EXPORT DIVERSIFICATION AND THE GREEN ECONOMY: THE KEY ROLE OF ECONOMIC RISK

Abstract

As countries propose to develop their green economy strategies to achieve sustainable development goals, many researchers and practitioners have analyzed the various factors affecting this special economy and how export diversification impacts the environment. However, there is limited knowledge about the link between export diversification and the green economy. Thus, this research study explored the impact of such diversification on the green economy by considering the role of economic risk. A new dynamic panel threshold approach was applied to the global panel data of 112 countries from 1995 to 2014. The results support the U-shaped correlation between export diversification and the green economy with an increase in economic risk. Export diversification tends to weaken the green economy when economic risk is at lower levels, but it improves the economy after reaching a certain level of economic risk. We also found that the green economy has a persistent effect over time. Under all economic risk levels, the previous level of green economy development promotes current green economy development. These findings thus provide policymakers with crucial implications.