AccScience Publishing / AJWEP / Online First / DOI: 10.36922/AJWEP026180118
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ORIGINAL RESEARCH ARTICLE

Examining the growth-environment nexus in OECD countries in relation to factors that shape sustainable outcomes

Asma Basit1* ,  Farah Waheed2 ,  Lubna Maroof3
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1 Department of Marketing and Business, Bahria Business School, Bahria University, Islamabad, Pakistan
2 Department of Economics, Bahria Business School, Bahria University, Islamabad, Pakistan
3 Department of Accounting and Finance, Bahria Business School, Bahria University, Islamabad, Pakistan
AJWEP, 026180118 https://doi.org/10.36922/AJWEP026180118
Received: 27 April 2026 | Revised: 1 June 2026 | Accepted: 9 June 2026 | Published online: 6 July 2026
© 2026 by the Author(s). This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License ( https://creativecommons.org/licenses/by/4.0/ )
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Abstract

The study aims to empirically examine the dynamic linkages among financial development, foreign direct investment (FDI) inflows, economic growth, economic complexity, energy innovation, urbanization, renewable energy consumption, and environmental degradation across 37 Organization of Economic Cooperation and Development (OECD) economies from 1990 to 2024. The pooled mean group–autoregressive distributed lag approach measures long-run homogeneity while allowing short-run heterogeneity. The empirical estimates highlight the need for OECD countries to improve environmental performance across key sectors, such as finance and urbanization. This will help mitigate degradation through eco-friendly technologies. In the short run, however, urban activities and FDI fail to meet environmental standards. Thus, OECD economies need to reduce degradation, protect biodiversity, and use resources efficiently. The study makes a significant contribution to the literature by examining key financial, economic, and environmental factors for OECD countries.

Keywords
Financial development
Environmental degradation
Economic complexity
Renewable energy
Energy innovation
Foreign direct investment
Funding
None.
Conflict of interest
The authors declare they have no competing interests.
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Asian Journal of Water, Environment and Pollution, Electronic ISSN: 1875-8568 Print ISSN: 0972-9860, Published by AccScience Publishing
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