Nexus between Government spending’s and Green Economic performance: Role of green finance and structure effect

Abstract

In response to the dual problems of global climate change and the economic crisis, the concept of the green economy has spread beyond environmental economics and into mainstream politics and business. The green Belt and Road Initiative (BRI) is a critical component of achieving a green transition in the regional economy, as well as a key component of the United Nations 2030 Agenda for Sustainable Development. We used data envelopment analysis and system GMM techniques to measure the association between Government expenditure and the green economic performance. This method uses panel data from 2008 to 2018 in selected BRI countries. The results show that the fluctuations in the green economic performance index of BRI countries are caused by the lack of serious government policies. Moreover, the econometric findings shows that government expenditure have positive significant effect on green economic performance. Furthermore, the analysis demonstrates that public expenditure on human capital and renewable energy leads to a productive green economy through labor, and technically advance developmental practices, with varying consequences in distinctive countries. This research also includes policy recommendations for BRI countries.