GREEN GROWTH – A TECHNOLOGICAL SUCCESS OR AN OFFSHORING STORY? : Investigating Ecological Footprints of Production and Consumption

With the green growth strategies that are currently dominating the environmental agenda, the ability to decouple economic growth from environmental pressure is a condition for these to succeed. The vast body of literature that examine this relationship typically rely on narrow indicators of environmental pressure and neglect the environmental impact embodied in international trade. The present study overcomes these limitations by investigating the impact of economic growth on production- and consumption-based ecological footprints in an Environmental Kuznets Curve (EKC) framework, and further extends the analysis by examining the impact of new innovations, the expanding ICT infrastructure and the shift to renewable energy sources. With a panel data set consisting of 166 economies between 1991 and 2016, a fixed effects analysis is conducted for high-, middle- and low-income economies worldwide. The N-shaped EKCs found for high- and low-income countries suggest territorial environmental pressure to initially increase, later decrease and finally rise with income. However, while the temporary decrease can be derived to the high share of renewable energy among low-income countries, the decrease among the high-income group is likely achieved by solely offshoring production and thereby the environmental burden to other countries rather than reducing it, as the total impact stemming from consumption is found to strictly rise with income. Moreover, renewable energy is associated with environmental benefits among all income groups, while innovations and expanding ICT infrastructure display mixed results, being more beneficial among high-income countries. Lastly, no evidence of sustained absolute decoupling is found, and the results question previously confirmed EKCs that ignore the role of international trade by relying on production-based indicators alone