Is ecological footprint related to foreign trade? Evidence from the top ten fastest developing countries in the global economy

Abstract

An ecological footprint (EF) refers to the resources that are used by the people or production companies in an area for commerce, which includes the production of food, water resources, and housing; however, it also includes foreign trade of the products produced. The present study aims to examine how foreign trade affects EF and recommend specific new policies or revisions to policies to reduce EF. EF is used as an environmental indicator in the present study. The top 10 fastest developing countries (Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea, and Turkey) comprised the study sample. The analyses were conducted using annual data for the period of 1990–2018; export and import data were taken as foreign trade variables, and their relationship with EF was tested through two different models. Renewable energy consumption (REC) and national income were modeled as control variables, and second-generation panel data analysis techniques were used. When the Durbin-Hausman cointegration test was applied, the data indicated a strong correlation between foreign trade and EF. According to the Common Correlated Effects (CCE) coefficient estimator, there was an inverse relationship between exports and REC and EF and a positive relationship with economic growth. When the Augmented Mean Group (AMG) coefficient estimator was applied, an inverse correlation was indicated among exports, imports, REC, and EF. Based on the findings of the analyses, it can be argued that policymakers and market players should manage foreign trade and environmental policies in a harmonized manner, and long-term planning should be shaped around these test results.