Sustainability catalysts and green growth: Triangulating evidence from EU countries using panel data, MMQR, and CCEMG

Abstract

Green Growth Strategies (GGS) are a win–win opportunity for not only the nation’s economy but also the environment. However, many countries are not concerned about reaping these benefits, and they continue to harm the environment for short-term gain, neglecting long-term sustainability. Southern European countries can utilize green growth policies to enhance their competitiveness, bypass older, more polluting technologies by directly adopting cleaner alternatives, and achieve economic and environmental progress. To address this concern, we analyzed 12 Southern European countries from 2010 to 2019, investigating how they can enhance their green growth performance by incorporating critical predictors. We employed panel data estimators, mean group (MG) to accommodate slope heterogeneity, and Common Correlated Effects Mean Group (CCEMG), which opens the opportunity to observe the influence of unobserved common factors and allows us to capture cross-sectional dependence and heterogeneous behavior better. We applied the Method of Moment Quantile Regression (MMQR) technique further as a robustness check to capture heterogeneous effects across the green growth distribution. The same methodology with ecological footprint data and implementation of the Generalized Method of Moments (GMM) has eliminated the endogeneity concern. The findings highlighted that educational attainment, globalization, and renewable energy consumption have positive influences on green growth. In comparison, trade openness and natural resource rent exhibit negative effects when we shift the methodology from MG to CCEMG, giving us a total of four significant factors to be concerned with. The study emphasizes the crucial importance of tailored policy approaches and regional collaboration in addressing environmental challenges effectively, and offers actionable insights for achieving green growth in the region by providing empirically grounded and practical recommendations that account for diverse socioeconomic contexts and ecological vulnerabilities.