Factors affecting the ecological footprint: A study on the OECD countries

Abstract

The purpose of this study is to analyze the effect of economic growth, trade openness, urbanization, foreign direct investment, renewable energy consumption and natural resource rents on the ecological footprint in 31 Organisation for Economic Co-operation and Development (OECD) countries. Moreover, we examine the validity of Environmental Kuznets Curve hypothesis for the period from 1995 to 2017 by employing the second-generation panel data methodologies which allow to crosssectional dependence among countries. Our findings show that the inverted U-shaped Environmental Kuznets Curve hypothesis is valid in OECD countries. In line with the long-term model results, while URB and GDP increase EF, other variables decrease it. According to the causality test results, there is a bidirectional causality among ecological footprint, economic growth, natural resource rents and trade openness. In addition, it is concluded that there is a unidirectional causality running from urbanization, renewable energy consumption and foreign direct investment to ecological footprint.