thesis on economics growth

• International Economics
• Emerging Economies

The Effect of Globalization on Economic Growth: Evidence From Emerging Economies

• August 2018
• In book: Emerging Economic Models for Global Sustainability and Social Development
• Publisher: IGI Global

• Erciyes Üniversitesi

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Economics Undergraduate Honors Theses

Examples of honors theses written by economics undergraduate students.

Posted with permission of the author. © 2019-2022 by the individual author. All rights reserved.

• "The Causal Effect of ACA Subsidies on Insurance Coverage Status Among California Adults"  - William Vereyken
• "Economic Impacts of Immigration Detention Centers Built Between 1990-2016 on U.S. Commuting Zones"  - Ekaterina Yudina

Spring/Summer 2022

• "The Impact of Indiv. Mandate on High-Income, Non-elderly Indiv. Health Insurance Coverage Rates and Racial/Ethnic Disparities"  - YeJin Ahn
• "An Economic Analysis of the 1997 Amhara Land Redistribution in Ethiopia"  - Ezana Anley
• "Affirmative Action's Effect on Educational and Wage Outcomes for Underrepresented Minorities"  - Vishnu G. Arul
• "Are the Effects of Racism Really That Black and White? A Study on the Effect Racism Has on the Productivity of Black   Footballers in the Premier League"  - Advik Banerjee
• "An Empirical Analysis of Industrial Concentration and Prices: Can We Blame Inflation on Corporate Greed?"  - Anton Bobrov
• "Tax Revenue Cyclicality and Income Inequality: Evidence from U.S. Counties From 1989 to 2019"  - Yiyang Chen
• "The Impact of Economic Opportunities on African American Migration Patterns in Oakland"  - Fernando Cheung
• "Impact of Tech Companies on Wages in the Local Economy"  - Niki Collette
• "Warm Welcome: Evidence for Weather-based Projection Bias in College Choice"  - Maria Cullen
• "Impact of the Belt and Road Initiative on Bilateral Trade with China"  - Pedro de Marcos
• "Renaissance of the Black Homeowner: Impact Evaluation of Michigan's Renaissance Zones"  - Rupsha Debnath
• "Lockdown Blues: The Effect of Social Norms on the Psychological Cost of Unemployment During the COVID-19 Pandemic"  - Dylan Hallahan
• "How Education Affects Health Outcomes Across Genders"  - Jessica Li
• "Is Increasing Diversity Inclusion Effective in Improving Companies' Performance in the Financial Services Industry?"  - Miranda Li
• "The Future Financial Status of the Social Security Program"  - Chloe Manouchehri
• "Does Recreational Marijuana Legalization Affect Hard-Drug Use? - Evidence from Cocaine Prevalence and Treatment Admissions"  - Arthur Weiss
• "Relationship Between Economic Status and Money Spent on Private Education Leading to Economic Inequality in South Korea"  - Jiho Lee
• "The Impact of Migrant Remittances on Rural Labor Supply: Evidence from Nepal"  - Amanda Wong
• "Confirmation Bias: The Role of Messages and Messengers"  - Hongyu (Randol) Yao

Spring 2021

• "Gender Equality and Economic Growth: Solving the Asian Puzzle"  - Zoya Ali
• "Women in STEM: Moving Up or Falling Off the Academic Career Ladder?"  - Sophia J. Bai
• "Time Dependence in Okun's Law at the State Level" - Sarah Baig
• "Labor Regulation and the Impact on Firm Behavior in India" - Vatsal Bajaj
• "Gender Representation in Academia: Evidence from the Italian Education System Reform" - Oyundari Batbayar
• "Money & Marriage on the Elementary Mind: A High-Level Analysis of Inequitable Child Development in LA County" - Matthew J. Chang
• "Unanticipated Unemployment Rate News on the Stock Market" - David Chi
• "Should Physicians Be More Collaborative? Determining the Relationship Between Patient Participation and Treatment Plan Confidence Across a Spectrum of Illness Severity in the State of California" - Saif Chowdhury
• "Modeling Optimal Investment and Greenhouse Gas Abatement in the Presence of Technology Spillovers" - Sabrina Chui
• "Understanding the Influence of Marginal Income Tax Rates on Retirement Investment Habits"  - Daniel Cohen
• "Infrastructure in India's Internal War: A District-Level Analysis of the Naxalite-Maoist Conflict" - Krunal Desai
• "Do Eucalyptus Trees Increase Wildfires?"  - Lila Englander
• "Understanding the Labor Outcomes of Hurricane Sandy" - Kevin Fang
• "Does TikTok Show Viewers the Content Relevant to them?" - Ekaterina Fedorova
• "The Impact of the Affordable Care Act Dependent Care Provision on Long-term Young Adult Labor Market Choices" - Anne Fogarty
• "Orchestra Sex Disparity: Experimental Evidence from Audience Members" - Richard Gong
• "The Big Three Medical Price Indexes: A Comparative Review and Analysis"  - Robert Hovakimyan
• "Effect of Value-Added-Services on Customer Reviews in a Platform Marketplace" - Shankar Krishnan
• "COVID19 Recession: Gender Layoff Gap Explodes" - Ember Lin-Sperry
• "The Gender Wage Gap in China: Learning from Recent Longitudinal Data" - Donghe Lyu
• "Local Graduation Policies as a Tool for Increasing College Eligibility: Evidence from Los Angeles" - Dan L. Ma
• "Trust in Government and Lockdown Compliance in Sub-Saharan Africa" - Charles McMurry
• "I Do (or Don't): The Impact of Same-Sex Marriage Laws on International Tourism" - Oliver McNeil
• "International Shipping Consequences of a Navigable Arctic" - Jack Melin
• "Investigating Dollar Invoicing Trends Using United Kingdom Export Data" - Aneesh Nathani
• "Micro-Level Impact of Initial Public Offerings on Bay Area Housing Inflation" - Mina Nezam-Mafi
• "Explaining EU's Oil Dependency Through the Response of the Portuguese Sector Indexes to Brent Oil Prices Fluctuations" - Pedro S. Nunes
• "Dynamic Incentives and Effort Provision in Professional Tennis Tournaments" - Ruiwen Pan
• "Examining the Effects of Minimum Wage Laws on Part-Time Employment" - Odysseus Pyrinis
• "The Great Indian Identity Crisis? Exclusions & Intersectionality in the Indian Aadhaar System" - Aditi Ramakrishnan
• "The 'Clutch Gene' Myth: An Analysis of Late-Game Shooting Performance in the NBA"  - Can Sarioz
• "Estimating the Impact of Artificial Intelligence on Jobs Within the Healthcare Industry" - Sidharth Satya
• "Factors Influencing Telehealth Utilization: Evidence from California" - Emily Schultz
• "Cash and Conflict: Evidence from the Indian Banknote Demonetization" - Nachiket Shah
• "Determinants of the Number of Anti-Government Demonstrations: Evidence from OECD Countries" - Nina Singiri
• "Hygiene Heroes: A Process Evaluation of Promoting Hygiene Practices in Tamil Nadu Schools" - Malika Sugathapala
• "Exploring the Labour Patterns of Women and Mothers Through the COVID-19 Pandemic: The Impact of School Closures and a New Kind of Recession"  - Renee Isabel Utter
• "How Have Socioeconomic Achievement Determinants Changed in the Past Decade for First-Generation Chinese Immigrants in the U.S." - Haolin Wang
• "The Impact of Quarantining on School Enrollment: Evidence from the Ebola Epidemic in Sierra Leone" - David Willigrod
• "Weeding out Needy Households and Welcoming the Better Off? Impacts of Transactional Barriers on SNAP Participation Rates" - Kevin Woo
• "Are Soccer Teams Being Inefficient? An Analysis of Sunk Cost Fallacy and Recency Bias Using Transfer Fee" - Junru Lyu
• "The Effects of Access to Family Planning Facilities on Female Labor Market Outcomes"  - Marcus Sander
• "Macroeconomic Volatility at the Zero Lower Bound: Evidence from the OECD" - Anthony Swaminathan
• "How are Society's Conditions and Demographics Related to the Popularity of Chief Executive Carrie Lam  and the Hong Kong Government"  - Peter To

Spring/Summer 2020

• "Parental Involvement: The Differential Impacts of Consent and Notice Requirements for Minors' Abortions" - Angela Ames
• "Examining Local Price Levels and Income Distribution Over Time" - Josh Archer
• "Estimating the Effect of Grandparent Death on Fertility" - Jason Chen
• "Democracy in the Face of COVID-19: Have Less Democratic Countries Been More Effective at Preventing the Spread of This Pandemic ?" - Yi Chen
• "Understanding the Effects of Conditional Cash Transfers on Indigenous People in Mexico" - Arushi Desai
• "Microfinance and Payday Lending: Are they Solving a Problem or Creating One?" - Sophia Faulkner
• "The Risk-Taking Channel of Monetary Policy and Foreign Banks" - Noah Forougi
• "Ride of Die? Metropolitan Bikeshare Systems and Pollution" - Sean Furuta
• "Internet's Important Involvement in Information Industry Integration in Idaho, Iowa, Illinois, Indiana (and others): How the emerging internet affected the economic geography of the information industry" - Keming (Alex) Gao
• "The Relationship between Economic Crises and Long-Run Wealth Inequality" - Renuka Garg
• "Voter Bias in the Associated Press College Football Poll : Reconducting a 2009 study with new data in a $1 Billion-dollar industry that has seen significant changes in the past decade"  - Brent Hensley
• "Monopsony Exploitation in Major League Baseball: Using Wins Above Replacement to Estimate Marginal Revenue Product" - Jacob C. Hyman
• "The Relationship Between Currency Substitution and Exchange Rate Volatility" - Jewon Ju
• "Efficiency, Bias, and Decisions: Observations from a Sports Betting Exchange" - Alexander Kan
• "The Effect of Medicaid Expansion on Substance Use Disorder Treatment Utilization: Evidence from the Affordable Care Act" - Christy Kang
• "Analyzing the Relationship between Personal Income Tax Progressivity and Income Inequality" - Gevorg Khandamiryan
• "The Effects of Occupancy Taxes on the Short-Term Rental Market: Evidence from Boston" - Alan Liang
• "Corporate Types and Bank Lending in Contractionary Era: Evidence from Chinese Listed Companies" - Zishen Liu
• "Financial Constraints on Student Learning: An Analysis of How Financial Stress Influences Cognitive Function in Children" - Simone Matecna
• "The Effect of Workplace Inspections on Employment and Sales - A Regression Discontinuity Analysis" - Jeseo Park
• "Lending Sociodynamics, Economic Instability, and the U.S. Farm Credit Crisis" - Erfan Samaei
• "The Effect of Intangible Assets on Value Added: Evidence from microdata across small and large firms in Europe" - Tamara Sequeira
• "Price Efficiency Differences Between Public and Private Utilities: An Empirical Analysis of US Electric Utilities" - Yechan Shin
• "Effect of Campus Shootings on Academic Achievement: Examination of 2014 Isla Vista Killings" - Min Joo (Julie) Song
• "First-Degree Price Discrimination: Evidence from Informal Markets in India" - Rishab Srivastava
• "Who Benefits From Gentrification? A Case Study of Oregon Public High Schools" - Namrata Subramanian
• "Estimating the Economic Impacts of Wealth Taxation in France" - Jeffrey Suzuki
• "Transit-Oriented Development or Transit-Oriented Displacement? Evaluating the Sorting Effect of Public Transportation in Los Angeles County" - Yeeling Tse
• "How State Abortion Policy Restrictiveness is Associated with Unintended Pregnancy Outcomes in the United States from 2014-2018" - Ruhee Wadhwania
• "Global Food Security and the El Niño-Southern Oscillation"  - Aidan Wang
• "The Relationship Between Pharmaceutical R&D Spending and NME Development" - Taylor Wang
• "The Role of Individual Risk Attitude in Occupational Inheritance" - Yi Wang
• "Labor Market Segmentation: Evidence from U.S. Janitorial Jobs Advertised in English and Spanish" - Zijun Xu
• "Bias on the Brain: How Patient Gender Influences Use of Emergency Room Diagnostic Imaging" - Abigail Zhong
• "Age Effects, Irrationality and Excessive Risk-Taking in Supposedly Expert Agents" - William Aldred
• "Pricing Disparities for Minority Communities in Chicago: Rideshares and Taxis" - Matthew Cleveland
• "Where My Negros At? Evaluating the Effects of Banning Affirmative Action on Black College Enrollment" - Ellie Koepplinger
• "Race and Recession: How Minorities May Affect Downturns" - Alexander Szarka
• "Understanding the Effects of Canadian International Food Aid on Production and Trade" - Patrick D. Tagari
• "Urban Property Rights and Labor Supply in Peru: Heterogeneity Analysis by Gender and Educational Attainment" - Juan Sebastián Rozo Vásquez
• "Effect of High-Speed Rail on City Tourism Revenue in China: A Perspective on Spatial Connectivity" - Lingyun Xiao

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Dissertations from 2024 2024.

ESSAYS IN APPLIED ECONOMICS , Jiantao Ma

Essays on the Industrial Organization of Recreational Cannabis , Joshua Scott

Dissertations from 2023 2023

Essays on the Economics of Health and Education , Thao Bui

Dissertations from 2022 2022

Applications of Applied Economics Utilizing Geographic Information Systems Data and Regression Discontinuity Designs , Edward Powell Seyler

Dissertations from 2020 2020

Socio-Eonomic Impact of Immigration and Diversity in the U.S. , Peter Gingeleskie

Agricultural Policies and Economic Development in Vietnam , Kien Le

Essays on the Economics of Education , My Tra Nguyen

Three Essays on the Economics of Education , Tianheng Wang

Dissertations from 2019 2019

Essays on the Chinese Economy , Fan Duan

Essays on Education and Crime , Swarup Joshi

Effects of U.S. Financial Regulations on Labor Markets , Anindo U. Sarker

Essays on Interplay Between Economics and Culture , Ishita Tripathi

Dissertations from 2018 2018

Essays on Health Economics: The Impact of Public Policy on Health and Labor Market Outcomes , Grace Ellis Arnold

The Impact of Cultural Attitudes on Economic Outcomes and the Political Behavior of Blacks , Jhacova Williams

Essays on the Impact of Parents' Investment and School Curriculum on Educational Outcomes in China , Han Yu

Essays on Estimation for Nonlinear Spatial Models , Xiaoyu Zhou

Dissertations from 2017 2017

Essays on the Impact of Education on Economic Outcomes in a Developing Country , Omer Bahadir Dursun

Essays on Economic Growth In India , Sujana Kabiraj

Essays in Health and Public Economics , Sara Oloomi

Essay on Incentives, Economic Conditions, and Human Capital Formation , Masayuki Onda

Dissertations from 2016 2016

Essays on the Externalities of the Mahatma Gandhi National Rural Employment Guarantee Act of India , Satadru Das

Essays in Economics of Institutions and Culture , Luiza Valeriyevna Pogorelova

Essays on Regional Economic Growth in China , Ting Wang

Dissertations from 2015 2015

Essays in Labor Economics , Sukriye Elif Filiz

Essays on Corruption , Chandan Kumar Jha

Essays on Sub-national Economic Growth: Evidence from A Global Sample , Dachao Ruan

A Bayesian Approach to Small Area Estimation of Health Insurance Coverage , Zhengjia Sun

Dissertations from 2014 2014

Essays on Poverty and Infant Health , Deokrye Baek

Economic inequality and marriage formation , Xue Li

Essays on technology and international trade , Xianliang Tian

Essays on incentives, economic conditions, and educational choices , Gregory Brian Upton Jr.

Dissertations from 2013 2013

Strategic interaction and social networks , Quqiong He

Essays on the impact of income on family and child well-being , Christian Werner Raschke

On contests with complementarities , Matthew Wiser

Dissertations from 2012 2012

Investigating the role of genetic variation in long run economic outcomes , Charles Justin Cook

Regional effects of monetary policy , Taehee Han

Assessing cost efficiency and economies of scale in the European banking system, a Bayesian stochastic frontier approach , Ana Maria Ichim

Essays on social networks , Emre Unlu

Dissertations from 2011 2011

Essays on the economics of crime , Duha T. Altindag

Essays in health economics and public policy , Colin Darren Cannonier

Monetary policy shocks: analyzing the quasi-narrative approach , Daniel Matthew Groft

The Economics of Discrimination in the Court System: Police, Technology, and Their Interaction , Sarah Marx Quintanar

Essays on risk and volatility , Junyue Xu

Essays on the Random Parameters Logit Model , Tong Zeng

Dissertations from 2010 2010

A kernel weighted smoothed maximum score estimator for the endogenous binary choice model , Jerome Krief

Productivity growth of US states , Bibhudutta Panda

Dissertations from 2009 2009

Appropriate technology, human capital, and economic development , Beatrice Farkas

Dissertations from 2008 2008

Essays on models for financial volatility , Mihaela Oana Craioveanu

Neglecting parameter changes in GARCH option pricing models and VAR , Burak Hurmeydan

Technology diffusion and total factor productivity growth , Subaran Roy

Dissertations from 2007 2007

The Hausman test, and some alternatives, with heteroskedastic data , Viera Chmelarova

The microeconomics of international price dispersion , Ozlem Inanc

The role of networks in labor markets , Nongnuch Soonthornchawakan

Dissertations from 2006 2006

Income inequality and economic growth , Nor Azam Abdul Razak

Essays on group lending: evidence from Jordan , Moh'd Al-Azzam

Essays on the Bayesian estimation of stochastic cost frontier , Xia Zhao

Dissertations from 2005 2005

Three essays in labor and health economics , Christopher K. Coombs

Health and Growth , Petia Stoianova Stoytcheva

Risk properties of a Stein-like estimator for multinomial choice models , Vera Alexandrova Tabakova

Dissertations from 2003 2003

An empirical investigation of tax policy in G-7 countries , Kerim Peren Arin

Empirical analysis of economic growth , Winford Henderson Masanjala

Marginal income tax rates and the U.K. economy: three essays , Eon-Seon Rym

Dissertations from 2002 2002

Essays on international trade and Bayesian forecasting , Dennis S. Edwards

An empirical analysis of the macroeconomic effects of government purchases , Eric Horent

Essays on the Bayesian inequality restricted estimation , Asli K. Ogunc

Theses/Dissertations from 2001 2001

An Economic Analysis of the Allocation of Research Funding at the National Institutes of Health. , Janet B. Daniel

Essays on Semiparametric Estimation. , Kang-sun Lee

Theses/Dissertations from 2000 2000

Three Essays on Political Economy and International Trade. , Far-tsair Lai

Theses/Dissertations from 1999 1999

An Empirical Examination of Maximum Entropy Estimation. , Randall Charles Campbell

Essays on Identification of Monetary Policy Shocks in Vector Autoregressive Models: Alternative Identification Schemes and Lag Structures. , Keuk-soo Kim

Theses/Dissertations from 1998 1998

The Effects of Fiscal Structure, Leviathan, and Interdependent Demands on Local Public Spending Behavior. , Rebecca J. Campbell

An Analysis of Reimbursement Methodologies and Cost Containment Policies in Medicaid Inpatient Hospital and Pharmaceuticals. , Etienne Elmer Pracht

Theses/Dissertations from 1997 1997

An Empirical Examination of the Grant Induced Price and Income Effects of Lump-Sum Intergovernmental Aid. , Peter Michael Mitias

Theses/Dissertations from 1996 1996

Bureaucrats, Bureaucracy and Utility Maximization: Empirical Evidence From Taiwan. , Chinkun Chang

The Effects of AMA Contributions in the United States Senate: An Analysis of Roll Call Votes, 1979--1992. , Karen Gutermuth

Three Essays on VAR Techniques. , Omer Ozcicek

Theses/Dissertations from 1993 1993

Forecasting the Economic Effects of Produced Waters Discharge Regulations on Oil and Gas Activity in Coastal Louisiana. , Allen Paul Dupont

Theses/Dissertations from 1992 1992

Three Essays on International Linkages of the Korean Economy. , Jai-ki Lee

A Regional Market Model for Construction Aggregate Materials. , Alicia Norma Rambaldi

Theses/Dissertations from 1991 1991

Three Essays in the Economics of the Physician Firm. , William David Bradford III

Three Essays on Sampling Techniques: Small Sample Performances of Estimators and Predictors. , Parisun Chantanahom

An Empirical Analysis of Ricardian Equivalence and Macroeconomic Interdependence in Korea. , Jang Cheon Jin

Theses/Dissertations from 1990 1990

Small Sample Properties of Estimators and Test Statistics in Nonlinear Regression: The Box-Cox Transformation. , Minbo Kim

Theses/Dissertations from 1989 1989

Toward the Inclusion of Environmental Factors in the Concept and Measure of National Income. , George Edward Foy Jr

Three Essays on the Determinants and Effects of Public Sector Bargaining Laws. , Melissa S. Waters

Theses/Dissertations from 1988 1988

Stein-Like Estimation and Inference. , Lee Chester Adkins

Three Essays on the Welfare Effects of Factor Immobility and Price Uncertainty for a Country Experiencing Growth, Entering a Customs Union and Giving or Receiving a Unilateral Transfer. , Carolyn Margaret Landry

Theses/Dissertations from 1986 1986

Effect of Ownership Structure on Efficiency: a Comparative Analysis of Various Organizational Forms (Stochastic Frontier, Allocative Efficiency). , Daniel Omer Cote

Theses/Dissertations from 1985 1985

An Empirical Inquiry Into the Variation of Interest Rates, 1959-1983 (Time Series Analysis, Spectral, Money Supply, Inflation Rate). , Umit Erol

Alternative Regimes of Common Property Exploitation for Manganese Nodules and Their Market Structure Impact. , Akbar Barzegar Marvasti

Determinants of the Money Supply in the United Kingdom, West Germany, and Canada (Central Bank, Reaction Function, Inflation, Fiscal, Monetary Policy). , Deep Shikha

Theses/Dissertations from 1984 1984

The Habitat and Cost of Production of Domestic Petroleum Resources. , John Daniel Grace

Stewardship of Creation: Some Implications for Economic Theory and Policy. , John Harlan Mcdonald

Female Labor Force Participation and Fertility in Nigeria: a Study of Lagos. , Amon Okechukwu Okpala

Theses/Dissertations from 1979 1979

A Theoretical and Empirical Analysis of the Relationship Between Fiscal Policy and the Money Supply. , William Douglas Mcmillin

Theses/Dissertations from 1976 1976

An Economic Evaluation of Vocational Rehabilitation in Louisiana. , Robert Charles Brown

A Disaggregate Model of the Automobile Market: the Demand for Cars of Different Sizes. , Rodney Lee Carlson

Frictional, Structural, and Cyclical Factors in Louisiana Unemployment. , Jeffrey Alan Reed

Theses/Dissertations from 1975 1975

An Economic Analysis of Interregional Migration in Louisiana and Its Policy Implications for Population Distribution. , Koong-lian Kao

Theses/Dissertations from 1974 1974

An Economic Analysis of Governmental Exchange. , Ralph William Lange

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Revaluating the Sustainable Development Thesis: exploring the moderating influence of Technological Innovation on the impact of Foreign Direct Investment (FDI) on Green Growth in the OECD Countries

• Open access
• Published: 10 September 2024
• Volume 5 , article number  252 , ( 2024 )

Cite this article

You have full access to this open access article

• Germain Stephane Ketchoua 1 ,
• Sodiq Arogundade 1 &
• Biyase Mduduzi 1  

The Sustainable Development Goals (SDGs) advocate for advancing green growth, a concept that balances economic prosperity with environmental protection. At the core of this vision are principles of sustainable consumption, production, and energy usage, all aimed at mitigating climate change and safeguarding ecosystems. This study investigates how technological innovation influences the relationship between Foreign Direct Investment (FDI) and green growth in OECD member countries. Specifically, we examine two facets of green growth: production-based CO 2 productivity and demand-based CO 2 productivity. We employ empirical analyses using the EKC and STIRPAT framework, which includes Ordinary Least Squares (OLS), smoothed instrumental-variables quantile regression (SIVQR), and System GMM methodologies, to uncover significant insights. Our analysis reveals that FDI impedes green growth, while technological innovation is pivotal in enhancing it. This pattern holds steady across various time frames and renewable energy sources. Furthermore, our findings indicate that combining FDI and technological advancement leads to heightened production-based CO 2 productivity but diminished demand-based CO 2 productivity. We also identify the presence of an environmental Kuznets curve for production-based CO 2 productivity. Adding to significant scientific value by demonstrating how technological innovation moderates FDI's impact on green growth in OECD countries, we advocate for fostering collaborative partnerships between foreign investors and local innovators to leverage global expertise while advancing green objectives. Additionally, policy interventions should focus on stimulating demand for eco-friendly products and services to bolster demand-based CO 2 productivity.

Avoid common mistakes on your manuscript.

1 Introduction

Economists and environmentalists have long been aware that the current economic growth path places immense strain on the natural environment, thereby threatening long-run economic development. Debates on the unintended consequences of pursuing growth at all costs have underscored the need to consider a growth path that signifies resilience, inclusivity, and sustainability as a critical policy imperative. There is a view that green growth is one of the key strategies that policymakers can use to stimulate the economy and achieve climate objectives simultaneously. The Organisation for Economic Co-operation and Development (OECD) defines green growth as fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services essential to our well-being [ 1 ].

Moreover, the relevance of green growth is deeply embedded in the Sustainable Development Goals (SDGs), which promote a balance between economic prosperity and environmental protection [ 2 , 3 , 4 ]. Aligning green growth with the SDGs can provide a roadmap for sustainable economic development, ensuring that investments and policies contribute to long-term environmental sustainability. Despite the growing global emphasis on green growth, the impact of economic growth and Foreign Direct Investment (FDI) on achieving this objective remains a contentious issue. Designing effective policies for green growth requires a nuanced understanding of the key factors influencing this growth, with economic growth and FDI being significant factors. Economic growth has long been a double-edged sword for environmental quality. On one hand, it can provide the necessary resources for investing in cleaner technologies and improving environmental standards.

On the other hand, unchecked economic expansion often leads to increased resource consumption, higher emissions, and greater environmental degradation [ 5 , 6 ]. The relationship between economic growth and environmental quality is complex and varies across different contexts. In many cases, economic growth initially leads to environmental deterioration. Still, as economies mature, there is a shift towards more sustainable practices, a concept known as the Environmental Kuznets Curve (EKC) [ 7 , 8 ]. Understanding this dynamic is crucial for policymakers aiming to balance economic development with environmental sustainability. This study explores this intricate balance, particularly how technological innovation moderates the effect of Foreign Direct Investment (FDI) on green growth in OECD countries.

The novelty of this paper is evident through its exploration of the moderating influence of technological innovation on the impact of FDI on green growth, which is a gap in the current literature. By examining both production-based and demand-based CO 2 productivity, the study provides a comprehensive understanding of green growth dynamics. Employing advanced methodologies like smoothed instrumental-variables quantile regression (SIVQR) and System GMM offers new empirical insights, contributing significantly to the existing body of knowledge. Peer review documents suggest that technological innovation is pivotal in enhancing eco-efficiency and promoting green growth, playing a dual role in mitigating environmental degradation while simultaneously driving economic progress. For instance, Wang et al. [ 9 ] and Zhang & Zhou [ 10 ] argue that aligning foreign investment with the host economy's technological capabilities can significantly reduce CO 2 emissions.

Similarly, studies by Bakhsh [ 11 ], Radmehr et al. [ 12 ] and Zhao et al. [ 13 ]emphasize that technological innovation can transform investment into a catalyst for green growth, particularly in regions with robust innovation ecosystems. These technological advancements foster the adoption of cleaner practices, contributing to production and demand-based CO 2 productivity. Consequently, understanding the role of technological innovation is crucial for devising policies that leverage FDI for sustainable development.

The ongoing surge of FDI in OECD economies has ignited debates about its environmental ramifications. Theoretical literature presents conflicting viewpoints on the correlation between FDI and environmental pollution. On one hand, it is argued that FDI influx into countries with lax environmental regulations may exacerbate ecological degradation. This perspective aligns with the pollution haven hypothesis (PHH) first proposed by Brian et al. [ 14 ], suggesting that globalization allows firms from countries with strict environmental standards to relocate their polluting activities to countries with less stringent regulations. Conversely, an opposing perspective emphasizes that FDI fosters technological advancements within host countries, thereby improving environmental conditions [ 15 , 16 ]. Understanding these conflicting views is essential for developing policies that leverage FDI to support green growth without compromising environmental integrity.

In this context, technological innovation improves the eco-efficiency of Foreign Direct Investment (FDI) and instigates structural transformations within industries, influencing their environmental impact. Also, technological spillovers from foreign firms can catalyze domestic innovation capabilities, creating a positive cycle of green technological advancement. However, the extent to which technological innovation mitigates the impact of FDI on the environment and promotes green growth varies among OECD sub-regions due to contextual differences in regulatory frameworks, market structures, and technological capabilities. For example, in regions with stringent eco-role and robust innovation ecosystems, FDI inflows may catalyze the adoption of cleaner technologies and practices, thereby promoting green growth. Conversely, FDI might result in heightened pollution levels and environmental degradation in areas characterized by lenient environmental standards and limited technological capacities.

The relationship between technological innovation, foreign direct investment (FDI), and the green economy, particularly within OECD countries, is not extensively covered in existing literature. This gap is crucial because technological innovation can mitigate or exacerbate the environmental impacts of FDI, depending on the context. In addition, the United Nations Sustainable Development Goals (SDGs) provide a comprehensive framework for achieving sustainable development globally. This study aligns with several SDGs, particularly SDG 9 (Industry, Innovation, and Infrastructure), SDG 13 (Climate Action), and SDG 17 (Partnerships for the Goals). Consequently, by examining how technological innovation shapes the influence of FDI on green growth in the OECD sub-region, this research enhances our understanding of how economic activities can support sustainable development. Specifically, we examine two dimensions of green growth: production-based CO 2 productivity and demand-based CO 2 productivity. To gain meaningful insights into these dynamics, we utilize a range of methodologies.

This research uniquely contributes to environmental economics literature, offering numerous implications and far-reaching impacts. It breaks new ground by investigating the effects of FDI on green growth within OECD member countries. By exploring this relationship using two measures of green growth—production-based CO 2 productivity and demand-based CO 2 productivity—the study provides a comprehensive understanding of the dynamics of carbon emissions. Production-based metrics focus on emissions generated within a country's borders, while demand-based metrics consider emissions embedded in goods and services consumed domestically. Integrating both perspectives enables a holistic assessment of a nation's carbon footprint, facilitating the development of targeted policies addressing production, consumption, and trade-related emissions to mitigate climate change and promote sustainable development effectively.

Additionally, by acknowledging the role of countries' development, the study employs SIVQR (Semi-Parametric Instrumental Variable Quantile Regression) to investigate the nexus across different development levels. This approach provides nuanced insights into varying stages of development, enhancing our understanding of how economic policies and growth trajectories differ globally. Consequently, this method improves the robustness and applicability of the findings across diverse economic contexts. Moreover, the study examines how technological innovation influences the relationship between FDI and green growth. On one hand, this investigation sheds light on whether technological advancements can offset the potential negative environmental impacts of FDI and promote sustainable development.

On the other hand, it provides insights into the dynamics of green growth, informing policymakers on how to leverage FDI and innovation synergies to achieve environmentally sustainable economic growth. Lastly, accounting for time differences in examining this relationship enriches the literature by capturing the dynamic and evolving nature of these relationships. This approach reveals how the impact of FDI on sustainable development changes over time, identifies lag effects, and highlights long-term trends. It enhances the understanding of temporal factors influencing green growth, offering more nuanced and policy-relevant insights into the economic-environmental interplay.

The remainder of the paper unfolds as follows: Sect.  2 provides a concise literature review, followed by Sect.  3 , which outlines the data and methodology utilized. Section  4 delves into the findings, and Sect. 5 offers concluding remarks.

2 Literature review

This section examined the theoretical and empirical literature on the nexus between FDI and the green economy. Several hypotheses and accounts on the nexus between FDI and environmental quality have been established in the literature. The nature of the relationship between the two variables can be summarised into two hypotheses called the pollution halo and pollution heaven hypothesis. The proponent of the pollution haven hypothesis asserts that foreign investors essentially take advantage of loosened environmental-related rules in these developing countries by bringing pollution-intensive production units [ 17 ]. Supporters of this view, such as Anyanwu [ 18 ], also identified factors such as cheap labour and abundant natural resources as the drivers of this process.

However, some scholars have identified a different perspective, named the pollution halo hypothesis. Followers of this view argue that multinational corporations employ clean technologies in their production processes, thereby contributing to a clean environment [ 19 ]. Furthermore, proponents of this viewpoint also emphasize that introducing clean technology has the dual benefits of improving the environment in the host nation and generating jobs through the transferring or linkage effect [ 20 ].

Although the perspective of these theories is explanatory and convincing, most scholars do not generally accept their adequacy. The empirical literature on the nexus between FDI and the environment makes the heterogeneity of opinions more apparent. Empirical studies have produced inconsistent results, with a considerable number of studies indicating a positive relationship and a few indicating a negative impact [ 21 ]. Some studies argue that the nature of the relationship is characterized by nonlinear or inverted U-shaped patterns, supporting the Environmental Kuznets Curve (EKC) theory.

A good portion of this empirical research, primarily from developing countries, accepts the pollution haven theory. For instance, using the quantile model, Chowdhury et al. [ 22 ] accepted the pollution haven hypothesis and argued that FDI positively and significantly impacts the environmental quality of 92 countries. In the same vein, Sabir et al. [ 23 ] used the panel autoregressive distributed lag (ARDL) method to examine the short-run and long-run impact of FDI on the environment in a sample of South Asian countries; the study discovered that FDI increases environmental degradation of the countries. Balsalobre-Lorente et al. [ 24 ] found similar results, stating that FDI improves air quality as multinational corporations bring cleaner and more efficient technology capable of reducing energy consumption. Similarly, empirical outcomes were observed for Udemba [ 25 ] for Turkey, Solarin et al. [ 26 ] for Ghana, and Ahmed et al. [ 27 ] for a sample of Asia–Pacific countries. Shahbaz et al. [ 28 ] examined the impact of FDI, financial development and energy innovations on environmental degradation in France. Using a Fourier ARDL model, the study discovers that FDI deteriorates environmental quality, thereby attesting to the pollution-haven hypothesis.

However, a couple of empirical papers support the pollution halo hypothesis. For instance, Tang and Tan [ 17 ] analyzed the relationship between C0 2 emission, energy consumption, FDI and economic growth in Vietnam. The study confirms the existence of the pollution halo hypothesis, i.e., FDI improves environmental quality in Vietnam. Similarly, Al-Mulali and Tang [ 19 ] investigated the validity of the pollution haven hypothesis in the Gulf Cooperation Council (GCC) countries using Fully Modified OLS. The results suggest that foreign direct investment inflows have a long-run negative relationship with CO 2 emission. Similar empirical outcomes were observed for Kirkulak et al. [ 29 ] and Tamazian and Rao [ 30 ]. Caglar et al. [ 31 ] also examine the impact of economic growth, trade openness, renewable energy, human capital, and competitive industrial performance on the load capacity factor for EU countries. Using the CUP-FM and CUP-BC methodologies that address heterogeneity and cross-sectional dependence, the study lends credence to the pollution haven hypothesis and argues that economic growth, trade openness, and competitiveness worsen environmental quality. In Turkiye, Yavuz et al. [ 32 ] also discovered that gross domestic product, natural resource rents, and primary energy consumption accelerate environmental degradation using the newly developed Augmented Autoregressive Distributed Lag (A-ARDL) with Fourier term.

Some studies support the environmental Kuznets curve (EKC) hypothesis despite the evidence supporting the pollution haven and pollution halo hypotheses. According to these studies, environmental degradation occurs when economic growth occurs (through FDI), and a cleaner environment cannot be attained until FDI reaches an appropriate level. For example, Destek and Okumus [ 33 ] used second-generation panel data analysis on newly industrialized countries. The findings reveal that FDI has a U-shaped relationship with the ecological footprint. Similarly, Sapkota and Bastola [ 34 ] investigated the effect of FDI on pollution emissions in Latin American countries using a fixed-effect model. The study validated the EKC hypothesis. Studies such as Shahbaz et al. [ 28 ] and Doytch and Uctum [ 35 ] also conclude that FDI and environmental quality have an inverted U-shape relationship.

Furthermore, some studies have begun to examine the role of intermittent variables on the impact of FDI on the environment. Starting with the study by Caetano et al. [ 36 ] which analyzed how the energy transition mediates the role of FDI in the green economy. The study concludes that energy transition modulates the impact of FDI on the green economy. Qamri et al. [ 37 ] also examined the role of financial development and economic growth on the impact of FDI on the green sector of 21 Asian countries. Using a panel econometric method, the study discovers that economic growth and financial development mediate the positive impact of FDI on the green economy. Padhan and Bhat [ 38 ] examined the link between FDI and the environmental quality of BRICS and NEXT-11 using green innovation as an intermittent variable. Using a Driscoll–Kraay (DK) standard error model, the study reveals that green innovation modulated the negative impact of FDI on the environment, indicating that the presence of green innovation and FDI proves the existence of the pollution halo hypothesis. Ofori et al. [ 39 ] examined how energy efficiency mediates the impact of FDI on inclusive green growth in Africa. Using a dynamic GMM estimator, the study discovers that energy efficiency reduces the deteriorating impact of FDI on inclusive green economic growth.

While the literature is replete with unremitting debate on the link between FDI and the green economy, there is limited literature on the role of technological innovation on the impact of FDI on the green economy. This study contributes to the extant literature by (1) examining the impact of FDI on the green economy in OECD countries and (2) investigating the role of technological innovation on the nexus between FDI and the green economy.

3 Methodology

The study's analysis relies on a dataset comprising 37 OECD countries Footnote 1 spanning the years 1995 to 2021. The countries were chosen based on the availability of data during the study period. The OECD countries are typically regarded as advanced economies characterized by high-income levels, stable institutions, and robust statistical systems. This makes them an ideal representative sample for studying economic, social, and environmental trends in developed nations. While the period under consideration includes various economic cycles—growth, recession, and recovery—and encompasses significant policy changes in areas such as globalization, trade, fiscal policy, and social policy. This provides a valuable context for examining long-term trends and assessing the impact of economic cycles and policy shifts on different variables.

The data for green growth, Solar thermal energy, Wind energy, and technological innovation are drawn from the OECD database. The data for globalization is obtained from the KOF Swiss Economic Institute database. The remaining data utilized in the study was obtained from the World Bank's World Development Indicators. Table 1 presents the variables' characteristics in terms of mean, standard deviation, minimum, and maximum values, while Table  2 illustrates the correlations among the variables.

3.2 Justification of variables

3.2.1 dependent variable.

Our dependent variable of interest is the green growth proxy by production-based CO 2 productivity, and demand-based CO 2 productivity aligns with SDG indicators for climate action and sustainable consumption and production patterns. Production-based CO 2 productivity is determined by measuring the real GDP generated per unit of CO 2 emitted (expressed in USD/kg). This includes emissions from the combustion of coal, oil, natural gas, and other fuels. On the other hand, demand-based CO 2 productivity reflects the CO 2 emissions from energy use throughout the diverse stages of producing goods and services consumed within domestic final demand, regardless of where these production stages occurred. Both measures provide insights into the sustainability and environmental impact of economic growth. Appendices 3 and 4 show the production-based and demand-based CO 2 productivity across the OECD countries.

3.2.2 Independent variables

The independent variable of the study is foreign direct investment (FDI). Foreign Direct Investment (FDI) involves investment in a business by an entity from another country, facilitating capital flow and technology transfer. FDI can influence green growth positively by introducing sustainable technologies, enhancing environmental standards, and promoting renewable energy [ 2 , 3 ]. Additionally, it can stimulate economic development, leading to increased demand for green products and services. However, without proper regulations, FDI might also exacerbate environmental degradation due to relaxed environmental standards or exploitation of natural resources.

Figure  1 presents the trend of FDI, while Fig.  2 presents a correlation analysis between FDI and green growth proxy by production-based CO 2 productivity (PP) and demand-based CO 2 productivity (DP) in the OECD countries. The correlation analysis serves as preliminary findings on the nature of the relationship between FDI and green growth. The scatter plot indicates a positive effect of FDI on production-based CO 2 productivity (PP) and demand-based CO 2 productivity. The findings on the nature of this relationship are further experimented with using the instrumental quantile regression that accounts for initial levels of FDI and also addresses potential endogeneity.

Source: Authors’ computation from WDI database

The trend of FDI in the OECD countries.

Source: Authors’ computation

The correlation between FDI and green growth.

3.2.3 The moderating variable

The moderating variable of the study is technological innovation to assess progress toward SDG 9. Technological innovation refers to the development of new or improved technologies, processes, or products that enhance efficiency, productivity, or functionality [ 13 , 40 ]. In the context of green growth, technological innovation plays a pivotal role by enabling the creation of sustainable solutions. Advancements in green technology, waste management, and resource-efficient technologies mitigate environmental impact, reduce carbon emissions, and promote eco-friendly practices [ 41 , 42 ]. Such innovations drive economic growth while preserving natural resources, fostering a greener and more sustainable future. The study uses patents as a proxy for technological innovation. Figure  3 shows the evolution of technology innovation in the OECD countries.

Source: Authors’ computation from the OECD database

The trend of technology innovation in the OECD countries.

3.2.4 Control variables

The selection of the control variables is based on the environmental sustainability literature. First, GDP per capita, a measure of economic output per person, affects environmental sustainability from its reliance on resource consumption and production. High GDP often correlates with increased resource extraction, energy use, and waste generation, contributing to environmental degradation and climate change [ 5 ]. Second, renewable energy consumption (% of total final energy consumption) promotes environmental sustainability by reducing greenhouse gas emissions, mitigating air and water pollution, and minimizing dependence on finite fossil fuel resources. It contributes to climate change mitigation and fosters a transition towards cleaner, more sustainable energy systems, thereby preserving ecosystems and enhancing the planet's health. Third, globalisation impacts the green economy through increased trade and industrialisation, leading to resource depletion, pollution, and unequal distribution of environmental burdens and benefits, necessitating comprehensive global and local action [ 43 , 44 , 45 ]. Fourth, urbanization, indicated by the urban population as a percentage of the total population impacts green growth by intensifying resource consumption, pollution, and habitat fragmentation [ 46 , 47 ]. Increased infrastructure development often leads to land degradation and loss of biodiversity. However, well-planned urbanization can promote sustainability by fostering compact, efficient cities with green spaces, public transportation, and renewable energy integration.

3.3 Theoretical and estimation strategy

The theoretical foundation of this paper is grounded in the pollution halo and pollution haven hypotheses (see Brian et al. [ 14 ]; Tang and Tan [ 17 ]; Al-Mulali and Tang [ 19 ]), as well as the Environmental Kuznets Curve (EKC) hypothesis and the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) framework [ 47 , 48 , 49 ]. The EKC hypothesis postulates an inverted U-shaped relationship between environmental degradation and economic growth. Initially, economic growth leads to increased environmental degradation, but after reaching a certain level of income per capita, the trend reverses, leading to environmental improvements. This theory provides a foundational framework for examining of how economic activities, including FDI, impact environmental outcomes at different stages of development. On the other hand, the STIRPAT framework extends the IPAT model (Impact = Population × Affluence × Technology) by incorporating stochastic elements to analyze the impacts of human activities on the environment. The framework allows for the inclusion of multiple variables and their interactions, making it suitable for complex econometrics.

The empirical rigor of this paper is evident from the outset, starting with the specification of models to test the relationships between FDI, technological innovation, and green growth. First, we establish a baseline model to explore the Environmental Kuznets Curve (EKC) hypothesis and examine the impact of control variables on green growth. Finally, adhering to the STIRPAT framework, which accommodates multiple variables and their interactions, we introduce an interaction term to assess how FDI and technological innovation jointly influence green growth. The models are specified as follows:

The baseline model is specified in ( 3 ) as:

To capture the joint effect of FDI and technology innovation, Eq. ( 3 ) is modified to obtained ( 4 )

where i and t represent individual countries and time periods respectively, GG signifies green growth, GDP denotes GDP per capita and it squared, FDI represents foreign direct investment as a percentage of GDP, tech signifies technology innovation, TC indicates the transmission channel through which the effect of FDI on green growth is modulated, with its estimated coefficient denoted by \({\pi }_{i}\) . The TC variable summarises (FDI*tech), \(K\) represents control variables which are renewable energy consumption, globalization, urbanization along with their corresponding estimated coefficients ( \({{\varvec{\delta}}}_{{\varvec{h}}})\) , ε representing the error term.

3.4 Estimation technique

The study utilizes a smoothed instrumental-variables quantile regression (SIVQR) approach to address potential endogeneity concerns. This methodology is of significant importance in assessing the influence of foreign direct investment (FDI) on the distribution of green growth. By analyzing distinct quantile levels within the conditional distribution, the quantile regression method facilitates the identification of countries characterized by varying degrees of green growth, thereby classifying them into low, intermediate, and high levels. The merit of this method, as highlighted by Wirajing et al. [ 50 ], lies in its capacity to elucidate the initial levels of the exogenous variable. Unlike ordinary least squares (OLS) regression, which frequently yields oversimplified and broadly generalized policy suggestions, instrumental quantile regression identifies precise quantiles where independent variables notably impact the dependent variable. This contrasts OLS, which depends on mean values and may result in broad policy implications.

Moreover, the instrumented quantile strategy aims to minimize absolute deviations across various quantile estimates, offering insights that hinge on the prevailing levels of Foreign Direct Investment (FDI) impact on green growth. This methodology diverges from Ordinary Least Squares (OLS), which prioritizes the reduction of the sum of squared residuals. In response to the shortcomings of OLS, quantile regression is being tailored by addressing the maximization problem outlined in Eq.  5 .

where \(\theta\) represents different quantile levels at the conditional distribution of the outcome variable, which belongs to {0, 1}. \(\theta\) can take 0.10, 0.25, 0.50, 0.75 and 0.90. The conditional quantile of green growth is presented in Eq.  6 by weighing the residuals.

Equation  6 introduces y, which symbolizes green growth proxy by production-based CO 2 productivity and demand-based CO 2 productivity. To address potential endogeneity issues with FDI and other control variables in the quantile model, we instrument production-based CO 2 productivity and demand-based CO 2 productivity by utilizing lag values of FDI, while also instrumenting all control variables across quantile levels ranging from the lower (10th and 25th) to the upper (75th and 90th) quantiles.

To optimize computational efficiency and statistical accuracy, this study employs the sivqr quantile instrumentation, integrating the smoothed estimator introduced by Kaplan and Sun [ 51 ]. Standard errors are computed using the Bayesian bootstrap method, employing a selection of 100 at all quantile levels, and are compatible with bootstrap prefixes, thereby ensuring the robustness and reliability of findings. However, it's important to note that quantile regression encounters challenges in addressing cross-sectional dependence, which necessitates supplementation with the Generalised Method of Moments (GMM) strategy.

4 GMM specification

The study additionally employs the system GMM strategy to analyze the indirect effects. Specifically, it examines how technological innovation serves as a pathway through which FDI impacts green growth, moderating the relationship. By employing the GMM strategy, the study offers flexibility in modelling complex relationships, accommodates various types of data, and allows for robust statistical inference. It addresses potential endogeneity issues and tackles problems associated with unobserved heterogeneity, such as time-invariant omitted variables and concerns regarding reverse causality. System GMM was chosen to yield results with a net effect for policy recommendation, which applies to all OECD countries, a feature not easily accommodated by quantile regression. This strategy generates efficient estimates under specific conditions. The primary condition for adopting the GMM is met in our study, as it deals with 37 OECD countries over 26 years from 1995 to 2021, where the number of cross-sections exceeds the time series [ 52 ]. Additionally, the study satisfies the requirement for employing the GMM in panel data analysis.

The two-step system GMM strategy adopted in the study is summarised in the first difference ( 6 ) as follows:

K signifies the vector of control variables. µ i represents the country-specific effect, γ t indicates the time-specific constant term, represents the error term and τ the lagging coefficient.

Additionally, to prevent generic policy recommendations, we calculate the net effect of the modulating variable by utilizing the coefficients of both the direct and indirect effects, as outlined in Eq.  8 .

Ω denotes the average policy-modulating variable. The computation of the net effect is performed exclusively when β 1 and π 1 are both significant and demonstrate opposing signs.

5 Results and discussions

In this section, we delve into the findings of the study and offer a comprehensive analysis. To ensure clarity, the results are categorized into four sub-sections: Firstly, we present the fundamental findings derived from the baseline analysis. Secondly, we present the estimates from the quantile instrumental test results, accompanied by quantile regression plots provided in Appendix 1 and 2. Thirdly, we provided robustness checks by considering time variation and renewable energy by sources. Lastly, we discuss the results concerning the transmission effect and the determination of modulating thresholds obtained from the Two-Step System GMM estimates.

5.1 The Baseline results

The baseline results presented in Table  3 stem from the ordinary least squares model (OLS). These results reveal that FDI, GDP, renewable energy, and globalization exhibit positive correlations with both production-based CO 2 productivity and demand-based CO 2 productivity. Conversely, technological innovation and urbanization demonstrate negative effects. The study refrains from relying on the results of the OLS estimates for its conclusive remarks due to its failure to address issues of endogeneity and unobserved heterogeneity. In lieu of this, the present study opts for instrumental quantile regression as a more robust approach, the findings of which are outlined in Sect.  4.2 .

5.2 The instrumental quantile regression estimates

The quantile approach illustrates the estimated impact of FDI on green growth. These findings, derived from the quantile regression approach, are detailed in Table  4 of the study. The table showcases the results of instrumented quantile regression estimates at various quantiles, including the 10th, 25th, 50th, 75th, and 90th percentiles. Quantile regressions are widely adopted in both contemporary and non-contemporary literature as a robust regression technique, enabling a more typical assumption of normality for the residual term [ 50 , 53 ].

Even after addressing the issue of endogeneity in the OLS results, the discovery of the exclusive positive impact of FDI on production-based CO 2 productivity and demand-based CO 2 productivity remains consistent with the findings of the OLS analysis. Foreign Direct Investment (FDI) often leads to increased industrialization and economic activity, contributing to higher CO 2 emissions. Production-based CO 2 productivity decreases as FDI boosts manufacturing output, intensifying emissions. Similarly, demand-based CO 2 productivity declines as FDI drives consumption, heightening energy use and emissions. Consequently, the correlation between FDI and production-based and demand-based CO2 productivity tends to be positive due to the environmental implications of the heightened economic activity facilitated by FDI. These findings are in line with Tukhtamurodov et al. [ 15 ], Salahuddin et al. [ 54 ], and Zhang and Zhou [ 10 ], who argued that FDI often introduces technologies or production methods that are environmentally unfriendly or energy-inefficient, thus worsening the green growth.

Moreover, the result indicates that GDP increases production-based CO2 productivity- and demand-based CO 2 productivity among the selected OECD countries. As a measure of economic output, GDP often incentivizes consumption and production without regard for environmental consequences. This hinders green growth, which aims for economic development while preserving the environment. GDP-driven policies prioritize short-term gains over long-term sustainability, leading to overexploitation of natural resources, pollution, and ecosystem degradation. Additionally, GDP fails to account for negative externalities such as carbon emissions and habitat destruction, undervaluing the true cost of economic activities. Consequently, investments in environmentally harmful industries might appear beneficial for GDP growth despite their adverse effects on the planet.

On the other hand, the GDP squared has a favourable effect on green growth, albeit not significant for demand-based CO 2 productivity, possibly reflecting heightened awareness of environmental concerns leading to policies advocating sustainability and the reduction of CO 2 emissions as a byproduct of economic progress. These findings align with the Environmental Kuznets Curve literature, which suggests that economic activities often escalate energy consumption in early growth stages, primarily from fossil fuels and major CO 2 emission sources. Conversely, in later stages, maturing economies tend to embrace cleaner technologies, renewable energy sources, and enhanced production methods [ 7 , 8 ].

Furthermore, the results indicate that renewable energy exacerbates production- and demand-based CO 2 productivity in OECD countries. This may stem from the energy-intensive processes involved in renewable infrastructure production and maintenance and the intermittent nature of some renewables, necessitating backup systems that can increase CO 2 emissions. Additionally, manufacturing renewable infrastructure involves energy-intensive processes, contributing to CO 2 emissions. Also, globalization unfavourably impacts green growth by amplifying production-based and demand-based CO 2 productivity through increased trade, transportation, and industrial activities. Meeting global demand results in heightened energy consumption, primarily from fossil fuels. Outsourcing manufacturing to regions with lax environmental regulations further escalates emissions, worsening the global climate crisis. This aligns with Kirikkaleli and Addai's [ 55 ] findings, highlighting how globalization, prioritizing profit over environmental concerns, drives up resource extraction, production-based, and demand-based CO 2 productivity through expansive trade networks.

The results further demonstrate that technological innovation fosters green growth. Specifically, within the OECD sub-region, technological advancements enhance environmental sustainability by improving efficiency, conserving resources, and reducing pollution. These innovations diminish reliance on fossil fuels, thereby curbing greenhouse gas emissions. Smart grid technologies optimize energy distribution, minimizing wastage, while advancements in waste management, such as recycling and composting, reduce landfill usage. Moreover, innovations in transportation, including electric vehicles and efficient logistics, contribute to carbon emission reductions. Indeed, studies by Suki et al. [ 56 ], Nosheen et al. [ 57 ], and Mensah et al. [ 58 ] affirm that technological innovation cultivates a more sustainable balance between human activities and the environment.

Finally, the findings also reveal that urbanization has a negative and significant effect on both production-based and demand-based CO 2 productivity in the OECD countries. This indicates that urbanization contributes to green growth by fostering denser living arrangements, thereby decreasing per capita resource consumption and carbon emissions. Compact cities promote public transportation and shared infrastructure, mitigating urban sprawl and conserving natural habitats. Moreover, centralized services enhance efficiency in waste management and energy distribution, promoting a more environmentally sustainable urban environment.

5.3 Sensitivity check

This section validates the findings by examining potential sources of bias, bolstering the study's credibility, and confirming the generalisability and consistency of the analytical approach. It incorporates assessments of time variances and renewable energy sources to ensure the consistency of the results.

5.3.1 Does time matter in green growth and the FDI relationship?

Different time periods affect green growth due to evolving societal attitudes, technological advancements, and policy frameworks. In the early days, limited awareness of environmental issues led to unsustainable practices. Industrial revolutions accelerated resource exploitation, causing environmental degradation. However, with the emergence of environmental movements in the mid-twentieth century, awareness grew, prompting the adoption of conservation measures and early environmental regulations. As we progressed into the twenty-first century, concerns about climate change intensified, leading to increased emphasis on sustainable practices and green technologies. Today, with a greater understanding of the urgency to address climate change, there's a global push for green growth.

Policies supporting green technologies, circular economies, and sustainable development goals shape contemporary approaches. Therefore, the trajectory of green growth is shaped by the socio-economic context and the level of commitment to sustainable practices across different time periods. Tables 5 and 6 present the effect of FDI on production-based and demand-based CO 2 productivity accounting for different time periods. However, the results generally align with the baseline, although with minor exceptions; for example, GDP's negative impact on demand-based CO 2 productivity in the first quantile across different periods, albeit statistically insignificant.

5.3.2 Robustness checks accounting for renewable energy by sources

Renewable energy sources such as solar and wind power exhibit availability and technological application variability, uniquely affecting their contributions to sustainable development and green growth. Solar thermal energy capitalizes on sunlight to produce heat or electricity, diminishing dependence on fossil fuels and lowering greenhouse gas emissions. Conversely, wind energy employs turbines to generate electricity, reducing carbon emissions. However, wind energy's effectiveness relies on wind availability, whereas solar thermal energy can offer more consistency in specific regions. Both technologies are pivotal in broadening the spectrum of renewable energy sources and advancing sustainable development goals.

This study's choice of solar thermal and wind energy is predicated on data availability for the covered time period. Tables 7 and 8 unveil the impact of FDI on production-based and demand-based CO 2 productivity while considering renewable energy sources, specifically solar thermal and wind energy. After accounting for the difference in renewable energy to check the consistency of our result, we observed that the result remained unchanged. Upon examining the control variables, we observe minimal alterations. For instance, urbanization positively impacts production-based CO 2 productivity, although this effect is deemed insignificant. Additionally, globalization negatively influences demand-based CO 2 productivity in the last two quantiles.

5.4 Indirect effect result

The indirect effect analysis investigates the moderating role of technology innovation on the effect of FDI on green growth within the OECD member state. The indirect effect results have been conducted to examine whether the quest technology advancement enables FDI recipients to adopt cleaner production methods, reduce resource consumption, and minimize environmental impacts. Investments in environmental technology, smart grids, and sustainable infrastructure can be facilitated through technological advancements, promoting green growth [ 57 , 58 ]. Additionally, innovations in waste management, water purification, and pollution control help mitigate negative externalities associated with FDI. Through technology, FDI can catalyze the development and deployment of environmentally friendly solutions, fostering a more sustainable and resilient economy [ 9 , 12 , 13 ]. This synergy between technology innovation and FDI contributes to achieving long-term environmental objectives while stimulating economic growth.

The introduction of the indirect effect guides us towards avoiding broad policy approaches. It offers a framework for devising strategies to enhance green growth within the OCED countries with inadequate environmental management. In this section of the study, the Two-Step System GMM strategy is employed to determine a consolidated net effect of FDI interaction with tech-innovation in the OECD sub-region to easy policy orientation. By utilizing the GMM strategy, the study ensures that the findings are unaffected by endogeneity, cross-sections, autocorrelation, and heteroscedasticity, as suggested by Wirajing et al. [ 50 ]. The outcomes of the system GMM analysis are presented in Table  9 . The findings suggest that FDI exerts a notable and positive influence on production—and demand-based CO 2 productivity, aligning with the core findings. Upon interaction with technological innovation, we discern a positive impact on production-based CO 2 productivity but a negative impact on demand-based CO 2 productivity. This suggests that technological innovation can moderate the influence of FDI on demand-based CO 2 productivity. This finding supports the role of innovation in achieving SDG 9 and underscores the importance of fostering collaborative partnerships between foreign investors and local innovators (SDG 17).

Technological advancements within OECD countries often attract FDI due to their growth potential and profitability. This prioritizes efficiency enhancements over environmental sustainability, consequently boosting production-based CO 2 productivity. Conversely, the synergy between technological innovation and FDI fosters the advancement of cleaner technologies and energy-efficient processes. This leads to a decline in demand-based CO 2 productivity, stemming from reduced energy consumption across various stages of goods and services production consumed domestically, regardless of the production locations.

5.5 Conclusion and policy implication

The Sustainable Development Goals advocate for advancing green growth, which entails fostering economic prosperity while safeguarding the environment. Central to this agenda are the principles of sustainable consumption, production, and energy utilization aimed at addressing climate change and preserving ecosystems. This study examines the moderating influence of technological innovation on the relationship between Foreign Direct Investment (FDI) and green growth within OECD member states. Our examination focuses on two dimensions of green growth: production-based CO 2 productivity and demand-based CO 2 productivity. Employing the EKC and STIRPAT frameworks, we analyze data from 1995 to 2021 across 37 OECD countries. Methodologically, our empirical approach involves employing Ordinary Least Squares (OLS), instrumental quantile, and System GMM methodologies. The results indicate that FDI hinders green growth, while technological innovation is pivotal in enhancing it. This dynamic holds across various periods and renewable energy sources. Moreover, our study reveals that FDI, in conjunction with technological innovation, leads to an increase in production-based CO 2 productivity but a decrease in demand-based CO 2 productivity. Additionally, we observe the presence of an environmental Kuznets curve for production-based CO 2 productivity.

Adding to significant scientific value by demonstrating how technological innovation moderates FDI's impact on green growth in OECD countries, we propose the implementation of a policy framework aimed at fostering domestic technological innovation while prudently managing foreign direct investment (FDI) to support sustainable growth. Also, policy frameworks should prioritize investments in research and development, creating an enabling environment for innovation and the advancement of sustainable technologies. Encouraging collaborative ventures between foreign investors and local innovators can also harness global expertise while furthering green objectives. Concurrently, policies should stimulate demand for environmentally friendly products and services to bolster demand-based CO 2 productivity. Moreover, investing in research and development (R&D) for green technologies is crucial. Lastly, integrating green criteria into FDI agreements and providing tax incentives for eco-friendly innovations will harmonize FDI with environmental goals.

5.6 Limitations and future recommendations

This study offers valuable insights into the interplay between Foreign Direct Investment (FDI), technological innovation, and green growth in OECD countries. However, several limitations stem from the design and methodology constraints, which may impact the interpretation of our findings:

First, the dataset covers 37 OECD countries over 26 years (1995–2021). While comprehensive, this temporal and spatial scope may not capture all relevant fluctuations and anomalies, especially short-term economic shocks or policy changes that could influence FDI and green growth dynamics. Second, using proxies, such as patents for technological innovation and production-based and demand-based CO2 productivity for green growth, introduces potential measurement errors. These proxies may not fully encapsulate the multi-faceted nature of technological innovation and environmental sustainability. Third, the focus on OECD countries, typically advanced economies, limits the generalizability of the findings to developing countries with different economic structures, regulatory frameworks, and technological capabilities. Also, the methodologies employed, including Ordinary Least Squares (OLS), smoothed instrumental-variables quantile regression (SIVQR), and System GMM, each have inherent limitations. For instance, OLS may not adequately address endogeneity issues, while SIVQR and System GMM require strong assumptions about the instruments and error distributions, which might not hold in all cases. Finally, technological innovation is a broad concept, and this study's focus on patents may overlook other forms of innovation, such as process improvements, managerial practices, and informal knowledge transfers that also significantly impact green growth.

Building on the findings and addressing the aforementioned limitations, the following recommendations are proposed for future research:

Future studies should incorporate a more extensive dataset, including non-OECD countries, to enhance the generalizability of the findings. Including data from emerging and developing economies could provide a more comprehensive understanding of the FDI-green growth nexus across different economic contexts. Moreover, employing alternative or supplementary measures for technological innovation, such as R&D expenditures, innovation indices, and qualitative assessments of technological capabilities, can provide a more nuanced understanding of its impact on green growth. Also, utilizing advanced econometric techniques that better handle endogeneity, non-linearity, and dynamic relationships, such as panel vector autoregression (PVAR) and machine learning approaches, can provide more robust insights. These methods can also help uncover complex interactions and causal relationships.

In addition, conducting in-depth case studies and sector-specific analyses can reveal contextual nuances and sectoral variations in the FDI-green growth relationship. This approach can identify best practices and policy interventions tailored to specific industries or regions. Lastly, integrating insights from other disciplines, such as political science, sociology, and environmental science, can enrich the analysis by considering broader socio-political and ecological dimensions influencing the FDI-green growth nexus. By addressing these limitations and following the outlined recommendations, future research can build on robust foundations, yielding valuable insights that inform practical applications and policy decisions to foster sustainable economic development.

Data availability

The data used in this study is available upon request from the corresponding author.

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1.1 Appendix 1: The quantile plot on the determinants of production-based CO 2 productivity

1.2 Appendix 2: The quantile plot on the determinants of demand-based CO 2 productivity

1.3 Appendix 3. Production-based CO 2 productivity across the OECD countries. Source: Author’s computation from OECD database

1.4 Appendix 4. Demand-based CO 2 productivity across the OECD countries. Source: Author’s computation from OECD database

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Ketchoua, G.S., Arogundade, S. & Mduduzi, B. Revaluating the Sustainable Development Thesis: exploring the moderating influence of Technological Innovation on the impact of Foreign Direct Investment (FDI) on Green Growth in the OECD Countries. Discov Sustain 5 , 252 (2024). https://doi.org/10.1007/s43621-024-00433-w

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Can anything spark Europe’s economy back to life?

Mario draghi, the continent’s unofficial chief technocrat, has a plan.

E urope has at last realised it has a problem with economic growth. Duh. Can it now find a solution? A report published on September 9th by Mario Draghi, a former president of the European Central Bank and prime minister of Italy, and the continent’s unofficial chief technocrat, is an attempt to do just that. Over almost 400 pages, Mr Draghi outlines a plan to overhaul Europe’s economy. Ursula von der Leyen, the recently re-elected head of the European Commission, is keen to act on his advice. Even Elon Musk, owner of Tesla and X, as well as a frequent opponent of the EU , has applauded his “critique”.

The report follows another, published in April, by Enrico Letta, another former Italian prime minister, which looked at the single market. Both focus on how to make Europe more competitive. The authors want to boost innovation, increase funding for riskier ventures (commercial, financial or scientific) and exploit Europe’s scale by bringing together hitherto fragmented markets. In short, they want to make Europe a bit more European, which in these areas at least is smart. The questions are as follows: Will countries be willing to see integration in sensitive sectors such as defence? Will they be able to overcome the narcissism of small differences? And will they be willing to spend as required?

Although Europe has long been poorer than America, its citizens used not to mind too much. Americans had too many guns and they had coq au vin . But as Mr Draghi lays out with urgency, the world around Europe has changed, making the continent’s lack of growth and innovation a threat to its way of life. “The EU has reached a point where, without action, it will have to compromise either its welfare, the environment or its freedom,” he writes in a guest article for The Economist .

Mr Draghi’s case is supported by a number of developments, including that the rest of the world is no longer playing by what the EU considers the rules. Led by America and China, countries are using protectionist policies to give their own firms an edge. Europe fears it will lose out economically if its companies cannot compete. It also risks becoming dependent on foreign supply-chains that China wishes to dominate, such as for rare earths, or to which a future American administration could one day restrict its access, perhaps in a crisis, such as for advanced tech.

Another is that Europe’s decline is becoming more painful. In 1995 European productivity was 95% of America’s; today it is less than 80%, which is a big enough gap for holidaymakers to notice. In frontier tech, such as artificial intelligence, Europe now looks set to fall further behind. And as this tech spreads to more and more sectors—think of self-driving cars—Europe’s potential for innovation will further decline. Pricey energy will make it still harder to lure cutting-edge firms in the future.

On top of this, Europe’s failure to exploit its scale is becoming more of a problem, as other countries make the most of their own size. “In the 1980s, when the single market was taking shape, Italy’s economy was about as big as China’s and India’s combined,” notes Mr Letta. It hardly seemed to matter if industries such as defence, energy, finance and telecommunications were national affairs. No longer.

What can Europe do? Mr Draghi concentrates, most of all, on boosting innovation, arguing that it should become “a tool of first resort”. For this to happen, he suggests that countries will have to pool research decision-making and funding, while agreeing to lift spending. He favours the creation of European Advanced Research Projects Agencies ( ARPA s), based on the famed American agency of the same name, which played an important role in the creation of technologies including GPS and the internet. He also wants to spend big on “world-leading research institutions” via a competitive process.

Next comes support for risk-takers. Bank funding is readily available to established firms with assets to post as collateral and revenues to service debt. It is less suited to younger firms with neither, and with uncertain prospects. Yet in Europe three-quarters of corporate borrowing comes from banks, compared with just a quarter in America. Deeper and more liquid capital markets are thus essential for growth, agree the two ex-prime ministers, in a message being echoed increasingly widely by both national leaders and bosses. “The green deal won’t work without capital-markets union,” says Christian Sewing, chief executive of Deutsche Bank.

Creating such a union means overcoming fragmentation, such as 27 different approaches to insolvency. It also means moving from unfunded public pension systems to better funded, market-based schemes. According to New Financial, a think-tank, pension assets come to just 32% of European GDP , against 173% in America. “We need a cultural change on how we fund businesses, given all the investment required. In this regard, we also need regulatory changes in Europe to allow growth to be financed,” Mr Sewing argues. Mr Draghi suggests creating a European supervisor for capital markets, similar to America’s Securities and Exchange Commission.

On regulation more broadly, Mr Draghi is careful not to challenge the basic economic insight that competition is the surest spur to innovation. But he does point to changes in tech and markets, arguing that regulators should be better staffed, faster to move and willing to take impact on future innovation and supply-chain resilience into account. Perhaps, for instance, Alstom and Siemens, two European train-makers, should have been allowed to merge in 2019, to better compete against Chinese firms. He also wants European state aid to be less fragmented and more focused on common continental interests.

Mr Draghi’s report has been well received by Europe’s powerbrokers and thinkers, and will continue to be until it comes to implementation. Take something that ought to be relatively uncontroversial: the creation of a competitive process for funding world-class research institutes. When Germany introduced a similar scheme in the 2000s, most of the money ended up in two prosperous southern states. As a consequence, the programme was quickly adjusted to make sure that every region benefited. Similarly, America’s ARPA thrived in the absence of red tape. It is hard to imagine European governments overcoming their instincts in either case.

Many of Mr Draghi’s plans—such as the creation of a single capital-markets supervisor—also require power to be transferred away from national governments. “Such a step would help to remove all the hidden barriers in Europe,” argues Nicolas Véron of Bruegel, a think-tank, “but neither national regulators nor many market participants would want such a strong European supervisor.” Governments like to have sway over their countries’ most important companies. “Each head of government wants the CEO s of the national energy firms, banks or telecom companies on speed dial, in case of crises,” says Mr Letta.

In his analysis of individual industries, Mr Draghi is keen to create cross-European markets where none yet exist. In telecoms, for instance, he wants to make mergers easier, to boost investment. Yet Margrethe Vestager, the commission’s departing competition chief, is strongly opposed to this idea. “Telecoms is probably the worst example of the need for scale,” says Zach Meyers of the Centre for European Reform, another think-tank. Fewer operators would mostly mean higher prices and lower quality, but not more investment.

Moreover, plans to reform competition rules in the name of sovereignty or resilience may embolden the wrong people. Mr Draghi also spends too little time considering why more market-minded countries, such as the Netherlands and the Nordics, which are small even by European standards, are home to innovative tech firms. Or why Germany, after at last liberalising its planning regime, is seeing renewables take off without European help.

Then there is money. According to commission estimates, to meet Mr Draghi’s plans €750bn-800bn a year extra in spending would be required, taking the share of investment in the continent’s GDP from 22% to 27%—an unprecedented increase after decades of decline. If the past is any guide, four-fifths of this would have to come from the private sector, which is not going to happen even if the capital-markets union is a roaring success.

That leaves debt-funded EU spending, which Mr Draghi says would be useful, but stops short of seeking outright. He knows that northern European leaders have little to no appetite for another batch of debt. “Never in the past has the scale of our countries appeared so small and inadequate relative to the size of the challenges,” Mr Draghi writes. And he is correct. Now he faces a far harder job than analysing those problems: he must convince national governments to give up power. ■

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Mark Carney to Chair Leader’s Task Force on Economic Growth

September 9, 2024

Globally-acclaimed Canadian economist, public policy leader, sustainability advocate, and author to help shape new ideas for jobs and growth for all.

NANAIMO, BC – The Liberal Party of Canada announced today that Mark Carney will serve as the Chair of a Leader’s Task Force on Economic Growth. The globally acclaimed Canadian economist, public policy leader, sustainability advocate, and author will help the Liberal Party of Canada develop and shape ideas for the next phase of Canada’s strategy for near- and longer-term economic growth and productivity, building on the Liberal government’s work to strengthen the middle class and deliver lower costs for families.

“Throughout his extensive career both in public service and the private sector, Mark Carney’s ideas, deep experience, and proven economic leadership have made a bedrock contribution to a better economic future for all Canadians,” said Justin Trudeau, Leader of the Liberal Party of Canada. “As Chair of the Leader’s Task Force on Economic Growth, Mark’s unique ideas and perspectives will play a vital role in shaping the next steps in our plan to continue to grow our economy and strengthen the middle class, and to urgently seize new opportunities for Canadian jobs and prosperity in a fast-changing world.”

In the years since the COVID-19 pandemic, Canadians faced a period of global inflation with real and higher costs on everyday life. Now, Canada has been among the first in the G7 to see inflation coming back down (now at its lowest rate since March 2021), and interest rates are falling. Building on this progress and the strong foundations of the Canadian economy, our work must continue to further lower costs and create new opportunities for Canadian families.

As the Chair of the Leader’s Task Force on Economic Growth, Carney will develop new ideas for the next phase of Canada’s strategy for near- and longer-term economic growth and productivity, and help the party shape a pragmatic, focused, and high-impact vision for Canada’s economic success.

This will include meetings and events to hear ideas from Canadians in the weeks and months ahead, including foremost experts in the business community, labour movement, Indigenous economic leadership, innovators, and more. Recommendations will be shared in a report with the Leader and Liberal Party’s Platform Committee as the party prepares for the next election.

“The world is becoming more divided and dangerous, but the hard work of Canadians means we can manage these risks and seize the enormous opportunities in the new global economy,” said Mark Carney. “Canada’s Liberals have achieved real progress for all Canadians. With a winning growth plan, we can build the strongest economy in the G7 and an even better future for all.”

Born in Fort Smith, Northwest Territories, and raised in Edmonton, Alberta, and educated at Harvard and Oxford, Mark Carney has served as a former Governor of the Bank of Canada (2008-13), Governor of the Bank of England (2013-2020), Chair of the G20’s Financial Stability Board, and in various senior roles in Canada’s Department of Finance. He currently serves as United Nations Special Envoy for Climate Change and Finance, and Chair of the G30 group of leading economists and policymakers. He continues to have an extensive and varied career in the Canadian and international private sector, and is also the national bestselling author of “ Values: Building a better world for all. ”

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Why rural electrification may not always lead to economic growth

Mini grids more viable than grid expansion in smallest, remote villages: study.

By Richa Mishra

There is a political narrative in India centre around the promise of Har Ghar Bijli (electricity in every home), but does it also serve to boost the rural economy? A new research from Energy Policy Institute University of Chicago has found that electrification brings significant benefits to larger villages, but has limited impact in the smallest and remote villages.

The study, titled ‘Expanding Electricity Access Doesn’t Always Increase Wealth’, explores whether electricity access — which boosts GDP at the national level — improves lives in small communities.

“We found the answer to be ‘no’,” said co-author Fiona Burlig, an assistant professor at the Harris School of Public Policy.

“While we see large benefits to larger villages, bringing electricity access to the smallest, remote villages is expensive, and it does not necessarily lift them out of poverty,” she said.

“It may well be much more cost-effective to do smaller solar home systems or mini grids in small, remote locations and expand the grid to the larger villages,” she added.

Maharashtra village taps solar power to achieve self-reliance

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Bengal lagging in harnessing renewable energy potential: Study

Burlig and her co-author, Louis Preonas from the University of Maryland, studied the economic impacts of electrification in the context of India’s massive national rural electrification programme covering more than 400,000 villages.

Business generation

The researchers used the programme’s rules to conduct a natural experiment, comparing villages just large enough to be eligible for electricity access with those just too small to be eligible. They also compared villages before and after electrification.

The authors noted that India’s effort succeeded in significantly increasing electrification in villages, and in larger villages of 2,000 people or more, electrification led to doubling of per-capita expenditure, an increase of about $17 per month (₹1,428). But the size of the village is critical, they said.

They found that in small villages of 300 people, electrification didn’t drive economic growth. In fact, per-capita monthly expenditure barely changed.

Digging further, the researchers studied whether businesses developed in the communities after electrification, which could be one reason for an improvement in the economy — in the larger villages they found a 10 per cent increase in the number of firms and 9 per cent increase in the number of employees. However, this was not the case in the smaller communities.

Cost vs benefit

They also found that the village size matters when determining the gains, as the benefits received from electrification in larger communities outweigh the costs of electrifying the village. In fact, the 2,000-person villages saw a 33 per cent return on investment. This suggests that electrification is more effective in creating new income-generating opportunities in larger communities. There was zero return from electrification over 20 years in the 300-person villages.

“When policymakers are weighing whether to expand the power grid, they should carefully consider the size of the community and let that be their guide,” says Burlig. “There are immense economic benefits to electrifying larger villages, but the benefits drop with the size of the village. For the smaller villages, policymakers might want to try other strategies to reduce poverty,” she added.

Related Topics

• rural electrification
• economy, business and finance
• industry growth
• rural economy

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Murphy outlines plan to turn the dial on economic performance

Date published: 09 September 2024

Economy Minister Conor Murphy today launched his Department’s Three-Year Forward Look and 2024/25 Business Plan.

The Minister launched the publication at the latest Northern Ireland Chamber of Commerce and Industry Public Affairs Forum.

Following last week’s Executive announcement on the publication of the draft Programme for Government, the Minister outlined how the 41 actions contained in the publication will help turn the dial on our economic performance. 

He said: “Creating more Good Jobs will ensure that working families enjoy a decent standard of living. Increasing productivity will be the fundamental driver of overall living standards. Promoting regional balance ensures that everyone shares in the benefits of prosperity. And decarbonising will safeguard the planet for future generations. “In pursuit of these objectives my Department will tailor its interventions to the needs of specific sectors. It will develop clusters of businesses and gear its support to start-ups and local SMEs. It will take full advantage of the export opportunities created by Dual Market Access. And it will embrace the potential of the all-Ireland economy.”

The Minister explained that since taking office much work has already begun to ensure these objectives become a reality. He said:  “Action Plans have been published to grow seven of our most innovative, productive and export-orientated sectors. Co-design groups have been established to develop the tourism and social enterprise sectors. A consultation on a landmark Good Jobs Bill is underway. “A Taskforce is producing a plan for 10,000 students at Magee campus. College lecturers have been given a substantial pay uplift and a new £12million fund has been announced to address skills shortages. Licensing of onshore oil and gas exploration and production has been ended.”

He concluded:  “This 2024/25 Business Plan and three-year forward look sets out how, working in a spirit of partnership, we will continue this programme of change.” Suzanne Wylie, Chief Executive, Northern Ireland Chamber of Commerce and Industry, said: “We welcome the objective of the plan to deliver on the priorities set out by the Economy Minister earlier this year in his economic vision. They strongly align with NI Chamber’s core areas of focus including competitiveness, the future workforce and energy transition. "There is work to be done, and opportunities to realised, and at NI Chamber we look forward to continuing to facilitate that vitally important work through direct engagement with business and by presenting evidence based solutions for better growth. “What matters now is effective partnership, not just with the Department and the Minister, but with the Executive as a whole, to create an agreed competitive proposition of Northern Ireland as a place to work, do business, and invest.”

A copy of the Department’s Three-Year Forward Look and 2024/25 Business Plan is available on the DfE website . 

Notes to editors: 

1. The Department may take photographs and videos at announcements and events to publicise its work. Photographs, interviews, videos or other recordings may be issued to media organisations for publicity purposes or used in promotional material, including in publications, newspapers, magazines, other print media, on television, radio and electronic media (including social media and the internet). Photographs and videos will also be stored on the Department’s internal records management system. The Department will keep the photographs and recordings for no longer than is necessary for the purposes for which they have been obtained. The Department’s Privacy Policy is available on our website. 2. To keep up to date with news from the Department for the Economy you can follow us on the following social media channels:

X – @Economy_NI Facebook – @DeptEconomyNI Instagram – economy_ni LinkedIn – Department for the Economy NI   3. For media enquiries contact the Department for the Economy Press Office at [email protected]   4. The Executive Information Service operates an out of hours service for media enquiries only between 1800hrs and 0800hrs Monday to Friday and at weekends and public holidays. The duty press officer can be contacted on 028 9037 8110.

Latest news

• Murphy outlines plan to turn the dial on economic performance 09 September 2024
• Department for the Economy publishes Further Education Outcomes Report 05 September 2024
• Electricity Consumption and Renewable Generation in Northern Ireland: Year Ending June 2024 05 September 2024
• Competition to appoint eight new members to the Board of Northern Ireland Screen 05 September 2024

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CTO Realty Growth: Get Paid To Wait For The Valuation Discount To Close

• CTO Realty Growth is undervalued due to near-term debt concerns, presenting a buying opportunity as refinancing at favorable rates is likely with dropping interest rates.
• The REIT's portfolio focuses on high-quality properties in growth markets, with strong economic fundamentals and long-term leases, enhancing stability and income potential.
• Q2'24 results exceeded expectations, with top line growth driven by new property acquisitions and improving occupancy rates, indicating strong operational performance.
• Despite high leverage, CTO Realty Growth's low cost of capital and favorable refinancing prospects support its financial stability and potential for future growth.
• Trading wide of peer valuations, investors are getting paid a generous 8% dividend in the meantime, getting paid to wait.

Margarita-Young

Investment Thesis

CTO Realty Growth ( NYSE: CTO ) trades at a discount to peers because of near-term debt coming due as early as 2026, which, I believe, has made other investors avoid the company. In my view, this has created a buying opportunity for investors as the Series A preferred offering in April shows that the company has a low cost of capital and, with interest rates dropping, should be able to refinance at similar rates to existing debt instruments. With a decent quality portfolio of assets in strong markets, I'm issuing a 'buy' rating on the REIT, with investors being more than compensated for the risks today.

Company Overview

CTO Realty Growth is a shopping center real estate investment trust (REIT) that focuses on high quality retail properties . While most of the portfolio is retail, the company also has some office and industrial exposure, which provides some diversification to the REIT. What makes the company unique is that it is generally focused around growth markets in the Southeast and Southwestern United States. This includes markets like Atlanta, Dallas, Richmond, Jacksonville, and Raleigh, five cities where CTO Realty has 75% of their properties.

Geographic Presence (Annual Report)

These are markets characterized by strong economic fundamentals, above-average population growth, and higher income neighborhoods, compared to the rest of the United States. Most of the investments are income producing properties that have longer-term leases. Aside from the company's multi-tenant properties, nearly all of the single-tenant leases are typically in the form of triple or double net leases and ground leases. These lease structures generally require CTO Realty Growth's tenants to pay many of the associated expenses of the property (beyond just the rent for use and occupancy) which includes things like real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance, and capital expenditures.

Investor Presentation

In addition to its own portfolio of properties, the company also owns a 16% interest in Alpine Income Property Trust, Inc. ( PINE ), a publicly traded net lease REIT. This investment is worth approximately $37 million at current prices. In addition to dividends it receives from the shares that it owns, CTO Realty Growth also receives management fees for managing Alpine.

Q2'24 Results and Outlook

CTO Realty Growth reported its Q2'24 results on July 25 and results came in better than expected. During the quarter, total revenue came in at $28.8 million ($25.9 million from income properties), which was 10.7% higher compared to last year. Compared to analyst estimates , this came in $1.4 million above consensus estimates for a 5% beat.

Revenue (Company Filings)

Most of this growth came from purchases of new investment properties. So far in 2024, the REIT has acquired the Marketplace at Seminole Towne Center in Sanford, Florida ($68.8 million), a vacant 4k square foot parcel of land in Richmond, Virginia ($2.3 million), a property in Lake Worth, Florida ($10.0 million), and the Plaza at Rockwall, a multi-tenant income property located in Rockwall, Texas ($61.2 million), among others. Outside of new investment properties, same property NOI for the quarter increased 2% and 4% for the six-month period ending.

With a busy first half to start the year, CTO Realty Growth really puts the 'growth' in its name as it continues to acquire new properties which they can then lease to a tenant. An important characteristic of REITs is occupancy, which measures how effectively a REIT is utilizing its properties. Coming out of Q2'24, the REIT had physical occupancy of 92.6%, an increase of 230bps from year-end 2023 and leased occupancy of 94.6%. The 200 basis point spreads between physical and leased occupancy represents almost $5 million of future cash rents in nearly 6% of CTO Realty Growth's current in-place cash base rents.

Given the high and improving occupancy rates, CTO Realty Growth seems to be on the right track and the higher leased occupancy compared to physical occupancy should be accretive to FFO and earnings through 2025.

In terms of FFO, core funds from operations increased 7.8% to $10.4 million this quarter, slightly better than top line growth. This was a result of a slight improvement in NOI margin, and this showed up in FFO growth per share, growing from $0.43 in Q2'23 to $0.45 this quarter. However, when we consider that a $450k non-cash write-off of straight-line rents impacted FFO growth during the quarter, it's then perhaps not unsurprising to see that AFFO per share didn't improve much, remaining steady at $0.48. With dividends paid of $0.38 in May, the payout ratio is roughly 79% on AFFO.

FFO (Company Filings)

My general takeaway is that this was another good quarter for CTO Realty Growth. Such a conclusion is backed up by the fact that, given the results of this quarter, management has now increased the midpoint of their FFO per share guidance for the full year. Now, management is guiding for FFO per share in the range of $1.81 to $1.86.

I'm also bullish on the fact that the returns CTO Realty Growth is able to generate are well in excess of its current cost of capital. When we look at the balance sheet, the REIT ended the quarter with long-term debt of $484 million, against a cash position of just $5 million. This brought net leverage to 7.5x. And while that may seem high on an absolute basis, investors should consider the other factors that limit balance sheet risk.

For one thing, CTO Realty Growth had available liquidity of $155 million, so while the cash position may be small (and likely will continue to be given limited working capital needs), the company can access cash quickly through its revolver and other means. Secondly, as shown below, most of the maturities are laddered, but there are some near-term maturities coming due in 2026. The largest of the line items in long-term debt is the credit facility at $150 million, which has a maturity of 2027 and can likely be refinanced at an attractive rate. Lastly, with a weighted average cost of debt of 4.23%, CTO Realty Growth has a very low borrowing cost which enhances its financial stability and flexibility. This low cost of debt provides the REIT with an advantageous position for financing future growth or potential acquisitions of new properties, while also maintaining manageable interest expenses.

Long-term Debt (Company Filings)

As a further point to the company's low cost of capital, in April, the company issued 1.7 million shares of Series A preferred stock for net proceeds of $33.1 million. These preferreds yield less than 7%, which is notably lower than the prevailing market rates for similar instruments. This issuance further illustrates the market's confidence in CTO Realty Growth and its ability to secure favorable financing terms, as well as preferred and debt investors' confidence in the security and safety of the assets and the reasonable likelihood that they will be paid back.

Valuation and Wrap Up

CTO Realty Growth is one of the cheaper names in the retail REIT landscape. I think that this may be the result of an above-average leverage position and the fact that the company has debt maturing as early as 2026, which may have spooked some investors away from the company. But, if you're a believer like I am that interest rates are likely to continue to drop, this might not be so much of a risk going forward.

Already, mortgage rates are at the lowest levels they've been at since May 2023 and this is a trend that's expected to continue. Moreover, this effect could have a multiplier effect whereby not only does the cost of financing go down, but implied cap rates could also further shrink, thereby increasing the value of real estate assets. And given the fact that the Series A preferred shares were issued at the sub-7% level, it's a fairly safe bet in my view that the cost of debt will be well below this figure, given that debt sits above preferred in the capital structure. With this in mind, refinancing shouldn't be an issue for the company.

Even if one believes this to be a larger risk than what I'm suggesting, I think this risk is already being more than reflected in the current valuation of CTO Realty Growth. Why? For one thing, analysts seem to have a fairly muted view on growth going forward, with an average price target of just $20.71 , implying about 7.6% upside from today's price.

Seeking Alpha

In addition, the company's forward valuations of 10.5x P/FFO and 10.1x P/AFFO are well below the peer group. Compared to the group average, which includes names like SITE Centers ( SITC ), Federal Realty ( FRT ), InvenTrust Properties ( IVT ), Acadia Realty ( AKR ), and Urban Edge Properties ( UE ), trades for 14.5x P/FFO and 15.8x P/AFFO. Given such a wide disconnect in valuations, I'd expect that discount to close over time, as early as next year, when the company may choose to refinance that debt earlier than 2026.

In the meantime, investors are getting paid a 7.9% dividend to wait for that discount to close. With a quarterly dividend of $0.38, well covered by AFFO at a payout ratio below 80%, I think CTO Realty Growth is a great buy for investors looking for an undervalued real estate name that they can look to for a regular income stream.

This article was written by

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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