The Impact of a Green Transition Upon the Economic Growth of Countries: Where Theory Meets Practice

The chapter aims to look at both the theoretical and the empirical investigations of green economic growth. The concept of green economic growth implies decoupling greenhouse gas emissions from economic growth, i.e., that greening of the economy can go hand in hand with economic growth. However, there is no firm evidence to substantiate that this is possible. The argument in favor of a Green Economy relates to claims of its: enhanced efficiency under a state of zero pollution; the adoption of new technologies, innovations, and investments; and the effects of the environmental Kuznets curve when indicators of environmental degradation first rise and then fall as per capital income increases. The counterarguments relate to the laws of use of materials and energy. In the empirical part, this chapter aims at ascertaining the relationship between indicators affecting green economic growth of the Eurozone countries, while investigating the possible effect of environmental policies on macroeconomic variables such as GDP, investment, employment, and trade, while applying the panel vector autoregression (PVAR) econometric model. Based on the results, we cannot yet state explicitly that economic growth in the Eurozone countries has been decoupled from climate change mitigation; however, green transition is on the right track. JEL Codes: O44 (Environment and growth), Q5 (Environmental economics), E6 (Macroeconomic policy).