Are de jure and de facto globalization undermining the environment? Evidence from high and low globalized EU countries

Abstract

Globalization as a mechanism to connect people at distance and share knowledge has been flourishing. Simultaneously, environmental degradation has been increasing, as reflected in global warming. Through three dimensions, the economic, the social and political, and two measures, de jure and de facto, this study provides a disaggregated analysis of the effect of globalization on the critical issue of global warming for 25 European Union countries from 1990 to 2016. To emphasize globalization, the countries analysed were evaluated by two measures of globalization, de jure and de facto, resulting in their classification as high or low globalized countries de jure and de facto. Furthermore, energy consumption, economic growth and efficiency were included in an Autoregressive Distributed Lag model performed with the Driscoll-Kraay estimator. Robustness was checked using a Feasible Generalized Least Squares estimator. The results revealed that, overall, globalization increases environmental degradation, with the de jure measure having greater influence on high-globalized countries and the de facto measure having greater influence on low-globalized countries. Bearing in mind the increase in worldwide emissions driven by globalization, practices such as the relocation of polluting industries from high globalized countries should be discouraged. Incentives to harmonize global environmental restrictions could contribute to decarbonization worldwide.