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Country-level Risk and Green Energy Transition: Evaluating Political Risk and Human Capital in OECD Economies

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  • Xinling Wang
  • Yufei Gan
  • Yun Zhou
  • Dingwen Si
  • Xiangying Cui
  • Jiale Yan

Abstract

In today's rapidly evolving world, the transition towards green energy remains momentous in attaining ecological sustainability. In this respect, the present study intends to elucidate factors influencing the green energy transition in OECD economies from 2004 to 2020. We use several diagnostic measures to validate the heterogeneity of slopes and cross-sectional dependence in the panel. Nevertheless, cointegration exists between the study variables, such as green energy, political risk, economic risk, financial risk, human capital, eco-innovation and energy efficiency. Using fixed effect and random effect approaches, we conclude that political risk, human capital and energy efficiency are significant and leading drivers of green energy transition in the region. However, economic expansion, financial risk and economic risk are significant barriers to transitioning towards green energy in the selected economies. The outcomes are robust, as authenticated by linear regression with a heteroskedastic panel-corrected standard error approach. We recommend the minimization of political, financial and economic risk, while improvements in environment-related R&D investment could further boost the transition process towards green energy.

Suggested Citation

  • Xinling Wang & Yufei Gan & Yun Zhou & Dingwen Si & Xiangying Cui & Jiale Yan, 2025. "Country-level Risk and Green Energy Transition: Evaluating Political Risk and Human Capital in OECD Economies," Politická ekonomie, Prague University of Economics and Business, vol. 2025(Spec.issu), pages 215-242.
    • Handle: RePEc:prg:jnlpol:v:2025:y:2025:i:spec.issuei.:id:1470:p:215-242
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    Keywords

    Green energy transition; political risk; human capital; financial risk; economic risk; eco-innovation; energy efficiency; economic growth;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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