Is Resource Inefficiency Self-Reinforcing? Evidence From the European Union

Abstract

Domestic material consumption (DMC) remains a significant source of climate change as identified within the sustainable development goal twelve (SDG12) by the United Nations. This makes the need to further explore the DMC growth nexus more pertinent. Using key material indicators and macroeconomic variables from the European Union (EU-28), this study explored the dynamics of the relationship between material consumption and economic growth, using the Granger-type autoregressive distributed lag (ARDL) panel estimation technique and a data period from 2007-2017. This enabled a comparison of performance between low resource efficiency economy against top performers, in reference to SDG12 and resource productivity performance in the EU-28 member states. Findings show that countries with high levels of domestic material consumption, as proxied by the resource productivity index, tend to have a relatively lower impact of material use on economic performance, which can lead to a dangerous cycle of inefficiency.