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Innovation, militarization, and renewable energy and green growth in OECD countries

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Abstract

Within a framework that includes economic activity, real interest rate, grants, and subsidies, we aim to explore the role of renewable energy, technological innovation, and particularly the environmentally damaging militarization in driving green growth, which fosters sustainable economic growth by ensuring the values of natural assets, considering OECD countries. Our examination affirms a positive proposition between the development of renewable energy, technological innovation, and green growth in the long run by implementing the cross-sectional dependency panel autoregressive-distributed lags (CS-ARDL) framework in a dynamic heterogeneous panel setting. The findings also suggest that militarization is antagonistic to green growth. Our decomposed analysis is compatible with our premier analysis, indicating a conducive impact of both biomass and non-biomass types of renewable energy on green growth. We also document a negative association between the real interest rate (RIR) and green growth, while income muddles the results. The robustness tests confirm the sensitivity of our main findings to the magnitude of the subsidies and grants provided to renewable energy. The paper concludes with several policy recommendations.

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Notes

  1. Imperatives, S., Report of the World Commission on Environment and Development: Our Common Future (United Nations, Oslo, 1987).

  2. The theory of “Creative Destruction” has been attributed to the Austrian-American Economist Joseph Schumpeter since the 1950’s. Schumpeter has named it as the theory of economic innovation and business cycle.

  3. We consider three types of renewable energy: RE, BIO and NBIO.

  4. We exclude the following 14 countries based on these two criteria: The first is their recent inclusion in the 35 member OECD, and the second is the unavailability of relevant data on real interest rate and disaggregated renewable energy data. These countries are: Estonia, Chile, Hungary, Iceland, Czech Republic, Israel, Japan, Korea, Latvia, Lithuania, Poland, Slovak Republic, Slovenia, and Turkey. Appendix table 8 presents a list of those countries.

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Authors and Affiliations

  1. Graduate School of Economics and Management, Ural Federal University, Yekaterinburg, Russia

    Kazi Sohag

  2. Department of Economics, University of Western Australia, Perth, Australia

    Shaiara Husain

  3. Lebow College of Business, Drexel University, Philadelphia, PA, USA

    Shawkat Hammoudeh

  4. Institute of Business Research, University of Economics, Ho Chi Minh City, Vietnam

    Shawkat Hammoudeh

  5. Accounting Research Institute (ARI), Universiti Teknologi MARA, Shah Alam, Malaysia

    Normah Omar

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  1. Kazi Sohag
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  2. Shaiara Husain
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  3. Shawkat Hammoudeh
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  4. Normah Omar
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Contributions

Kazi Sohag: conceptualization, simulation, and editing; Shaiara Husain: writing—original draft. Shawkat Hammoudeh: conceptualization, editing and supervision. Normah Omar: editing.

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Correspondence to Kazi Sohag.

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Appendix

Appendix

Table 7 Data, definitions and Sources
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Table 8 List of countries in the sample
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Sohag, K., Husain, S., Hammoudeh, S. et al. Innovation, militarization, and renewable energy and green growth in OECD countries. Environ Sci Pollut Res 28, 36004–36017 (2021). https://doi.org/10.1007/s11356-021-13326-6

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