The Effects of Circular Economy, Green Finance and ICT Developments on Resource Productivity aimed Ecological Sustainability: Evidence from OECD Countries Using a CS-ARDL Approach

Abstract

OECD countries gained exponential economic growth over last two decades, now contributing over 60% of global GDP, however, this growth came with significant environmental costs, depleting natural resources at an alarming rate – material consumptions in these countries surged by 70% since 2000 – and raising critical question about these nations’ role to achieve SDGs by 2030. To address the critical need of maintaining ecological sustainability and resource productivity, this study examines the interplay of circular economy (CE), green finance (GF), and ICT developments (ICT) across 27 OECD countries from 2000 to 2022. We utilize the CS-ARDL econometric approach to explain the short-and long-term effects of circular economy (CE), green finance (GF), and ICT developments (ICT) on resource productivity (RP) and ecological sustainability (ES). Findings reveal CE’s dual impact, with initial short-term challenges – arising from resource-intensive infrastructure development – transforming into long-term benefits by reducing waste and improving resource efficiency. GF emerges as a robust driver, aligning investments toward green technologies and resource-efficient practices, fostering sustainability at scale. ICT developments exhibit a complex relationship, initially straining resources but later significantly enhancing RP and ES through advanced analytics, automation, and resource monitoring. Additionally, the study high-lights the role of environmental policy stringency, showing that CE, GF, and ICT are more effective in enhancing RP and ES under tight environmental policies, whereas relaxed policies lead to weaker sustainability outcomes. This study underscores the critical role of CE, GF, and ICT in addressing pressing global sustainability challenges, offering actionable insights for policymakers and stakeholders.