Do the asymmetric effects of natural resource dependence and financial development amidst green policies make or mar sustainability agenda in E7 countries?

Abstract

It an undeniable fact that society that is blessed by abundance of natural resources coupled with adequate development financing has the opportunity of growing faster and steadily. However, the ecological impacts of these strides have constituted the centerpiece of environmental concern especially in the recent times of global warming. The present study presents the maiden empirical verification of asymmetric impacts of natural resource dependence and financial development on environmental sustainability with amidst the intervening role of green policies comprising green energy, green technology, and green finance in Emerging Seven (E7) countries from 1995 to 2019. The study verifies and examines the hypothesis by adopting Pooled Mean Group (PMG), Mean Group (MG), Dynamic Fixed Effects (DFE), Quantile Regression (QR), and panel causality tests. Findings show that positive and negative shocks from natural resource dependence escalate the emission surge in E7 economies. Regarding financial development, positive shocks moderate CO2 emissions whereas the negative shock compound the emissions. The results imply that natural resources remain a curse to the economies than good blessing. Whereas financial development stands between promoting and hindering the sustainability agenda, the components of green policies substantially drive the agenda. The distributional effects of the exogenous variables estimated based on quantile regression corroborate the main findings. Besides, the panel causality uncovers the existence of bidirectional and unidirectional causality in the estimated model. Policy insights that support the pathways towards sustainability in E7 economies are suggested based on the findings.