Abstract
The paper proposes a new perspective in the environmental and resource economics literature by examining innovation (measured by R&D expenditures), FDI (measured by country–country technology transfer), and energy–environment–growth nexus. Using simultaneous equation modelling (SEMs), three econometric functions were formulated for production, energy consumption, and environmental pollution with GDP per capita, energy consumption, and CO2 emissions (CO2e) as dependent variables for twenty-four OECD economies for the period 1993 to 2014, respectively. The results failed to support the Environmental Kuznets Curve (EKC) hypothesis in the OECD economies. At the same time, a two-way causality was observed between GDP per capita and energy consumption per capita, indicating that the pollution has not yet reached the maximum threshold. Moreover, the results unveiled that fossil-fuel consumption, innovation, and FDI were the primary sources of CO2e. The paper offers important implications for academics, policymakers, and identifies avenues for future research.
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Notes
Past literature (e.g., Burnett et al. 2013; Itkonen 2012; Jaforullah and King 2017) suggests that the inclusion of energy consumption in the EKC equation causes systematic volatility in the coefficients of all variables. But there is recent evidence for the use of energy consumption as a factor in the energy–environment–growth nexus (Ahmad et al. 2018a, b; Arminen and Menegaki 2019).
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Ahmad, M., Khattak, S.I., Khan, A. et al. Innovation, foreign direct investment (FDI), and the energy–pollution–growth nexus in OECD region: a simultaneous equation modeling approach. Environ Ecol Stat 27, 203–232 (2020). https://doi.org/10.1007/s10651-020-00442-8
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DOI: https://doi.org/10.1007/s10651-020-00442-8