Nexus of natural resources, urbanization and economic recovery in Asia: The moderating role of innovation

Abstract

Despite their population, Asian countries have failed to provide full economic recovery, and what recovery has occurred may be short-lived if they do not protect the environment. Asian nations' economic recovery from the Asian Financial crisis (1997–1998) is examined in this study, with a focus on the consequences of globalization, economic growth, financial development, natural resource utilization and innovation. Econometric approaches that can handle cross-sectionally dependent panel datasets are used to determine the environmental implications of these variables over the period 1980 to 2016. This work uses the second-generation panel unit root and long-run cointegration tests for robust and reliable results. There is a mixed order of integration for the variables, which are cointegrated. The long-term regressions show increased economic recovery due to natural resource use, while technological advancement reduces economic recovery. The results suggest that financial development and eco-innovation enhance economic recovery, whereas urbanization accelerates environmental deterioration by increasing the ecological footprint. This study recommends that Asian countries become more financially incorporated, fund environmental initiatives, support environmental modernization and accelerate economic recovery rates through their energy production and consumption.