Essays on the Political Economy of Growth and the Ecological Transition

This PhD dissertation unfolds essentially within a political economy approach, in which the innate connection between economics and politics permeates the discussion alongside its two main research topics: economic growth and the ecological transition. The core background draws from the Classical-Keynesian perspective to growth theory, which is combined with Comparative Political Economy and Ecological Macroeconomics approaches to build an interdisciplinary framework to address political, social and environmental aspects in the course of the work. Accordingly, the objectives of this dissertation span over multiple research questions. The discussion begins within the growth models perspective, engaging with an interdisciplinary research agenda that bridges Post-Keynesian Economics and Comparative Political Economy, with a particular focus on export competitiveness. In this approach, growth models or strategies are shaped by specific political and economic relations that influence macroeconomic policy and patterns of growth. These strategies are rooted in the institutional and political configuration of the economy, which, in turn, determines the prominence of different growth drivers. While this research agenda has gained increasing attention, there remains a lack of consensus on how growth models should be operationalized and classified. In this dissertation, it is argued that demand-led growth accounting identifies which expenditures are most prominent in stimulating economic production, while growth driver analysis examines what motivates this spending. Together, these approaches provide a solid framework for analyzing the political economy of growth and its determinants. The urgency of the ecological transition, alongside the conflictual perspective around economic growth's environmental implications in the ecological macroeconomics literature, leads this dissertation to a further step: integrating economic growth with ecological macroeconomics. From an ecological perspective, continuous growth is incompatible with the environmental boundaries. From a political economy perspective, the absence of economic growth entails serious socio-economic issues considering structural and sizable unemployment in capitalist economies, being particularly critical for developing countries that have not yet attained a certain level of material well-being. Hence, the shift towards environmental concerns is gradual, although not fortuitous. In this context, it is fundamental to integrate ecological aspects into the macroeconomic modeling framework. Rather than engaging in the normative debate on whether growth is desirable, this dissertation acknowledges that growth is inherent to capitalist economies and argues that growth models should be adapted to embody environmental relations and address the ecological transition. Expanding renewable energy supply is crucial to unlocking this transition, highlighting the need to integrate energy production into growth models. To this end, an analytical framework is developed by incorporating the energy sector within a demand-led growth model. While economic growth remains demand-driven, the feasibility of the green transition is ultimately constrained by the availability of renewable energy, underscoring the interplay between demand-led growth dynamics and energy supply constraints. In the theoretical model, green public expenditures are assumed as a key mechanism to expand renewable energy capacity and, consequently, unlocking the energy transition. Therefore, the relationship derived from the analytical model paves the way for an empirical investigation into the effectiveness of different policies on renewable energy diffusion. In this context, how public investment in energy R\&D affects renewable energy deployment remains largely unexplored in the empirical dimension. In addition to public direct investment in energy R\&D, the analysis considers conventional policies such as emissions taxes (price incentives) and regulatory measures. Accordingly, facing the challenge of a rapid decarbonization of the economy as a concrete problem requires substantial investments in infrastructure and innovation. These investments demand large volumes of resources and entail high risks and uncertain returns, which often discourage private investment. In this context, public direct investment emerges as an instrument capable of playing a key role in mitigating these risks, mobilizing private resources, and generating positive spillovers to expand renewable energy capacity and shape the broader energy transition. Beyond contributing to the empirical literature on environmental policy effectiveness, this discussion extends to the political economy of the ecological transition, as disputes over how much to spend and where to allocate public resources highlight that these are inherently political decisions. Ultimately, just as growth strategies are shaped by coalitions of actors with conflicting policy preferences, so too are climate actions. Likewise, the institutional and political configurations that sustain a given growth strategy also influence how countries respond to climate change. Therefore, while this dissertation transitions from analyzing growth determinants to incorporating environmental concerns, the political economy approach provides the overarching framework throughout. The dissertation is structured as follows. The first essay proposes a comprehensive theoretical framework for operationalizing growth models within comparative political economy. It argues that demand-led growth accounting, inspired by the Sraffian supermultiplier model, and the growth driver investigation approach are complementary, together providing a robust framework within the growth models perspective. The empirical investigation consists of two steps. First, demand-led growth accounting is used to examine the economic performance of a sample of emerging economies before and after the 2008–2009 global economic crisis. Exports were the primary source of growth for all these economies before the crisis. The overall decline in exports following the crisis was accompanied by lower average growth rates, underscoring the importance of understanding export competitiveness factors to explain growth dynamics in these economies. Thus, in the second step, panel data estimations analyze export drivers. The second essay develops an analytical model that examines the transition to a low-carbon economy by integrating demand-led growth dynamics with energy supply constraints. While energy production in the ecological macroeconomics literature has typically been modeled within supply-driven growth frameworks, the novelty of this article lies in incorporating the energy sector into a demand-led growth framework. Specifically, the model builds on a Sraffian supermultiplier structure with two autonomous demand components: business-as-usual and green government expenditures. Investment and capital stock consist of both green and conventional components, and growth and energy dynamics are linked through a green investment equation, which introduces a constraint on green capital stock accumulation based on the availability of renewable energy. Consequently, while economic growth remains demand-driven, the feasibility of the ecological transition is supply-constrained. The transitional behavior and long-run dynamics of the model are explored through numerical simulations. The third essay investigates the impact of different policy approaches on renewable energy generation, the share of renewables in primary energy, and climate change mitigation, categorizing them into three forms of state intervention: conventional emissions taxes (price incentives), regulatory measures, and public direct investment in energy R\&D—an underexplored aspect in the empirical literature. Using data from 22 OECD economies (1995–2023), the empirical analysis applies panel cointegration techniques through an autoregressive distributed lag model (panel-ARDL) to assess policy effectiveness. This study contributes to the empirical literature on environmental policy effectiveness and the determinants of renewable energy diffusion by examining the role of public investment in energy R\&D. At the same time, it fosters a broader discussion on the political economy of the ecological transition, particularly the role of the state and the threat posed by fiscal austerity premises.