Is there a tradeoff between financial globalization, economic growth, and environmental sustainability? An advanced panel analysis

• Published in: Environmental science and pollution research international Vol. 29; no. 3; pp. 3983 - 3993
• Main Authors: Kihombo, Shauku, Vaseer, Arif I., Ahmed, Zahoor, Chen, Songsheng, Kirikkaleli, Dervis, Adebayo, Tomiwa Sunday
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 2022; Springer Nature B.V
• Subjects: Aquatic Pollution; Atmospheric Protection/Air Quality Control/Air Pollution; Carbon Dioxide - analysis; Earth and Environmental Science; Ecological effects; Ecological footprint; Economic analysis; Economic Development; Economic growth; Ecotoxicology; Empirical analysis; Environment; Environmental Chemistry; Environmental Health; Environmental Kuznets curve; Environmental science; Globalization; Internationality; Middle East; Population density; Research Article; Sustainability; Sustainable development; Waste Water Technology; Water Management; Water Pollution Control; Middle East; Financial globalization; Environmental sustainability; Ecological footprint; Economic growth
• ISSN: 0944-1344; 1614-7499
• DOI: 10.1007/s11356-021-15878-z

In recent years, many empirical studies investigated the effects of globalization on the ecological footprint (EF). Most of these studies relied on the KOF index of globalization and studied the effects of total globalization and disaggregated impacts of economic, social, and political globalization on the EF. However, less attention has been given to financial globalization which can also influence the EF. Hence, this study investigates the association between financial globalization (FG), economic growth (GDP), and EF controlling population density (PD) in the selected West Asian and the Middle East (WAME) nations from 1990 to 2017. The study relied upon second-generation methods for checking stationary properties and Westerlund and other techniques to scrutinize cointegration. The evidence showed cointegration in the model. The long-run approximations from continuously updated fully modified (CUP-FM) and continuously updated bias corrected (CUP-BC) tests divulge that financial globalization is an important factor to promote ecological sustainability in the sample countries because it decreases EF. Population density exacerbates EF and worsens environmental deterioration in sample countries. The study detected the environmental Kuznets curve (EKC) between EF and economic growth in the presence of financial globalization and population density. Besides, financial globalization Granger causes EF, while the feedback effect exists between EF and economic growth. Based on these results, WAME economies can accomplish ecological sustainability and sustainable development by enhancing their financial globalization levels.