital development, economic growth, economic openness and oil prices on sustainable energy use. It is further shown that decreasing carbon emissions and making sustainable energy more affordable should be on the central agenda of policymaking for promoting environmental sustainability. A multi-lever strategy is needed when making environmental policies while distributional heterogeneity should also be considered.

Retraction Note: Interplay of tourism renewable energies, tourism institutional quality, and political risk in OECD economies.

Retraction Note: Interplay of tourism renewable energies, tourism institutional quality, and political risk in OECD economies.

Analyzing the association between crude oil price volatility and economic growth in OECD economies

Analyzing the association between crude oil price volatility and economic growth in OECD economies

The network origins of trade comovement

I develop a production network model of the world economy that features Transcendental Logarithmic (a.k.a. translog) aggregators of varieties. This gives rise to variable substitution elasticities that consistent with the evidence are inversely related to the importer expenditure shares per exporter at the country-sector level. I quantify the model using data for 1970–2018 from 19 OECD economies and 30 sectors. Compared to the analogous constant elasticity version of the model, I find that the translog model amplifies international shock transmission between major trade partners and attenuates transmission elsewhere, which to an extent resolves the “trade comovement puzzle”.

Green energy transition, economic complexity, green finance, and ecological footprint: Shaping the SDGs in the presence of geopolitical risk

AbstractAchieving sustainable development while mitigating environmental degradation is a pressing global challenge. Economic development, accompanied by industrialization, fossil fuel consumption, and unsustainable use of natural resources, is widely identified in the literature as a leading cause of environmental degradation. Green energy transition (GET) and economic complexity—the shift towards more advanced and knowledge‐driven manufacturing, can be crucial strategies in reducing ecological degradation and helping countries achieve climate change mitigation targets. Green finance can play an important role in environmental sustainability, while geopolitical risk can impede countries' climate mitigation efforts. In this context, this study investigates the impact of GET, economic complexity, green finance, and geopolitical risk on the ecological footprint in OECD countries from 1995 to 2021. These four critical factors are integrated into the same environmental policy framework due to their potential to influence environmental sustainability in OECD economies. The study employed the Method of Moments Quantile Regression to provide robust estimates across different quantiles. The empirical outcomes unveiled that GET significantly reduces the ecological footprint across all quantiles. The economic complexity posed a significant and negative impact across all quantiles except at the lower quantile (τ = 0.10). Green finance also poses a negative impact, indicating its effectiveness in promoting environmental sustainability. However, geopolitical risk exacerbates the ecological footprint. The control variables, GDP and urbanization, are found to increase the ecological footprint. In terms of policy implications, this study suggests that policymakers should focus on increasing the share of green energy, fostering economic complexity and green finance, and mitigating geopolitical tensions to reduce the ecological footprint and achieve environmental sustainability in OECD nations.

Green horizons: Overcoming political risks with strategic environmental management and financial innovation

The impact of political risk and financial development has been widely studied in the context of sustainable environmental practices. However, their effects on green finance and sustainable finance initiatives have not been thoroughly explored. This paper fills this gap by examining the influence of the political risk financial development index on green finance across 21 OECD economies from 1990 to 2020. Unit root and cointegration tests reveal that variables are stationary at first difference, and there is a long-run cointegration among them. For the primary analysis, we employed the novel MMQR approach, which demonstrates that the financial development index enhances green finance, while the political risk index diminishes it across all quantiles – upper, median, and lower. Robustness analysis using BSQR further confirms these findings. Policies aimed at fostering financial development and reducing political risk should acknowledge the growing significance of green finance in OECD economies.

Green Parties and the Quest for Biodiversity: The Political Economy of Fiscal Commitments in OECD Economies

This study focuses on green parties in government and analyzes the political economy of public spending for biodiversity and landscape protection, comparing it with other environmental and non-environmental spending categories. Using panel data covering 26 OECD economies during the sample period from 1995 to 2021, we employ an error-correction approach that effectively accounts for both the presence of stochastic trends in the data and the structure of public budgets. Our findings highlight significant differences in the political economy of biodiversity and landscape protection spending compared with other environmental expenditures. Firstly, while governments under the participation of green parties generally allocate more funds to other environmental issues, the same does not hold true for biodiversity. Secondly, growth rates of other environmental expenditures increase considerably during election periods, whereas expenditures dedicated to biodiversity and landscape protection tend to shrink. Thirdly, environmental expenditures are more procyclical in comparison with public spending for non-environmental purposes, where, however, under green parties in government the cyclicality of biodiversity and landscape protection expenditure is mitigated during periods of fiscal adjustments. These results underscore the importance of establishing enhanced and counter-cyclical funding mechanisms, bolstered by support from supranational organizations, to ensure continuous and effective preservation of biodiversity.

The consumption of natural resources and its effects on environmental quality: Evidence from the OECD countries

The existing body of literature has extensively investigated and debated the pivotal role of natural resources in the dynamics of economic growth. However, the explicit impact of natural resources on the quality of the environment is yet to be explored comprehensively. Amid this backdrop, this study explores the significant role that natural resources play in the growth processes of OECD member economies and the potential impact on environmental management. For our research model, the data for the OECD member countries (1997–2021) was collected from the “World Development Indicators (WDI)”. We applied econometric tools namely, fixed effects, generalized least squares and two stages least squares for empirical results. A causality exercise based on the Dumitrescu and Hurlin (DH) is conducted to identify the direction causation. Our results show that the use of natural resources adversely impacts the quality of the environment in OECD economies. The square term of natural resources is negative and significant, confirming the validity of the environmental Kuznets curve (EKC) hypothesis between the use of natural resources and environmental degradation. When the cubic term of natural resources is entered into the estimated model positively, it shows that the potential shape of the EKC hypothesis is N-shaped. Our results also demonstrate that energy consumption and urbanization have worsened environmental quality, while trade openness and per capita income have improved the quality of the environment in OECD countries. The causality analysis showed several one-way as well as two-ways relationships. Our study's findings provide valuable insights from the OECD economies, which can be used to design and execute policies for managing natural resources to address environmental problems.

The connection between disaggregate energy use and export sophistication: New insights from OECD with robust panel estimations

Numerous nations have demonstrated their commitment to achieve sustainable economic growth by enhancing export sophistication fueled by imperative energy utilization. This research examines the impact of renewable and non-renewable energy (RE and NRE) use on the improvement and diversification of export strategies among OECD economies using data from 1990 to 2022. This study contributes to the existing body of knowledge by introducing an export sophistication index as a dependent variable in the corresponding model. Pre-estimations followed by employing the CS-ARDL method findings revealed that disaggregated energy use plays a pivotal role in enhancing the intelligence of OECD economies, with the use of NRE energy exerting a more significant influence than REN use. While foreign direct investment, institutional quality and human capital also play essential roles in the complexity of exports within these economies. Applying the dynamic econometric technique, Wavelet coherence analysis substantiates these findings. Consequently, the study's results yield a range of policy recommendations.

Does fintech positively moderate the impact of mineral resources on green growth? Role of economic policy uncertainty in OECD economies

Resource curse remains a dilemma for the resource-endowed OECD countries, whereas consistent mineral resource utilization impedes green growth. However, fintech innovations are imperious in transforming the economic landscape and resource curse paradox. Therefore, our study elucidates the impact of Fintech, economic policy uncertainty (EPU), and mineral resource rents on green growth. For empirical exploration, the generalized method of moment (GMM) was employed from 2014 to 2022 in selected OECD countries. The empirical outcomes reveal that mineral resource rents hinder green growth, affirming the resource curse hypothesis. Similarly, EPU exerts negative impacts on green growth. On the other side, Fintech is a stimulator of green growth, demonstrating a positive linkage. The moderation covariates of fintech measures with the mineral industry have immense potential to reduce adverse economic effects and significantly promote green growth. The alternative estimator echoes identical findings with different magnitudes and signs to affirm estimated outcomes. This research suggests valuable policy implications for OECD economies to disseminate fintech adoption in curbing harmful economic uncertainty and resource erosion in the green transition.

Determinants of Health Status and Life Satisfaction among Older South Koreans.

South Korea is a rapidly aging society with the lowest fertility rates among the OECD economies. It is projected to become a super-aged society in 2025, with the share of individuals older than 65 reaching twenty percent. These developments make it important to analyze the determinants of health outcomes in older individuals. In this study, we identified the determinants of subjective and objective health outcomes among senior individuals in South Korea. We used self-rated health and life satisfaction scores as the two subjective health status indicators, while the number of chronic diseases was the objective one. We ran Tobit multivariate regressions of all three indicators on a set of factors related to the older citizens' physical, economic, and social characteristics. Active employment status and willingness to work in the future were positively related to self-rated health level but were not statistically related to life satisfaction, while income positively affected both subjective health status indicators. Age did not appear to affect satisfaction with life. Active leisure activities were positively related to both self-rated health and life satisfaction. In contrast, passive leisure, such as watching TV, was negatively related to both health status indicators while being associated with an increased number of chronic diseases. Our findings suggest that older South Koreans view employment primarily as a means of financial support rather than as an opportunity for active social engagement.

Assessing the determinants of human development in OECD economies: evidence from labor productivity and investment decisions

Assessing the determinants of human development in OECD economies: evidence from labor productivity and investment decisions

Is tourism conducive to green growth? An investigation of the role of tourism-based economic expansion in the nexus of leisure tourism and business tourism

PurposeThe gradual expansion of the tourism sector is raising concerns about whether tourism-based economies are conducive to supporting green growth. Hence, the current study aims to analyze the direct impact of tourism motives on green growth along with the indirect impact of tourism-based economic expansion while controlling for country risk and renewable energy.Design/methodology/approachAn unbalanced panel data for a sample of 21 countries comprising OECD and non-OECD economies are employed for the analysis.FindingsRegression results reveal that leisure tourism (LT) significantly and positively influences CO2 intensity compared to business tourism (BT). Propensity score matching results show that the most traveled tourist destinations contribute more to CO2 intensity than those less traveled. Mediation analysis by employing Baron and Kenny’s three-step regression, Sobel’s test and Monte Carlo test shows that tourism-based economic expansion significantly mediates between the nexus of LT and CO2 intensity.Practical implicationsResults of the study provide useful practical implications for sustainable economy and green growth. It recommends to mitigate the challenges of LT, reducing the negative impact and to harness the potential of BT, enhancing the positive influence, through various policies and practices.Originality/valueThis study is the first to examine the impact of LT and BT on green growth, to explore the role of destination popularity and the mediating role of tourism-based economic expansion in this relationship.

Information communication technology and manufacturing industry exports based on technology intensity in OECD and non-OECD countries

Studies on the effect of Information and Communication Technology (ICT) on the export of the manufacturing industry, as disaggregated into the low-, medium-, and high-technology intensity, were lacking. However, the trade impact of ICT is mixed and relies on countries’ development and adoption of technology. To this end, this study explicitly contributes to this strand of literature. By using some key and popular ICT indicators we examined the comparative influence of ICT on the manufacturing industry exports defined by their technology intensity/adoption in OECD and non-OECD countries. A panel data technique with the PPML (Pseudo-Poisson Maximum Likelihood) covering the period 2010–2018 was applied for the analysis. Our empirical strategy indicates that internet use only promotes manufacturing exports of high-technology intensity in OECD countries. Low-technology intensity manufacturing exports were negatively affected by an increase in the use of the internet in all the samples of non-OECD and OECD economies. Except for high-technology, an increase in mobile phone subscribers is associated with increased manufacturing exports in all categories of industries and all sample countries. Broadband subscriptions only positively affect exports of low-technology intensity in OECD countries and negatively affect exports of medium-technology in non-OECD countries. The economic complexity index shows a positive influence on exports in OECD and non-OECD countries except for low-technology intensity. Human capital has been found to influence manufacturing exports in OECD countries and reduce exports in non-OECD countries. In both the OECD and non-OECD countries, positive and significant effects of GDP and trade were observed in all categories of technology adoption. These findings imply that in OECD and non-OECD countries ICT is an important aspect worth considering in trade policy making due to its significant influence on exports. ICT services need to be checked by the government to ensure quality, efficient, and effective delivery for better export. Findings also support the practical significance of ICT especially in developing OECD countries.

The linkages between energy efficiency, renewable electricity, human capital and inclusive growth: The role of technological development

This study highlights the important role of strategic policy interventions in promoting sustainable economic prosperity and social equity in OECD economies. It specifically focuses on the positive effects of technological development, energy efficiency, renewable electricity, and human capital on inclusive growth across 35 OECD economies from 1990 to 2019. We employed cross-sectional augmented distributed lag, fully modified ordinary least squares, and dynamic ordinary least squares to analyze the data. The long-run and short-run estimates show that technological development, energy efficiency, renewable electricity, human capital, and renewable energy consumption have positive effects on inclusive growth. Based on these findings, we propose that the government should provide funds for innovation and technological development, and it improves access to information and services, it increases productivity and efficiency, creates new job opportunities, and promotes inclusive growth. Moreover, the government should promote energy efficiency, which will help in cost savings, job creation, improved access to energy, inclusive growth, and environmental benefits.

Bridging the green gap: Do green finance and digital transformation influence sustainable development?

Understanding the complex socio-economic factors that impact climate change is crucial for developing strategies to reduce their negative environmental impacts. Therefore, the present study explores the association that exists among green finance, digital transformation, and consumption-based carbon emissions, with a specific focus on selected OECD economies from 1995 to 2020. In this study, we have divided digital transformation into two categories, namely digital technology exploration and digital technology readiness. The results of the investigation underscore the key role of green finance in limiting carbon emissions and highlight the role of digital technology readiness in boosting the quality of the environment. In contrast, digital technology exploration positively influences and enhances carbon emissions in OECD economies. Furthermore, the findings also indicate that exports reduce carbon emissions, while imports and economic growth are significantly associated with an increase in carbon emissions. The findings of this study have significant policy implications, advocating for a comprehensive strategy to promote green finance, encourage digital transformation, and support environmentally friendly organizations.

How export and import concentration influence natural resources and green growth nexus in OECD countries

Green growth (GG) is a multifaceted phenomenon that maintains environmental sustainability with economic growth; however, the resource curse paradox inhibits economic growth. Therefore, it is indispensable to explore the promoting factors of GG, comprising export diversification (EXD), import diversification (IMPD), and natural resources (NR) for 33 selected OECD economies from 2010 to 2022. The system generalized moment method (System-GMM) is employed for empirical investigation, elucidating that EXD associates negatively with GG. However, IMPD significantly encourages the GG by unveiling the positive relationship. NR negatively associated with GG and confirms the resource curse hypothesis. The integrative impact of EXD and IMPD mitigates the resource curse, driving GG by 0.012% and 0.018%, respectively, implying that diversified trade structures in imports and exports convert the resource curse problem into a blessing. Besides, the alternative panel estimator affirms the empirical outcome endorsed by the system-GMM model. Among all variables, EXD, IMPD, and NR reveal the bi-directional causality, while remaining show the unidirectional association. The findings recommend valuable policy ramifications to policymakers of OECD countries in attaining green and low-carbon economies.

Foreign Direct Investment Response to Economic Growth Shocks: Evidence from a VAR Estimation on a Panel Dataset

This paper examines the relationship between inward foreign direct investment (IFDI) and economic growth in OECD and ASEAN, China and Hong Kong (East Asia) over the past 35 years (1985-2019). Our estimates using vector autoregression on a panel dataset show that the mutually causal relationship between IFDI inflows and economic growth exists in both the advanced and emerging countries. However, the relationship appears to be stronger in the OECD economies than in the East Asian economies, and IFDI is more responsive to economic growth in the OECD countries. The results from impulse response functions also indicate that a shock in economic growth leads to a change in the IFDI inflows into OECD countries while there is no strong evidence in ASEAN, China and Hong Kong.