The sustainability of remarkable growth in emerging economies

The remarkable GDP growth along with the dramatic increases in energy consumption and pollution emissions in emerging economies raise the concerns for the sustainability of their development pattern. However, the precise role of how energy and environment contribute to economic growth in emerging economies is still unknown. This paper explores the sustainability of remarkable GDP growth in emerging economies by using non-radial directional distance function (NDDF) to identify the sustainable total-factor productivity (STEP) growth in the emerging economies and comparing it with that in developed economies. Our research extends previous literature by highlighting the roles of energy and environment in economic growth. The results raise the concerns on the sustainability of the remarkable GDP growth (especially after 2000) in emerging economies due to their slow STFP growth after excluding the contributions from energy and environment. Furthermore, it is also found that compared with developed economies, the slower STFP growth in emerging economies is mainly caused by their disadvantages in innovation, although they are able to utilize existing technology by catch-up effect. Besides, analysis from the group heterogeneity among Asia, Eastern Europe and Latin America gives a better grasp of implications for stimulating the sustainable growth in emerging economies by promoting technology spillover from developed economies.