Sustainable development and openness in oil-exporting countries: Green growth and brown growth

Shirazi, Jalil Khodaparast; Taghvaee, Vahid Mohamad; Nasiri, Mohamad; Assari Arani, Abbas Article Sustainable development and openness in oil-exporting countries: Green growth and brown growth Journal of Economic Structures Provided in Cooperation with: Pan-Pacific Association of Input-Output Studies (PAPAIOS) Suggested Citation: Shirazi, Jalil Khodaparast; Taghvaee, Vahid Mohamad; Nasiri, Mohamad; Assari Arani, Abbas (2020) : Sustainable development and openness in oil-exporting countries: Green growth and brown growth, Journal of Economic Structures, ISSN 2193-2409, Springer, Heidelberg, Vol. 9, Iss. 40, pp. 1-19, https://doi.org/10.1186/s40008-020-00216-2 This Version is available at: https://hdl.handle.net/10419/261587 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Sustainable development andopenness inoil‑exporting countries: green growth andbrown growth Jalil Khodaparast Shirazi1* , Vahid Mohamad Taghvaee2,4 , Mohamad Nasiri3 and Abbas Assari Arani2 1 Introduction What is the nexus between sustainability and openness? It has been a main question for many decades for which no clear answer has been proposed to achieve a strong consensus on (Dufrenot etal. 2010; Falvey etal. 2012; Greenaway and Morgan 1998; Greenawa etal. 1998; Grossman and Krueger 1991; Prebisch 1950; Singer 1950; Singer and Gray 1988; Talberth and Bohara2006; Ulasan 2015; Zahonogo 2017). This can be due to the various relationships of openness with each element of sustainability (i.e., environmental quality and economic growth). Although there are a wide range of hypotheses and theories on the relationship, there is no strong consensus on the nexus of openness either with the environmental pollution or with the economic growth (Arezk etal. Abstract What is the nexus between sustainability and openness? This study employs econometric methods to estimate a neoclassical growth model, considering brown and green growth as two pillars of sustainability, in ten oil-exporting countries during 1990–2012. Based on the results, the nexus is non-linear and U-shaped, depending on the level of openness. From the green growth viewpoint, the current relationship of sustainability with openness is negative in the sample, but it becomes positive in the higher levels of openness. From the brown growth perspective, not only the current relationship of openness with sustainability is positive, but also it can become stronger in the higher level of openness. They are proofs for the openness acting as a catalyst for sustainability in the sample. All the oil-exporting countries are suggested to open their economy wider and wider since the sustainability and openness nexus either is already positive or it becomes positive in the higher degrees of openness. So, sustainability is a flimsy pretext to discourage the openness since it is a positively effective strategy in the long-term, notwithstanding its potentially negative effects in the short-run which creates a gap. Keywords: Sustainability, Openness, Green growth, Brown growth, Oil-exporting countries JEL Classification: Q24, Q38, Q41 Open Access © The Author(s) 2020. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creat iveco mmons .org/licen ses/by/4.0/. RESEARCH KhodaparastShirazietal. Economic Structures (2020) 9:40 https://doi.org/10.1186/s40008‑020‑00216‑2 *Correspondence: [email protected] 1 Department of Economics, Shiraz Branch, Islamic Azad University, Shiraz, Iran Full list of author information is available at the end of the article Page 2 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 2014; Grossman and Krueger 1991; Moutinho etal. 2017; Sun etal. 2017; Talberth and Bohara2006; Zhang, etal. 2017). Openness has four potential relationships with economic growth, as a pillar of sustainability, including neutral, positive, negative, and non-linear relationships. The last three hypotheses are presented in Fig.1. Based on the figure, the growth hypothesis claims a positive nexus between openness and sustainability due to the increase in specification, knowledge spillover, and return to scale, resulted from the openness (Alesina etal. 2000; Almeida and Fernandes 2008; Baldwin etal. 2005; Barro and Sala-i-Martin 1997; Bond etal. 2005; Zahonog 2017). However, the depression hypothesis suggests a negative connection which might be owing to incapability in society and vitality in domestic industries (Clemens and Williamson 2001; Fagerberg 1994; Irwin 2002; Musila and Yiheyis 2015; O’Rourke 2000). In addition to the couple of linear hypotheses, many suggest non-linear relations including J-carve pattern, Laffer curve of trade, pollution haven hypothesis, and Prebisch–Singer theory (Arezki etal. 2014; Colagiuri and Morrice 2015; Costa and Santos 2013; Greenaway and Morgan 1998; Greenaway etal. 1998, 2002; Harvey etal. 2010; Shen etal. 2017; Sun etal. 2017; Zhang etal. 2017). Finally, the four hypotheses believe no nexus between openness and economic growth as a sustainability pillar (Sachs and Warner 1995; Ulasan 2015). Environmental quality, as another pillar of sustainability, has the three potential relationships with openness, as mentioned above (Grossman and Krueger 1991). These wide range of theories and hypotheses not only do not assist in the identification of the nexus between openness and sustainability, but also they make it more dubious. This ambiguity is a problem statement for the oil-exporting countries, emerging with more focus on the issue in the future studies, as ours deals with it. The oilexporting countries, on the one hand, are growing their economy via exporting the oil, thanks to the technological and transportational advances which lead to a considerably greater openness. The openness, on the other hand, is a channel to import the more expensive and consumptive commodities into the oil-exporting. Not only does it waste the oil income, rather than the development of infrastructure, but also it might damage the domestic industry, or rather the economic growth (Arezki etal. 2014; Harvey etal. 2010; Prebisch 1950; Singer 1950). In addition to the effects of Negative Non-linear Positive •Domesc industries •Social incapability Insustainability Depression •J-curve paern •Laffer curve of trade •Polluon Haven Hypothesis •Prebisch-Singer theory •Environmental Kuznets Hypothesis Openness •Specializaon •Knowledge Spillover •Return to scale Sustainability Growth Fig. 1 Potential nexuses of openness and sustainability Page 3 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 openness on economic growth as a sustainability pillar, the production and exportation of oil are polluting the environment which is another pillar of the sustainability. This contradiction is proposing some questions which we investigate in the study, as mentioned below. The main objective of the study is to estimate the relationship between openness and sustainability in the oil-exporting countries. It is achievable with answering three questions: the first one is, what is the nexus between openness and brown economic growth (including merely the economic perspective) in the oil-exporting countries; the second one is, what is the nexus between openness and green economic growth (growth including economic, social and, environmental considerations) in the oilexporting countries; and third one is, how wide is the gap between growth and sustainability. Answering these questions provide vital clues to the strategical question of whether the oil-exporting countries have been successful in compensating the depreciation in their natural capital by the well worthwhile investment. In case of a positive response, their policy-makers should pursue their current strategies; otherwise, they are advised to restructure the economic, social, and environmental policies to make them consistent with the sustainability framework. The novelty of the study is to employ both the green economic growth and brown economic growth simultaneously for the measurement of the relationship between openness and sustainability, which has three key pillars including economic, social, and environmental one. Based on Fig.2, the GDP focuses solely on the economy pillar of sustainability, ignorance of the environmental issues, namely brown GDP while the green GDP (environmentally adjusted GDP) embraces not only the economic items, but also the social and environmental ones (Talberth and Bohara 2006; Wang etal. 2011). In this study, we take the advantage of both brown GDP and green GDP while no previous study has such a simultaneity, despite numerous previous researches. 2 Literature review There are various ideas on the nexus between openness and sustainability. Many researchers are supporting a positive relationship while many are claiming a negative one. Notwithstanding the mentioned couple-of-view-points, a third group is viewing the nexus from a broader standpoint to compromise the conflicting view-points by accepting a non-linear relationship between trade, for openness, and growth, for sustainability. Growth index (GDP) rather than green GDP, many argue that, is subject to GDPGreen GAP GDPBrown •Environment •Society •Economy Sustainability Fig. 2 Brown GDP versus green GDP Page 4 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 limitations upon the measurement of the sustainable development, leading to different results and then conflicting perspectives on the openness and sustainability. On the one hand, trade and growth suggest a positive relationship in numerous researches (Alesina etal. 2000; Almeida and Fernandes 2008; Baldwin etal. 2005; Barro and Sala-i-Martin 1997; Bond etal. 2005; Guncavdi and Ulengin 2012; Zahonogo 2017). They provide a wide range of explanations for the nexus. One of them is specification due to the Adam Smith`s belief in the role of trade, as an openness proxy, on specification which leads to economic growth, as he entitled the first chapter of his famous book, “Wealth of Nations”, as “Of The Division of Labour” (Smith 1776). Like Adam Smith, the comparative advantage theory of Ricardo explains how trade leads to specification and economic growth through comparative advantage theory (Ricardo 1817). In addition to the specification, trade causes the diffusion of technology and knowledge spillover as the Solow residuals, leading to economic growth (Romer 1996). Moreover, the recent researches add other growth contributors such as foreign direct investment and return to scale increment as a result of trade, supporting the positive connection of trade and growth (Alesina etal. 2000; Bond etal. 2005; Zahonogo 2017). On the other hand, trade and growth show a negative relationship in many researches (Clemens and Williamson 2001; Irwin 2002; Musila and Yiheyis 2015; O’Rourke 2000) They offer various explanations for the reverse nexus such as insufficiency in R&D and human capital, hampering the technology adoption in the countries with inappropriate institutional-settings such as financial and bureaucratic systems which are impervious culturally, socially, politically, etc. (Fagerberg 1994; Zahonog 2017). Another is the domestic industries. They, clearly, might be threatened by opening the borders to the international trade which leads to the more competitive markets, paving the way for boosting the more competitive industries in other countries. Whether has the openness the various effects on the different countries, times or, conditions? Furthermore, many researchers, considering both the above-mentioned views, claim that the nexus can be both positive and negative in changing circumstances which propose several theories and hypotheses supporting non-linear relationships between trade, as a proxy for openness, and growth, as a proxy for sustainability, such as (A) “Laffer curve of trade” (Zahonogo 2017); (B) “Environmental Kuznets Hypothesis” (Grossman and Krueger 1991); (C) “J-curve pattern” (Falvey etal. 2012; Greenaway etal. 1997, 1998, 2002; Jelassi etal. 2017); (D) “Pollution Haven Hypothesis” (Zhang etal. 2017); and (E) “Prebisch–Singer theory” (Arezk etal. 2014; Harvey, etal. 2010). A. J-curve pattern it establishes a J-curve nexus for trade and growth, considering shortand long-run time-periods. In short-run, this nexus is negative due to the delay in shifting the resources. It slowly occurs after which the trade liberalization-promoting policies are implemented, leading to a lag for the trade–growth relationship. Moreover, a crisis involving a decline in income can, albeit slowly, facilitate trade liberalization which, in turn, is a prerequisite to secure loans of the international financial institutions (the World Bank and IMF) (Falvey etal. 2012; Lora 1998). Another prerequisite is devaluation. The IMF-supported structural plans generally embark on devaluation (Singh 2010). It, at first, immediately worsens the trade balance, already conducted, since the imports seem more expensive in nominal value and that of Page 5 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 the exports do cheaper. So the higher the trade is, the lower the growth becomes in short-run. Later, the exported products, however, become more competitive in price and the imported ones do cheaper, leading to a reversal as the devaluation improves the trade balance and, in turn, the economic growth (Oskooee etal. 2016). In addition, the resources have, finally, shifted to the efficient allocation and the loans are received in long-run, accelerating the growth in this time-period. So the higher the trade is, the higher the growth becomes in long-run. This reversal, in shortand long-terms, forms a J-curve for the trade–growth nexus (Falvey etal. 2012; Greenaway and Morgan 1998; Greenaway etal. 1998, 2002; Jelassi etal. 2017). In addition to the economic growth, the openness shows relationship with other pillars of sustainability such as environment. B. Environmental Kuznets hypothesis firstly, it was proposed by Grossman and Kruger in 1991 to investigate the nexus between openness and environmental pollution; they suggest an inverted U-shaped curve. The explanation is focused on the higher technological and efficiency capacity in the richer countries (Taghvaee and Parsa 2015). The difference in capacity is generated to other factors in the next hypothesis. C. Laffer curve of trade it suggests that the trade–growth nexus hinges on the levels of financial development, adoption of technology, human capital, and institutional quality. As long as they are high, the nexus works positively and, vice versa, if they are low it does negatively. It suggests a positive and negative nexus in the developed and developing countries, respectively, which is interpreted as a non-linear nexus of trade–growth in the different phases of development in a country (Ikerd 2016: Zahonogo 2017). For example, the oil-exporting countries are potentially in the danger of low level of social and technological quality, as curse hypothesis argues. This hypothesis claims that these countries are concentrating on the oil industry, leading to miss the development of the other sectors. The more open their borders, the higher the oil export, encouraging focus on oil industry stronger and stronger while the other sectors become weaker and weaker (Colagiuri and Morrice 2015; Costa and Santos 2013). D. Pollution haven hypothesis the allocation of foreign direct investment is another explanation for the nexus between openness and sustainability, based on the stringency of environmental regulations. The developing countries with less-stringent regulations attract relatively larger foreign investment from the developed ones with more stringent regulations, stimulating the economic growth, development, and sustainability in the former countries. However, it vastly increases their level of pollution due to the inherently pollutant character of those investments. Clearly, they are environmentally perilous, leading to the outflow from the developed countries for escape from those stringent rules through the international borders. The more open the developing economy, the larger the inflow level of pollutant foreign investment, which, in turn, discourages the sustainability in developing countries; and vice versa in the developed countries with more stringent environmental regulations (Shen etal. 2017; Sun etal. 2017; Taghvaee etal. 2017; Zhang etal. 2017). Therefore, openness has two different effects which are conflicting not only on the environment and the economy, but also on the developed countries and the developing countries. Page 6 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 Oil industry is a good example for the hypothesis. This activity makes the oil-exporting countries a pollution haven for the foreign investments. It paves the way for economic growth in both the contributing countries while it degrades the environmental quality in the oil-producer one, proposing different effects not only on the various sectors, i.e., environment and economy, but also on the different countries. E. Prebisch–Singer hypothesis it argues that the markets of primary commodities are demonstrating a downward trend in their equilibrium price while it is upward in the manufactured commodities with the elapse of time in long-run. The primarycommodity-based economies, like oil-exporting countries, with the decreasing price trend, regarding the hypothesis, are expected to stagnate in case of engaging in trade with the manufactured-commodity-based economies, though it boosts the economy for the latter (Arezki etal. 2014; Harvey etal. 2010; Prebisch 1950; Singer 1950) The above-mentioned example of oil-exporting countries in pollution haven hypothesis works as well for this theory. Since oil is a primary commodity for production of the other manufactured ones, its exporters might fall into the trap of this theory, notwithstanding the current income of oil sale, as the more open their economy, the more serious their deficit in balance of payments, with the elapse of time. The sustainability of oil-exporting countries might be threatened by increasing openness and its potential damages on environmental, economic, social, and technological elements. Although the strong sustainability perspective believes that the damages are irrecoverable especially in the environment, the supporters of weak sustainability believe that they can be avoided by investing the current oil income in the infrastructural sectors to guarantee a sufficient, secure, and permanent income in the future to compensate them. However, many researchers believe in a neutral nexus between trade and growth, rejecting any relationships between them (Ulasan 2015). They claim that it is insignificant, even if it exists, needing a fertile ground to become considerable and effective. In other words, openness merely is insufficient to establish a connection with sustainability and the breeding ground for the establishment is achievable by stable macroeconomic policies, structural policies, and institutions (Sachs and Warner 1995). These various results and conclusions can be rooted in the limitations of the methodologies, indices, and models in the previous studies. The GDP index, for example, has many serious limitations to cover all the aspects of sustainability and even growth concept which we replace by the green GDP in an econometric methodological framework as explained below. 3 Methodology, model, anddata In this section, we explain the methodology, tests and model of our study as well as the sequence of various tests and estimations; then we elucidate how the research questions and the studied hypotheses are related to the parameters of the models. The model of our study is based on the neoclassical growth model, endogenous growth model, and standard Solow growth model (Mankiw etal. 1992; Othman etal. 2014; Solow 1956; Talberth and Bohara 2006), as follows: (1) Y = f(L,K,O), Page 7 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 where Y, L, K, and O are output, labor, capital, and openness, respectively. Following Mankiw etal. (1992), Taghvaee etal. (2016), Talberth and Bohara(2006), the function is transformed into the Cobb–Douglas form as below: To be employed in the empirical researches, the corresponding log-linear form is Eq.3: where A0 is the intercept; u is residuals; t is year; and α and β are the parameters to represent the elasticities, thanks to the natural logarithm form of the variables. Now following Talberth and Bohara(2006), we insert the following proxies for output, capital, labor, and openness to form an estimable regression with a restriction. We call the linear regression as Model 1-L: where GGDP is the GDP growth as a symbol for the brown growth or merely economic growth; it is the first difference of per capita GDP in logarithmic form measured in Purchasing Power Parity (PPP) in constant 2011 international dollar. DADR is the first difference of the age dependency ratio; it is the ratio of dependents—people younger than 15 or older than 64—to the working-age population—those aged 15–64 in percentage term, as a proxy for the inactive population.DGFC is the first difference of the ratio of gross fixed capital formation to GDP in constant 2011 international dollar; OPN is the first difference of the ratio of trade value to GDP. All the data are derived from World Bank database(World Bank 2016). ε is residual series; i is country; t is year; β is are the corresponding coefficients of the independent variables. In addition to the linear variables, the squared form of openness is affixed to the explanatory variables to investigate the non-linear relationship between output and openness (Talberth and Bohara2006). We name the non-linear regression as Model 1-N: Conflicting signs of β3 and β4 provide evidence for a non-linear nexus between openness and growth which is consistent with one the non-linear hypotheses including J-curve pattern, Laffer curve of trade, or Prebisch–Singer hypotheses which are focusing on the economic dimension of sustainability (Arezki etal. 2014; Falvey etal. 2012; Zahonogo 2017). To investigate the environmental aspect of sustainability, or rather the strong one, we employ the genuine savings instead (Othman etal. 2014; Talberth and Bohara 2006; Nasrollahi etal. 2018). We name the linear regression as Model 2-L: where GGS is the genuine savings growth as a proxy for the green growth; it is the first difference of per capita genuine savings in logarithmic form measured in Purchasing (2) Yt =A 0 Kα t O β t L 1 − α − β t eut . (3) Yt = A0 + αKt + βOt + (1 − α − β)Lt + ut, GGDP it = C + β 1 DADR it + β 2 DGFC it + β 3 OPN it + ε it β1 = 1 − β2 − β3 , Model 1-L GGDPit = C +β 1DADRit +β 2DGFCit +β 3OPNit +β 4OPN2 it +ε it Model 1-N GGS it = C + β 1 DADR it + β 2 DGFC it + β 3 OPN it + ε it β1 = 1 − β2 − β3 , Model 2-L Page 8 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 Power Parity (PPP) in constant 2011 international dollar and derived from World Bank database(World Bank 2016). The remaining symbols were described previously. Like Model 1-N, the linear form of Model 2-N is transformed into the non-linear one with inclusion of the squared form of openness (Talberth and Bohara2006). We name the non-linear regression as Model 2-N: The examination of both the green and brown economic growth paves the way for the analysis of the openness nexus with two dimensions of sustainability, the economic and the environmental ones. The difference between the two concepts is investigated with the following regression (Talberth and Bohara 2006). We name the linear regression as Model 3-L: where GAP is the gap between green and brown economic growth, GCO2 is the growth of per capita carbon dioxide emissions measured in kilo-ton and derived from World Bank database, as the index of environmental pollution(World Bank 2016); and the remaining symbols are as mentioned previously. Like Models 1-N and 2-N, we attach the squared openness to investigate the non-linear relationship of openness and the gap of green and brown economic growth (Talberth and Bohara 2006). We name the nonlinear regression as Model 3-N: Subsequent to the estimation of the models using the software of EViews 8, we delineate the non-linear ones in the coordinates system in which the openness is the horizontal axis using the software of MATLAB 9. Next to the estimated curve, the location of each country in 2012 is represented in the coordinates system to allow the comparison of the countries with each other. Furthermore, it paves the way to find the position of each country in comparison with the estimated curve which plays a key role in the trade strategies of the country. Prior to the estimation of the above regressions, we run the preliminary tests to check the robustness of the estimated coefficients. Firstly, we put the variables into the Levin, Lin, and Chu unit root test to assure that the estimated coefficients are not spurious. The null hypothesis implies unit root, or rather the non-stationarity of the variable, being performed in two cases: (1) without intercept and trend and (2) with intercept (Levin etal. 2002). Then we employ the F-Limer statistics, for selection between pooled and panel models, being supported by null and alternative hypotheses, respectively (Tehrani etal. 2016; Saleh etal. 2014). In case of accepting the pane model, the Hausman test is based on the Chi squared statistic to decide between fixed and random effects model whose null hypothesis suppresses the former (Georgiev and Mihaylov 2015; Greene 2011; Hausman 1978). Finally, the coefficients of the models are estimated for the sample. GGSit =C+β 1 DADR it +β 2 DGFC it +β 3 OPN it +β 4 OPN 2 it +ε it . Model 2-N GAPit = C + β1GCO2it + β2OPNit + εit , Model 3-L GAPit = C + β1GCO2it + β2OPNit + β3OPN2 it + εit . Model 3-N Page 15 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 the study. The more open the economy, the wider the gap in Venezuela, Russia, Canada, Algeria, and Norway, whilst the more open the economy, the narrower the gap in Kazakhstan, Saudi Arabia, Kuwait, and Angola, albeit slightly. It implies that opening the economy is diverging the three pillars of sustainability in the former group, leading to the unbalanced development, which is in sharp contrast with the latter group with a relatively more converging pillars and balanced development. However, the openness plays a limited role in the gap between various pillars of sustainability. 5 Discussion In the oil-exporting countries, openness shows various relationships with sustainability pillars in different conditions, a non-linear nexus. Currently, the more open their economy, the lower the green growth; while it shows a direct relationship with brown growth, or rather economic growth. Regarding the current situation, the openness is directly correlated to the economic growth (or brown growth) as the economic pillar of sustainability in the oil-exporting countries. These countries inevitably export oil in order to raise their income level, leading to have a more open economy. On the import side, openness facilitates purchasing commodities with lower expenses as the relative advantage theory claims that the reduction, or even elimination of the tariff rates and non-tariff barriers boosts the economic growth. It is advised for the oil-exporting countries too. Furthermore, they should adopt some policiesto reduce the tension in their relationships with the other countries, leading to the development in tradeand economy. Finally, they should open their borders, in case of pursuing the sustainability at economic growth; but it might damage the other pillars of sustainability. The social and environmental pillars of sustainability, as the green growth, show a negative relationship with openness in the sample countries. From the environmental point-of-view, it is not only for the growth of oil industries which is an extremely polluting sector, but also due to the expansion of transportation system which is another hazardous sector for the environment as a sustainability pillar. From the social perspective as another sustainability pillar, the negative nexus is deeply rooted in their capacity in human capital, technological adoption, financial system, etc., which is low according to the resources curse hypothesis. It is compatible with the Laffer trade hypothesis. To compensate the potential dangers of resource curse and Laffer trade hypotheses, they are suggested to develop their capacity in the non-oil sectors too; and impose the environmental regulations not only in the transportation and oil sectors, but also in the other sectors of economy. It is worth adding that the negative nexus exists solely in the current level of trade share and it reveres in the higher level of openness. So, sustainability is a flimsy pretext to discourage the openness since it is a positively effective strategy in long-term, notwithstanding its potentially negative effects in short-run which makes a gap between brown and green growth. Openness is a minor contributor to the gap of brown and green growth, as the various dimensions of sustainability, although each dimension shows a distinctive relationship with openness, possibly widening the gap of the dimensions. The length of the gap is reliant on the other major factors which can be investigated in the future Page 16 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 studies, such as regulation-setting framework, taxation system (especially the environmentally related taxes), technological infrastructure, etc. In conclusion, openness motivates the sustainability as a whole. Despite its currently negative nexus with green growth, it becomes positive in the higher levels of openness. Moreover, not only its current relationship with economic growth is positive, but also it can become stronger in the higher level of openness. They are proofs for the openness acting as a catalyst for sustainability. 6 Conclusion This study investigates the relationship between openness and sustainability in ten oilexporting countries within 1990–2012. This is non-linear; and it depends on the level of openness which the country has. The estimations of models display two distinctive nexuses for each kind of growth, linear and non-linear nexus; the former is positive and the latter relies on the level of openness in which the economy is. In the lower share of openness, the more open the economy is, the lower the brown growth is while they are correlated positively in the higher level of openness, passing a certain threshold. Another threshold exits for the green growth with the same nexuses in the either side. It infers that, on the basis of the level of openness, each country might show a different nexus, but clearly it is significant. However, there is an insignificant relationship between openness and the gap of brown and green growth. Instead, openness has a significant relationship with carbon dioxide emissions in that model. The results of these models’ estimations are depicted in figures. Three distinctive figures represent the estimated non-linear regressions in mathematical coordinates beside the actual data in 2012. Almost all the sample countries congregate on the right-hand side of the openness–brown growth nexus after the threshold, showing a positive relationship whilst they assemble in the left-hand side in the openness–green growth curve, implying a negative nexus. Notwithstanding the different locations of the countries in each curve, undoubtedly, all of them find a positive relationship between sustainability and openness in the higher levels of openness after outpacing a certain threshold. It suggests the oil-exporting countries to open their borders more and more to boost both the brown and green growth. Both brown and green growth shows a nexus with openness whose curves are highly convex, but the nexus of openness–gap of brown and green growth is slightly convex, confirming the insignificant relationship of openness–gap which is resulted in the model estimation. Finally based on the model estimation, interpretations, and discussions, all the oilexporting countries are suggested to open their economy wider and wider since the openness and sustainability find a positive nexus in the higher degrees of openness. A suggestion for future study is to investigate the nexus with more degrees as the actual data in the openness–brown growth shows a three degree one. Furthermore, the nexus of sustainability dimensions can be investigated with other socio-economic factors such as financial development. Acknowledgements Not applicable. Authors’ contributions All the authors worked with each other to complete this research. All authors read and approved the final manuscript. Page 17 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 Funding Not applicable. Availability of data All the data, employed in this study, are available via contacting and requesting the corresponding author. Competing interests The authors declare that they have no competing interests. Author details 1 Department of Economics, Shiraz Branch, Islamic Azad University, Shiraz, Iran. 2 Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran. 3 Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran. 4 Training, Research and Capacity Building Office, I.R. Iran Customs, Tehran, Iran. Appendices Appendix1: Openness versusGDP growth andthegap ofbrown andgreen growth intheten oil-exporting countries: theactual data in2012 andtheestimated curves ofmodel 1-N and3-N This merged figure provides us with a big map to make a broader comparison of each country with another in different ranges of openness and the specified thresholds. It paves the way to have more comprehensive standpoint for policy-making. Appendix2: Abbreviation ofthesample countries Country Abbreviation Algeria DZ Angola AO Canada CA Iran IR Kazakhstan KZ Kuwait KW Norway NO Russia RU Saudi Arabia SA Venezuela VE Page 18 of 19 KhodaparastShirazietal. Economic Structures (2020) 9:40 Received: 23 December 2019 Revised: 23 December 2019 Accepted: 7 May 2020 References Alesina A, Spolaore E, Wacziarg R (2000) Economic integration and political disintegration. Am Econ Rev 90(5):1276–1296 Almeida R, Fernandes A (2008) Openness and technological innovations in developing countries: evidence from firmlevel surveys. J Dev Stud 44(5):701–727 Arezki R, Hadri K, Loungani P, Rao Y (2014) Testing the Prebisch-Singer hypothesis since 1650: evidence from panel techniques that allow for multiple breaks. J Int Money Financ 42:208–223. https ://doi.org/10.1016/j.jimon fin.2013.08.012 Baldwin RE, Braconier H, Forslid R (2005) Multinationals, endogenous growth, and technological spillovers: theory and evidence. 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