Organisation For Economic Co-operation And Development Economies Research Articles

What drives environmental sustainability? The role of renewable energy, green innovation, and political stability in OECD economies

ABSTRACT One possible way to achieve environmental sustainability is by addressing the issue of rising CO2 emissions, which significantly cause climate change by intensifying the greenhouse gas effect. The Organization for Economic Cooperation and Development (OECD), which substantially contributes to global CO2 emissions, necessitates a paradigm shift towards using clean energy sources and promoting green innovations to ensure environmental sustainability. Thus, this study aims to inspect the role of renewable energy use, green technology innovation, political stability, and fiscal decentralization in attaining environmental sustainability by limiting CO2 emissions for seven OECD economies from 2000 to 2019. This study has employed the ‘Cross-Sectional Augmented Autoregressive Distributed Lag and Augmented Mean Group Estimator’ for robust empirical analysis. The results indicate that renewable energy use, political stability, and fiscal decentralization can mitigate CO2 emissions and ensure environmental sustainability in OECD economies. In contrast, green technology innovation exhibits an insignificant effect on CO2 emissions. Furthermore, the moderation effects of fiscal decentralization and political stability exhibit a negative relationship with CO2 emissions. Notably, this study advises OECD nations to encourage regional cooperation to ensure political stability and devolution of fiscal powers to promote green innovation and renewable energy use to achieve sustainable goals.

Globalisation and carbon dioxide emissions inequality in OECD countries

AbstractEconomic growth has been crucial in contributing to carbon dioxide (CO2) emissions from the Industrial Revolution, and it affects CO2 emissions heterogeneously with different income levels. Therefore, studying the role of economic growth on inequality in carbon emissions is imperative. This paper analyses the determinants of CO2 emissions inequality in the panel dataset of 37 Organisation for Economic Co‐operation and Development (OECD) countries from 1990 to 2019. Age dependency, globalisation, and institutional quality reduce CO2 inequality in the OECD economies. However, gross domestic product per capita increases CO2 inequality. The results are robust to utilise different panel data estimation techniques. This paper provides the first evidence in the literature of determinants of CO2 inequality across the OECD countries. It is suggested that governments in the OECD economies offer a blueprint for a sustainable society of green economic growth. Other potential policy implications are also discussed.

Asymmetric Causality between Unemployment Rate and House Prices in Select OECD Economies

Previous research on how unemployment influences house prices is limited by employing a symmetric approach to cointegration. The symmetric method masks the underlying link between unemployment and housing prices. This study examines the impact of unemployment on house prices across 20 Organisation for Economic Co-operation and Development (OECD) economies by using an asymmetric approach to cointegration. The current research additionally leverages Hatemi-J causality to bolster the asymmetric causation between unemployment and house prices. According to the symmetric approach, 13 of the 20 OECD economies in the short run and 9 economies in the long run have at least one lagged significant coefficient associated with the LnUN variable. The asymmetric effects demonstrate a significant short- and long-term asymmetric association between unemployment and house prices in the instance of 16 OECD nations. The Hatemi-J causality results demonstrate that in each of the selected economies, there is evidence of an asymmetric bidirectional causal relationship between unemployment and house prices, as shown by at least one significant variable that runs either from unemployment to house prices or from house prices to unemployment.

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

It is only possible to achieve the aims of reversing the impacts of the resource constraint and attaining sustainable growth if there is a rise in tourism organizational efficacy and tourism and a decrease in political instability. This is because these factors can influence the demand for energy by causing changes in the amount of power consumed. These factors may affect energy demand via changes in energy transitions. In light of this, the objective of this study is to investigate the impact that critical measures of institutional efficiency, tourism, and policy instability have on the utilization of renewable energy sources in a dataset consisting of 32 countries that are members of the Organization for Economic Co-operation and Development between the years 1997 and 2019. The article uses descriptive statistics and correlation models (cross-section dependency test and autoregressive distributed lag (ARDL) model) using panel data from 32 Organization for Economic Co-operation and Development (OECD) nations from 1997 to 2019. Insight into the matter aids in our selection of appropriate econometric methods. The following methods are briefly explained. Evidence shows that as a society's average wealth and standard of life grow, so does its utilization of renewable energy sources. In addition, the economic globalization process and the danger it entails are adversely associated with a long-term reliance on renewable energy sources. Policymakers in countries that are members of the OECD should investigate the role that institutional effectiveness and policy instability play in the demand function for renewable energy to ensure a cleaner natural environment over the long term.

The Repercussions of Economic Growth, Industrialization, Foreign Direct Investment, and Technology on Municipal Solid Waste: Evidence from OECD Economies

The paper’s main objective is to evaluate the repercussions of economic growth, industrialization, and foreign direct investment (FDI) on OECD (Organization for Economic Cooperation and Development) municipal solid waste (MSW) from 2000–2020. Further study includes the role of technology in managing waste activities’ repercussions. We also explore the mediation impact of technology and industrialization with economic growth on the waste of OECD economies. The empirical assessment is carried out in two ways. First, we use graphs to assess the evolution over the years and their association with the core factors. Second, we apply a proper econometrics series to examine the empirical nexuses between the relevant factors. The study finds that economic growth and industrialization evolve over time, increasing the waste of OECD economies. FDI inflow is unfavorable and increases waste production. However, the magnitude impact of FDI is lower than that of economic growth and industrialization. Technological advancement (research and development) is a significant factor in reducing waste generation. The later phase of economic growth is still not advantageous to reduce waste generation in the OECD. The OECD needs to manage industrialization and economic activities through a proper mechanism and tax on such activities that can increase unwanted waste. Further, through technology, the management of waste can be improved.

Evaluating the role of renewable energy investment resources and green finance on the economic performance: Evidence from OECD economies

Recently, economic performance is considered as the global requirement because of the environmental uncertainty and energy resources issues that gained the attention of recent literature and governments or policymakers. Therefore, the primary goal of the present study is to examine the impact of renewable energy investment as well as the investment in different resources of renewable energy such as geothermal, solar, bio energy, hydropower and wind power project and green finance on the economic performance of organization for economic co-operation and development (OECD) economics. The authors have taken the secondary data from 2001 to 2019 that are extracted from the international renewable energy agency (IRENA), global green finance index (GGFI) and world development indicators (WDI). The current article has used the generalized methods of moment (GMM) and fixed-effect (FEM) model to explore the nexus among the said variables. The results indicate that renewable energy investment resources and green finance have significant and positive effect on the economic performance of selected economics. This study provides help to the future researchers while exploring this area and also guides the policy makers regarding making the policies for the economic performance and renewable energy resources investment.

Private health insurance consumption and public health-care provision in OECD countries: Impact of culture, finance, and the pandemic

In this paper, we investigate private health insurance (PHI) spending in Organization for Economic Co-operation and Development (OECD) economies for the period 2000–2020, with a focus on the impact of financial, cultural, and health-environment factors. PHI consumption is positively associated with financial development and cultural–social–economic factors, such as income, education, individualism, uncertainty avoidance, and long-term orientation, whereas it is negatively associated with public health spending, masculinity, indulgence, and power distance. In addition, factors related to the health environment, such as the COVID-19 pandemic, have a negative influence on PHI consumption in the selected OECD economies owing to losses in income. Our findings can serve as guidance for consumers and recommendations for health insurers and policymakers in designing health insurance policies and programs in developed and developing countries.

Measures to achieve carbon neutrality: What is the role of energy structure, infrastructure, and financial inclusion

Infrastructure and energy structure play key roles in the adaptation of a sustainable environment. In order to achieve a desirable infrastructure and energy structure, financial inclusion is essential. Thus, the current study investigates the nexus of energy structure, infrastructure, financial inclusion, and carbon emissions in the countries of the Organization for Economic Co-operation and Development (OECD). In particular, the well-known nexus of growth and environment is employed to estimate the linkages using data between 2001 and 2020. The findings suggest the supportive role of infrastructure, energy structure, and financial inclusion in abating carbon emissions. The OECD economies should enhance their investment in infrastructure and energy structure. Moreover, in order to achieve a sustainable environment in the long-run, financial inclusion should also be expanded. The results are also robust to the short- and long-run policy implications. This study is conductive to the implementation of the United Nations (UN) Sustainable Development Goals.

Revisiting environmental Kuznets curve: an investigation of renewable and non-renewable energy consumption role.

Empirical studies on the environmental Kuznets curve (EKC) hypothesis have not reached a consensus on their findings because different environmental indicators are used, among other reasons. So, this study proposes using a composite index encompassing all dimensions of environmental pollution, using the composite environmental quality index (CEQI) which is introduced by Fakher et al. (Environ Sci Pollut Res 28(43): 61096-61114, 2021b). To do so, continuously updated fully modified (CUP-FM) and continuously updated bias-corrected (CUP-BC) techniques are used for the panel of selected Organisation for Economic Co-operation and Development (OECD) countries and Organization in the Petroleum Exporting Countries (OPEC) from 2000 to 2019. The findings show that the EKC hypothesis is confirmed in the inverted N-patterned relationship for the OPEC countries and an inverted U-patterned relationship for the OECD countries. Our findings also declare that consumption of renewable energies (REC) significantly increases environmental quality (EQ) while consumption of non-renewable energies (NREC) adds to environmental degradation (ED). Further, the role of financial development (FD) in our composite index is respectively negative and positive for sampled OPEC and OECD economies. The positive coefficient of combined trade share (CTS) in both groups of studied countries indicates that this variable works to reduce ED. Lastly, the implications of these findings for economic-environmental policies are discussed.

Exploring the role of export product quality and economic complexity for economic progress of developed economies: Does institutional quality matter?

It is important to unearth the role of structural change factors for sustainable growth in developed economies. Economic complexity, export product quality, and institutional indicators represent the overall structural change and transformation in an economy. This paper probed the influence of export product quality and economics of complexity on economic growth for 28 OECD (Organization for Economic Co-operation and Development) countries using the data from 1990 to 2019. In doing so, the study employs three-panel data econometric models to investigate the role of economic complexity, export quality, and institutional quality on economic development. The paper performs the empirical tests, including the cross-sectional related dependency methods and cointegration techniques. As per the results emerging from fully modified OLS (FMOLS) and dynamic OLS (DOLS) estimation, export quality and financial development positively and significantly strongly impact growth in the long run. The empirical conclusions report detailed discussion on sustainable growth and discuss novel implications concerning product quality and institutional performance. The conclusions stress the practical implications for sustainable economic growth of OECD economies.

Credit-to-GDP ratios – non-linear trends and persistence: evidence from 44 OECD economies

PurposeIn particular, in this article, the authors investigate the degree of persistence in the credit-to-gross domestic product (GDP) ratio in 44 Organisation for Economic Co-operation and Development (OECD) economies in the context of nonlinear deterministic trends.Design/methodology/approachThe authors use Chebyshev's polynomials in time, which allow us to model changes in the data in a smoother way than by structural breaks.FindingsThis study’s results indicate that approximately one-quarter of the series display non-linear structures, and only Argentina displays a mean reverting pattern.Research limitations/implicationsPolicy implications of the results obtained are discussed at the end of the manuscript.Originality/valueThe authors use an approach developed that allows for non-linear trends based on Chebyshev polynomials in time, with the residuals being fractionally integrated or integrated of order d, where d can be any real value.

Economic globalization and energy consumption patterns in Organisation for Economic Co-operation and Development economies

This study examines the impact of economic globalization on the patterns of energy consumption for 24 Organisation for Economic Co-operation and Development (OECD) economies from 1995 to 2015. We employ Westerlund cointegration, which shows a long-run association between economic globalization and energy consumption patterns. Furthermore, cross-sectional autoregressive distributed lag models (CS-ARDL) results explain the short-run and long-run relationship between the series. The results further explain that economic globalization reduces oil and coal consumption while accelerating gas consumption in OECD economies. We additionally employ the Eberhardt augmented mean group test to verify consistency with CS-ARDL results. The empirical evidence of this study suggests that OECD economies’ policymakers should prioritize economic globalization in framing policies related to energy consumption. Furthermore, allocating funds for better technology related to high polluting fuels should be one of the crucial considerations arising from this study. Finally, we recommend economic globalization as an important indicator to address the issues related to OECD economics’ environmental and ecological footprints.

Combined role of green productivity growth, economic globalization, and eco-innovation in achieving ecological sustainability for OECD economies

Since climate change is the paramount concern of recent literature, macroeconomic factors such as green growth and economic globalization may play an integral role in achieving ecological sustainability in the presence of eco-innovation. However, the combined contributions of green growth, economic globalization, and eco-innovation towards achieving ecological sustainability are missing from the existing knowledge. Therefore, we investigate the combined influence of these variables in the presence of human capital, financial development, and gross domestic product on ecological footprint per capita for a panel of 20 Organization for Economic Co-operation and Development (OECD) countries from 1990 through 2017. The method of panel quantile regression is used to produce sound results across varying levels of the ecological footprint of OECD nations. The main results are as follows: firstly, green productivity growth linearly and non-linearly mitigates the ecological degradation, presenting a more pronounced ecological protection impact for higher quantiles, followed by medium and lower quantiles. Secondly, economic globalization manifests mixed effects: it induces ecological deterioration impact in the absence of its interaction with eco-innovation, while it brings about an ecological protection impact with the interaction term. Thirdly, eco-innovation demonstrates an ecological protection impact for all quantiles, with the most influential impact in countries with higher ecological footprint per capita, followed by medium and lower footprints. Based on empirical results, we propose productive utilization of environmental resources for ecological sustainability through product and process innovation and efficient management practices. Besides, we recommend cultivating energy-efficient and clean environmental technologies for long-term ecological sustainability.

Exploring the heterogenous impacts of environmental taxes on environmental footprints: An empirical assessment from developed economies

The Organization for Economic Co-operation and Development (OECD) economies face the challenges of rising energy demand, urbanization, and growing environmental issues (rising ecological footprint and less biodiversity). The primary objective of this article is to explore the role of environmental taxes and economic growth on the growing ecological footprint in 29 OECD economies. The autoregressive distributed lag (ARDL) approach and the related intermediate estimators are used to attain the purpose. The two substitute single equation estimators, DOLS, FMOLS, and fixed effect, are also employed to check the robustness of the ARDL estimator. Empirical results reveal that environmental-related taxes, economic growth, foreign direct investment, energy use, urbanization, renewable energy, and industrialization significantly influence the long-term ecological footprint in OECD countries. The dynamics of the studied variables got changed when time is considered. In the short-term, these dynamics are mixed while staying similar in the long-term across the OECD countries. This is attributed to varying levels of renewable energy use and industrialization progress in OECD countries. The empirical conclusions suggest that OECD economies need careful monitoring of environmental regulations for energy usage policies and cleaner production goals.

Does exports diversification and environmental innovation achieve carbon neutrality target of OECD economies?

Achieving carbon neutrality is of great importance to many developed and developing countries around the globe. Global warming is one of the leading issues caused by human activities. To cope with environmental challenges, and to achieve carbon neutrality, fiscal decentralization and eco-innovation are promising strategies that can also enable countries and local governments to pursue visible economic growth. This study investigates the role of export diversification, environment-related technological innovation, and fiscal decentralization in effectively achieving carbon neutrality target for 37 OECD (Organization for Economic Cooperation and Development) economies from 1970 to 2019. For empirical analysis, it uses second-generation tests that deal with heterogeneity and cross-sectional dependence issues. To this end, this study employs updated cointegration techniques. The augmented mean group (AMG) approach is used to examine the long-run dynamic equilibrium among the variables of interest. The findings indicate that export diversification and fiscal decentralization followed by GDP growth affect carbon dioxide emission positively. While renewable energy consumption and environment-related technological innovation assure environmental improvement. Additionally, short-run causal and unidirectional links are found running from fiscal decentralization, export diversification, and environment-related technological innovation to carbon emissions. Our findings suggest that OECD partner countries need to be careful while devising fiscal decentralization and export diversification policies. They should increase the share of renewable energy, and expand environment-related technological innovation. Such strategic efforts would direct the OECD countries to meet the climate change mitigation agenda of sustainable development goals.

Trilemma among energy, economic and environmental efficiency: Can dilemma of EEE address simultaneously in era of COP 21?

Economic growth is a prerequisite for development while energy is the engine for growth process. In the era of globalization, production cost heavily dependent on energy intensity and efficiency with keeping environmental conditions intact. Therefore, the structuring of a significant environmental index is pre-requisition of the world with energy intensity, energy efficiency. For this objective, this study employs 18-years data set between 2000 and 2018 of Organization for Economic Co-operation and Development (OECD) to form a universal aspect of economics, environmental index, and energy efficiency (EEE). The data envelopment analysis (DEA) and arithmetic mean aggregation in the formation of mathematical aggregation mechanisms are applied for empirical analysis. According to the results, Iceland maintained an overall high rank regarding energy efficiency, energy intensity, and environment followed by Greece, New Zeeland, and Norway. In this investigation, Ireland followed by the UK and the USA are the lowest performer regarding energy and environment. Thus, the study concludes that energy (efficiency & intensity) and environment hold complex relations and needs a special set of policies to address them collectively and it is expected that this study can be used as valuable information for the policymaking process.

Analysis of financial sustainability indicators of higher education institutions on foreign direct investment

Purpose The purpose of this study is to examine the impact of financial sustainability indicators of higher education on foreign direct investment (FDI) using empirical evidence from 26 Organization for Economic Co-operation and Development (OECD) countries. The basic criterion for determining the financial sustainability of higher education institutions included indicators of income generated by higher education institutions being greater than the operational costs. However, this requires financial sustainability, which depends on financial self-sufficiency without seeking external financial assistance. This situation is affected by investment attractiveness. Design/methodology/approach Three quantitative proxies were used in this study to explain the financial sustainability indicators in higher education institutions of OECD countries: financial expenditures proxy measured by current tertiary education expenditure (CE); efficiency proxy measured by university-life expectancy (ULE) and endogenous growth proxy measured by gross enrolment tertiary ratio (GETR) to show the effect on FDI. Also, this study used six control variables considered an important part of experimental design and refers to contributing factors that were eliminated to clarify the independent variable and a dependent variable nexus. The quantitative data was collected from World Development Indicators (WDI). This study applied a STATA version using panel data techniques for over 15 years from 2001 to 2015 and also used fixed effect (FE) and random effect (RE) estimations to address problems of heterogeneity. To mitigate the endogeneity problem, the generalized method of moments (GMM) was also used. Findings The results of this study were derived from the adoption of financial models applied in higher education institutions to test the financial sustainability indicators. Based on the RE and FE results, a one per cent increase in the current tertiary education expenditure caused about 0.19 and 0.18 per cent increase in FDI in the OECD economies. This positive and significant impact was higher when considering the problem of endogeneity by applying the GMM estimations. FDI grew by about 0.22 per cent when the CE increased by one percent. Meanwhile, there was a significant and negative relationship between FDI and the GETR variable for the FE results but this previous relationship was insignificant for RE estimations. The FDI in OECD economies decreased by about 0.0006 per cent when the GETR increased by 1 per cent. This negative effect became larger when applying the GMM estimations. Finally, the ULE results showed there was a positive and insignificant relationship between ULE and FDI for all estimators. Practical implications The management and analysis of the financial health indicators is necessary to evaluate educational activities but is not sufficient to achieve financial sustainability, which extends beyond the indicators of financial health to encompass factors such as student achievements; research and scientific output; community engagement; productive capacity; quality inputs; risk and infrastructure; and systems. Originality/value This study is considered one of the few existing studies examining the ways in which to achieve financial sustainability in higher education institutions using quantitative financial methods. Specifically, this study adopted Pecking order theory in its analysis of the financial sustainability indicators to clarify whether the financial sustainability indicators of higher education institutions lead to an improvement in the attractiveness of foreign investment in OECD countries in the long run. The findings contribute to the necessity of adopting internal financing sources in accordance with the Pecking Order theory to help achieve financial sustainability growth.

Stochastic analysis of the economic growth of OECD countries

This study examined the determinants of economic development for the 34 member countries of the Organization for Economic Cooperation and Development (OECD) and analysed efficient uses of economic development resource endowments. The methodology included econometric panel data modelling and stochastic frontier analysis, using the Cobb-Douglas production function and trans-logarithmic functional form to analyse data from 2003 to 2012. Economic growth was measured by the gross domestic product (GDP) of each economy. As a result, the determinants of economic development were presented and a ranking of efficiency was obtained for all OECD economies throughout the period of analysis. It was concluded that countries with higher economic growth levels have higher efficiency rankings. For example, countries with higher efficiency rankings were Luxembourg and the U.S.; Chile and Mexico were ranked lower. Finally, there was a positive relationship between growth levels and technical efficiency levels.

Digitalization and economic growth: A comparative analysis of Sub-Saharan Africa and OECD economies

This paper examines the contribution of digitalization to economic growth of Sub Saharan Africa (SSA) in comparison with the Organization for Economic Cooperation and Development (OECD) economies. The main reason for comparing the most and the least developed countries to measure the effects of digitalization is to have an insight of whether such effects depend on the levels of development of the country. New technologies in Sub Saharan Africa are assumed to have played significant roles in economic activity, including accessibility of communications, which was impeded by poor infrastructure, accommodation of the poor majority who were initially financially excluded from mobile banking and participation of small and medium enterprises (SMEs) in e-commerce. On the other hand, due to the effects of digitalization, least developed countries in SSA have been facing a premature deindustrialization.This study employs a panel dataset consisting of 11 years from 2006 to 2016 for 41 SSA and 33 OECD economies and we use the generalized linear methods of moments (GMM) estimators. The results show that digitalization has a positive contribution to economic growth in both groups of countries. The effect of broadband internet is minimal for SSA compared to OECD countries, whereas the impact of mobile telecommunications is higher in SSA compared to the OECD counterpart. These results are particularly interesting as less advanced technologies create more opportunities in the least developed countries since there is more space for improvement. With respect to policy implications, this study recommends that SSA governments should invest more in ICT along with other infrastructures, so as to benefit from digitalization and to realize significant economic growth.

Technological innovation and green growth in the Organization for Economic Cooperation and Development economies

Abstract Green growth means improving production and demand-based emissions through innovation of green technologies for cleaner production and supply chain. This study examines the effect of technological innovation on green growth on twenty-eight (28) Organization for Economic Cooperation and Development (OECD) economies for the period 2000 to 2014 with data sourced from OECD library statistics and World Bank, World Development Indicators. The economies were sub-grouped into Oceania, America, Asia and Europe. Preliminary tests conducted were Cross-section dependence test, Im Pesaran and Shin unit root tests. Westerlund cointegration confirmed that the variables are cointegrated. Using STIRPAT and IPAT models, the study found transport related technologies has been beneficial to green growth in the Oceania sub-region. OECD Asia's technologies for production and processing of goods have been beneficial to green growth. Climate change technologies in relation to generation and transmission of energy are detrimental to green growth in the OECD economies but its impact is visible in Asia and Europe sub-panels. Environmental related budget and taxes have been found worthwhile in the pursuit of green growth from the dominant negative coefficient values. Findings led to the presentation of some important implications which could be useful for policy-makers and industries in the pursuit of green growth globally.