Research on World Agricultural Economy

How CO₂ Emissions and Agriculture Shape Economic Growth: Evidence from OECD Countries

Son Lam Nguyen

School of Finance and Accounting, Industrial University of Ho Chi Minh City, Ho Chi Minh City 70000, Vietnam

Anh Hong Thi Nguyen

School of Finance and Accounting, Industrial University of Ho Chi Minh City, Ho Chi Minh City 70000, Vietnam

Hop Van Vo

School of Finance and Accounting, Industrial University of Ho Chi Minh City, Ho Chi Minh City 70000, Vietnam

DOI: https://doi.org/10.36956/rwae.v6i3.1838

Received: 10 March 2025 | Revised: 3 April 2025 | Accepted: 22 April 2025 | Published Online: 26 June 2025

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Abstract

This study analyzes the impact of agriculture and CO₂ emissions on economic growth in OECD countries over more than two decades from 2000 to 2023. Using the two-step SGMM estimation method, the results show that agriculture positively influences economic growth in both the short and long run, with GDP increasing by 0.225% and 0.532%, respectively, as agricultural output rises. Additionally, CO₂ emissions also have a positive effect on economic growth, reflecting the crucial role of industries in driving GDP. However, in the long run, uncontrolled emissions may harm the environment and increase economic costs. Furthermore, trade openness is found to be a growth-enhancing factor, while energy consumption negatively affects economic growth, highlighting the need for improved energy efficiency and a transition to renewable energy sources. In addition, when analyzing the data by region, the results show that OECD member countries in the European region have reduced CO₂ emissions more strongly than the Americas and Asia-Oceania regions, while the economic development of the Americas and Asia-Oceania regions depends on agriculture since the Covid 19 pandemic or agriculture contributes more to economic growth than in member countries in the European region. The study suggests policies such as applying advanced technologies in agriculture, imposing carbon taxes, and increasing investment in renewable energy to achieve sustainable economic growth in OECD countries.

Keywords: Agriculture; CO₂ Emissions; Economic Growth; OECD; SGMM

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