Weak Spots and Proper Modification of Mainstream Convergence Methodology: Evidence from a Global Ecological Footprint (EF) Panel

Abstract The paper searches for the most appropriate and consistent econometric modeling of ecological footprint (EF) convergence. By identifying the weak spots and limitations of mainstream methodology, it highlights potential risks that may arise for academics and policymakers, when investigating the gap between the contribution of industrialized and developing nations on ecological burden. The analysis is novel on the grounds that it proposes the modification of the traditional Phillips-Sul (PS) approach by incorporating the club merging algorithm of von Lyncker and Thoennessen (vLT). Empirical outcomes for the two methods verified the superiority of the vLT algorithm in scrutinizing both global and regional EF convergence and producing econometrically robust and homogenous convergence clubs with more rational country distribution. In the world dataset, the vLT algorithm did not allow country divergence, while contrary to other similar studies, it prevented the categorization of countries documented by Global Footprint Network (2024) as fairly poor EF performers in resource-efficient clubs and vice versa. Additionally, the vLT algorithm managed to improve initial PS club formation in 3 out of 6 major geographic zones (set by the World Bank according to geopolitical criteria), reducing or even eliminating the number of countries remaining unclassified, while maintaining statistically sound final clubs. Interestingly, several nations considered frontrunners in RES deployment, and low carbon emissions rates were placed by the vLT algorithm within the least ecologically sustainable club. The rational formation of the generated EF clubs was further verified by the estimated marginal effect of certain key club membership determinants since econometric outcomes of ordered-logit analysis were in full harmony with economic theory and relevant bibliography. The overall empirical analysis reveals new evidence relative to certain environmental strategies impeding green transition. Concretely, prestigious international organizations, like the United Nations (UN) and the European Union (EU), are recommended to avoid horizontal policies. Instead, they are advised to plan all long-term ecological conservation targets and universal environmental initiatives and treaties based on individual member states’ development stage, natural resource (NR) dependence, and environmental performance.