Green total factor productivity and convergence in developing countries: analysis of sustainable growth patterns

Abstract

The economic growth of developing countries is thought to come at the cost of environmental degradation and resource depletion, as foreign investors tend to shift production from developed countries to developing countries due to low-cost labor, natural resource wealth, and weak environmental regulations. To achieve high-quality economic development, it is crucial to reduce energy consumption and associated environmental pollution while promoting technical efficiency and technological progress to improve green total factor productivity growth (GTFP). This study measures the GTFP growth in developing countries using the Global Malmquist-Luenberger Productivity Index method (GMLPI). GTFP provides a holistic measure of the balance between economic prosperity and environmental preservation, making it essential for promoting sustainable development. This study also conducts Beta convergence tests to assess whether nations with initially lower levels of green productivity growth are catching up with more advanced economies in terms of sustainable growth. The results suggest that developing nations should implement region- and income-sensitive green growth strategies, supported by international cooperation, innovation incentives, stronger environmental regulations, and inclusive policies to boost sustainable productivity.

Keywords

Green total factor productivity / Green growth / Beta convergence / Developing countries / Sustainable development

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