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Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: 31 July 2025 | Viewed by 29341

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Special Issue Editors

Dr. Bruce Morley

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Guest Editor

Department of Economics, University of Bath, Bath BA2 7AY, UK
Interests: macroeconomics; financial economics; environmental economics
Special Issues, Collections and Topics in MDPI journals

Dr. Alistair Hunt

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Guest Editor

Department of Economics, University of Bath, Bath BA2 7AY, UK
Interests: environmental economics; health economics
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The aim of this Special Issue is to analyse how macroeconomic policies can enhance sustainable economic growth. Many countries have experienced booms and busts in their economies due to the use of unsustainable policies such as sharp fiscal expansions. The more successful economies have followed policies that have ensured steady increases in productivity and innovation, enabling steady and predictable growth rates. The main policies used to ensure sustainable growth are policies on innovation, improvements in human capital and skills, supply-side policies, international treaties and appropriate fiscal policies including environmental taxes or subsidies and monetary policies. We welcome the submission of theoretical or empirical studies as well as reviews.

The main aim of this Special Issue is to analyse macroeconomic policies and approaches that can ensure economic growth and development is sustainable, either through ensuring long-run stable growth or environmentally friendly growth. This fits the journal’s themes on sustainability in terms of the environment but also enabling economic growth to be stable and sustainable. In particular, the Issue is aligned with the themes of ‘Development and realization of national policies and international treaties for sustainable development’ and the ‘Implementation and monitoring of policies for sustainable development’.

In this Special Issue, original research articles and reviews are welcome. Research areas may include (but are not limited to) the following:

- Empirical or theoretical analysis of the determinants of sustainable economic growth in samples of emerging economies.

- Studies on the causal links between economic growth and macroeconomic policies—for instance, causal links between renewable energy spending and investment and economic growth.

- Reviews of studies on macroeconomic policies, economic growth and the environment.

- Environmental Kuznets curve and how policies affect pollution.

- The effects of trade policies on sustainable economic growth.

- Whether environmental damage affects sustainable growth.

We look forward to receiving your contributions.

Dr. Bruce Morley
Dr. Alistair Hunt
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

macroeconomics
environment
economic growth
emerging economy
sustainable economic growth
environmental economics

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Published Papers (10 papers)

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Research

19 pages, 696 KiB

Open AccessArticle

Examining the Environmental Phillips Curve Hypothesis in the Ten Most Polluting Emerging Economies: Economic Dynamics and Sustainability

by Goktug Sahin, Mustafa Naimoglu, Ismail Kavaz and Afsin Sahin

Sustainability 2025, 17(3), 920; https://doi.org/10.3390/su17030920 - 23 Jan 2025

Cited by 1 | Viewed by 1199

Abstract

In the context of the Environmental Phillips Curve hypothesis, this study investigates the impact of unemployment on environmental quality in ten emerging economies with the highest carbon emissions, as identified in the International Monetary Fund’s 2015 World Economic Outlook. The primary aim of this study is to estimate the effects of income, natural gas usage, renewable energy usage, unemployment, and population size on carbon dioxide emissions in the selected countries. The study utilizes panel data from 1990 to 2019 and employs an Autoregressive Distributed Lag model (ARDL) to evaluate the short- and long-run relationships between these variables. Findings obtained using the Pooled Mean Group (PMG) estimator indicate that both income and population size have a significant positive impact on air pollution levels, whereas natural gas consumption and the use of renewable energy correlate with a decrease in emissions. The results support a negative correlation between unemployment and environmental degradation, aligning with the EPC. The error correction term suggests that the process returns to equilibrium in about 2.8 years. The findings are validated through robustness tests utilizing the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators. This study offers important insights for environmental policymaking in these emerging economies, emphasizing the importance of sustainable development strategies and green energy adoption. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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22 pages, 611 KiB

Open AccessArticle

The Impact and Mechanism of New-Type Urbanization on New Quality Productive Forces: Empirical Evidence from China

by Xiaotian Gao, Xiangwu Yan, Sheng Song and Ning Xu

Sustainability 2025, 17(1), 353; https://doi.org/10.3390/su17010353 - 6 Jan 2025

Cited by 1 | Viewed by 1347

Abstract

The development of new-type urbanization (NTU) represents a crucial strategic approach to fostering new drivers of economic growth. Despite its importance, limited research has explored the effects and underlying mechanisms through which NTU influences new quality productive forces (NQPFs), key indicators of emerging economic dynamism. Addressing this research gap, the present study analyzes panel data from 283 Chinese cities spanning from 2009 to 2022, applying a difference-in-differences (DID) model to empirically evaluate the impact of the New-Type Urbanization Pilot Policy (NTUPP) on NQPFs. The findings reveal that the NTUPP has a significant positive effect on NQPFs, a conclusion that is supported by a series of robustness and endogeneity checks. Specifically, the NTUPP’s implementation corresponds to an average increase of 1.1% in NQPFs. The policy facilitates NQPF growth primarily through mechanisms such as talent agglomeration and optimal resource allocation. Notably, the NTUPP is particularly effective in boosting NQPFs at lower initial levels. Since NQPFs inherently reflect green productivity, NTU’s emphasis on green, low-carbon, and civilizational features markedly amplifies the policy’s positive impact on NQPFs, while NTU’s focus on smart urbanization aspects appears to mitigate this effect. These findings contribute valuable empirical insights from the Chinese context, highlighting the potential of NTU to accelerate new economic growth drivers. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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24 pages, 539 KiB

Open AccessArticle

The Impact of Economic Policy Uncertainty and Geopolitical Risk on Environmental Quality: An Analysis of the Environmental Kuznets Curve Hypothesis with the Novel QRPD Approach

by Ibrahim Cutcu, Ali Altiner and Eda Bozkurt

Sustainability 2025, 17(1), 269; https://doi.org/10.3390/su17010269 - 2 Jan 2025

Viewed by 2018

Abstract

This study aimed to determine the impact of economic policy uncertainty and geopolitical risk on environmental quality in 17 selected countries. In addition, it also aimed to test the environmental Kuznets curve hypothesis (EKC) within the scope of the determined variables and model. In this context, analyses were carried out with annual data for the period 1997–2022, based on the country group for which the economic policy uncertainty index was calculated, subject to data limitations. In this study, a Quantile Regression of Panel Data (QRPD) analysis, OLS (Ordinary Least Squares), and a panel causality test were used. As a result of the estimation with the Quantile Regression of Panel Data (QRPD), it was found that the increase in economic policy uncertainty had a positive effect on environmental quality in most of the quantiles, while geopolitical risk had significant and negative effects on environmental quality in the medium and high quantiles. The validity of the EKC hypothesis was also proved in the analysis. According to the results of the panel causality test, there was a bidirectional causality relationship between environmental quality and all the independent variables, except the square of economic growth. In order to make a comparison with the new-generation estimation method, QRPD, it was observed that the estimation results with the classical regression method, OLS, were similar. In light of these findings, it is recommended that policy makers pursue strategies that balance economic growth and environmental quality, reduce the environmental impacts of geopolitical risks, and favor a renewable energy transition. Moreover, long-term and stable environmental policies have a crucial role in the success of these strategies. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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25 pages, 1614 KiB

Open AccessArticle

Understanding the Role of Financial Literacy in Enhancing Economic Stability and Resilience in Montenegro: A Data-Driven Approach

by Ivana Katnic, Milorad Katnic, Marija Orlandic, Marija Radunovic and Ilija Mugosa

Sustainability 2024, 16(24), 11065; https://doi.org/10.3390/su162411065 - 17 Dec 2024

Cited by 2 | Viewed by 4955

Abstract

Financial literacy has emerged as a crucial factor in promoting economic stability and resilience, particularly in Montenegro. With the increasing complexity of financial products and the growing need for individuals to make sound financial decisions, the importance of financial literacy cannot be overstated. This study employs a quantitative, survey-based approach to explore the association between financial literacy levels and measures of economic stability, including savings rates, active debt management, and access to financial products. Data were collected through a representative, two-stage stratified sample of 1000 Montenegrin adults aged 18–79, ensuring comprehensive geographic coverage across all Montenegrin municipalities and balanced representation by gender and age. This stratification enables a detailed analysis of financial literacy trends across the population. Correlation analysis reveals that higher levels of financial literacy are associated with better financial practices, such as increased savings and responsible credit use, thereby enhancing economic resilience at the household level. Moreover, improved financial literacy contributes to sustainability by fostering long-term financial stability, reducing inequalities, and promoting inclusive economic growth. The findings suggest that financial literacy can mitigate the impact of economic shocks, emphasizing the need for policies that promote financial education as a tool for sustainable development. This study contributes to the literature on financial literacy in emerging economies and offers actionable insights for policymakers in Montenegro and similar contexts, highlighting financial education as a pathway to individual and national economic resilience. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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24 pages, 3440 KiB

Open AccessArticle

Do Financial Development, Institutional Quality and Natural Resources Matter the Outward FDI of G7 Countries? A Panel Gravity Model Approach

by Samira Ben Belgacem, Moheddine Younsi, Marwa Bechtini, Abad Alzuman and Rabeh Khalfaoui

Sustainability 2024, 16(6), 2237; https://doi.org/10.3390/su16062237 - 7 Mar 2024

Cited by 2 | Viewed by 2786

Abstract

Given the global growth of foreign capital flows, foreign investments hold significant potential for achieving sustainable development. Thus, this paper aims to highlight the key factors of FDI. In particular, it analyzes the effects of financial development and natural resources on FDI and how institutional quality and institutional distance can moderate these effects. The study used the dynamic panel gravity framework with two-step system GMM estimators to assess whether the developed financial system, better institutions, and possessing natural resources influence the outward FDI of G7 countries to host countries over the period 2002–2021. The results show that a well-developed financial system and well-functioning institutions in host countries are important prerequisites for FDI inflows. We find that the relationship between financial development and FDI is positively and significantly moderated by both institutional quality and institutional distance. Contrarily, these factors negatively moderate the connection involving natural resources and FDI. The significant negative association between institutional indicators’ interaction with natural resources indicates that natural resources play a key role in FDI, while joint policies for institutions and natural resources considerably decrease FDI inflows. Moreover, we discover that factors like GDP per capita, logistics infrastructure, and population could attract and handle more FDI. Based on the findings, the study recommends that host governments should focus on policies that strengthen the financial system, reduce institutional and legislative barriers, and enhance institutional quality and business environment to grant foreign investors access to all areas of their economies. Moreover, host governments should brand separate policies for institutions and natural resources to improve their economic advantages. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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31 pages, 711 KiB

Open AccessArticle

Reexamining the Impact of Global Value Chain Participation on Regional Economic Growth: New Evidence Based on a Nonlinear Model and Spatial Spillover Effects with Panel Data from Chinese Cities

by Can Li, Qi He, Han Ji, Shengguo Yu and Jiao Wang

Sustainability 2023, 15(18), 13835; https://doi.org/10.3390/su151813835 - 17 Sep 2023

Cited by 5 | Viewed by 2915

Abstract

This study utilizes panel data drawn from 239 Chinese cities, and it employs fixed-effects models, mediation models, and spatial spillover models to reexamine the actual impact of the global value chain’s (GVC) participation on regional economic growth. The findings reveal that this impact exhibits a U-shaped nonlinear pattern, with the turning point of GVC occurring at 0.45, which is higher than that of 222 cities. Most cities are on the left side of the U-shaped curve, which corresponds with the second stage of the “in-out-in-again” GVC participation pattern (i.e., the “out” stage). During this stage, a decline in foreign value-added ratio (FVAR), with regard to exports (accompanied by an increase in the domestic value-added ratio), promotes economic growth. Innovation capability acts as a mediator in the relationship between GVC participation and economic growth. Furthermore, GVC participation has significant spillover effects on neighboring cities, with siphon and spillover effects coexisting. Thus, China should focus on establishing domestic value chains and innovation systems, achieving relative independence from existing GVCs dominated by developed countries, enhancing indigenous innovation capabilities, and laying the foundation for the third stage (in-again) of reintegration into GVCs, at the high value-added end, to achieve a higher level of openness. This study explores the nonlinear impact of GVC participation on regional economic growth in China from both theoretical and empirical perspectives, focusing on the finest divisions that remain feasible—cities. This approach expands and supplements the relevant field of research in valuable ways, yielding more realistic research conclusions and policy recommendations. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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20 pages, 370 KiB

Open AccessArticle

Human Capital and Non-Renewable Natural Resources in Latin America and the Caribbean: ‘Is It a Curse or a Blessing’?

by Néstor Le Clech, Juan Carlos Guevara-Pérez and R. Urdaneta-Camacho

Sustainability 2023, 15(15), 11875; https://doi.org/10.3390/su151511875 - 2 Aug 2023

Cited by 4 | Viewed by 2000

Abstract

This study examines the role of non-renewable natural resources in the accumulation of human capital in a sample of eighteen Latin American and Caribbean countries from 1995 to 2018. We assess the influence of non-renewable resources through six distinct variables and employ panel data co-integration techniques (PMG-ARDL). Our findings reveal a positive long-run effect, whether measured by abundance or dependence indicators. Even in cases where negative short-run effects are observed, the positive impact is consistent in the long term. Furthermore, physical capital stock, institution quality, and a more open economy are the most important drivers of human capital accumulation in the region. Although the long-run effect of non-renewable natural resources on human capital was positive, the estimated elasticities account for a relatively low effect. Consequently, even in the absence of the ‘curse’ effect, we do not deem it appropriate to consider these results as a blessing. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

14 pages, 523 KiB

Open AccessArticle

Evaluating the Outcomes of Monetary and Fiscal Policies in the EU in Times of Crisis: A PLS-SEM Approach

by Aleksandra Fedajev, Danijela Pantović, Isidora Milošević, Tamara Vesić, Aleksandra Jovanović, Magdalena Radulescu and Maria Cristina Stefan

Sustainability 2023, 15(11), 8466; https://doi.org/10.3390/su15118466 - 23 May 2023

Cited by 3 | Viewed by 2468

Abstract

The asymmetric level of integration within the European Union (EU) regarding membership in the European Monetary Union (EMU) has resulted in inconsistent responses to crises such as the Great Recession of 2007–2009 and the European sovereign debt crisis of 2010–2013. Furthermore, it has led to varying outcomes of monetary and fiscal policies implemented across EU countries. This paper aims to investigate the impact of monetary and fiscal policies on economic development and employment through the inflation channel in the EU between 2007 and 2015, using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that the outcomes of monetary policy have been mixed between EMU and non-EMU countries, resulting in different measures and negative spillover effects of the European Central Bank’s (ECB) policy on countries outside of the EMU. Meanwhile, the ability of fiscal policy to lower inflation and boost economic growth and employment has been limited, which means that the impact of fiscal policy on both economic development and employment and inflation has been minor. Based on the findings of this study, there should be better coordination of monetary and fiscal policies at the EU level to support the macroeconomic stability of the Union during times of crisis. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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21 pages, 1132 KiB

Open AccessArticle

The Effects of Monetary Policy on Macroeconomic Variables through Credit and Balance Sheet Channels: A Dynamic Stochastic General Equilibrium Approach

by Pejman Peykani, Mostafa Sargolzaei, Amir Takaloo and Shahla Valizadeh

Sustainability 2023, 15(5), 4409; https://doi.org/10.3390/su15054409 - 1 Mar 2023

Cited by 9 | Viewed by 5585

Abstract

Economic policies aimed at managing economic variables in the short and long term have always been of special importance. These policies seek to reduce economic fluctuations in the short term and increase sustainable economic growth in the long term. One of these policies is monetary policy, which is mainly carried out by central banks worldwide. This paper uses the Keynesian Dynamic Stochastic General Equilibrium (DSGE) model to examine the effects of monetary policy on the real variables of the Iranian economy through the credit channel and the balance sheet channel. The presented model analyzed information about macroeconomic variables in Iran for the period from 1990 to 2020. The obtained results show that with the implementation of restrictive monetary policy in the economy, all productive activities of enterprises decreased, and this led to a decrease in household income, which in turn reduced household savings in the form of bank deposits. Because the most important sources of financing for banks are deposits, the ability of banks to offer loans was reduced. On the other hand, a restrictive monetary shock was associated with a decline in the value of corporate securities. As a result, the amount of received loans by firms was reduced by the value of the assets. This reduced the demand of banks for bank loans, which intensified the effects of the initial shock, along with a reduction in the banks’ ability to provide lending services. Further, the results indicate the relative success of the model in simulating Iran’s macro economy. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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15 pages, 1752 KiB

Open AccessArticle

Precautionary Saving and Liquidity Shortage

by Guohua He and Zirun Hu

Sustainability 2023, 15(3), 2373; https://doi.org/10.3390/su15032373 - 28 Jan 2023

Viewed by 1801

Abstract

Most of the canonical macroeconomic models simulate liquidity anomalies by changing the economic fundamentals or adding massive financial shock to firms’ collateral constraints, but a few facts somehow tell a different story. Instead of relying on the exogenous shocks, we introduce uncertainty into an otherwise classical liquidity framework and try to answer what worsens the aggregate liquidity in the absence of exogenous simulations and what a firm dynamics and financing strategy would be. Our analysis shows that (1) uncertainty induces agents to make decisions under the worst-case scenario and hence generates a unique expectation threshold that drags market (or firms) liquidity from sufficiency to insufficiency even without any shock or economic changes. (2) Precautionary saving occurs before the real liquidity shortage as the expectation shifts, causing firms to secure external financing by raising the equity issuing price and hoarding liquid assets, such as fiat money, against liquidity tightening. (3) To achieve liquidity stability and sustainability, an extra mathematical constraint is supplemented for the uniqueness and the existence of equilibrium under uncertainty. Other properties of firms’ intertemporal allocations, such as the bid-ask spread and return of holding of the illiquid asset, are derived. Moreover, some approaches for further empirical research are discussed. Full article

(This article belongs to the Special Issue Macroeconomic Policies and Sustainable Economic Growth in Emerging Countries)

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