Pollution concern during globalization mode in financially resource-rich countries: Do financial development, natural resources, and renewable energy consumption matter?

Abstract

The question still remains whether financial development, natural resources, and energy consumption can successfully alleviate environmental pollution during the mode of globalization. In this regard, this study presents empirical evidence of supporting this theoretical argument, exploring the influence of financial development, natural resources, globalization, non-renewable and renewable energy consumption on the ecological footprint in financially resource-rich countries from 1990 to 2018. The empirical findings confirm the strong cross-sectional dependence across cross-sections. Therefore, the second-generation panel data approach is applied to produce more robust and reliable results. The results explore that financial development, natural resources, and non-renewable energy positively affect the ecological footprint, while globalization and renewable energy reduce the ecological footprint in these countries. Similarly, the interaction between financial development integration with globalization and renewable energy usage with natural resources is confirmed to reduce environmental deterioration. Additionally, bidirectional causality discovers between financial development, non-renewable energy, renewable energy, and ecological footprint; however, unidirectional causality is significantly running from natural resources towards ecological footprint and ecological footprint towards globalization. Therefore, these countries require improving financial and natural resource structures and further upgrading of renewable energy consumption. Moreover, globalization plays a vital role in reducing ecological deterioration and requires instantaneous policy reactions in these countries.