Re-examining the roles of economic globalization and natural resources consequences on environmental degradation in E7 economies: Are human capital and urbanization essential components?

Abstract

The impacts of economic globalization on environmental degradation are investigated in the E7 economies in the presence of some control variables including economic growth, natural resources, urbanization, and human capital between 1990 and 2016 in a carbon-income environment. This study implements a panel regression analysis using the Augmented Mean Group (AMG) estimator of Eberhardt and Bond and Eberhardt and Teal method for the long run estimation. Besides, the study also applies the fully modified ordinary least square (FMOLS) and dynamic ordinal least square (DOLS) to estimate the long-run relationship between the variables using both CO2 emission and ecological footprint (ECF) as dependent variables in distinct models. Key important results from the study stand out. Firstly, the study reveals that globalization is negatively correlated with CO2 emission and the ecological footprint of the E7 economies. This finding depicts the significance of economic integration among countries as a significant tool for cushioning environmental degradation. Secondly, the study demonstrates that natural resources, urbanization, and economic growth increase pollution in both models. Thirdly, human capital reduces environmental pollution in the E7 and its pollution abating impacts also cushion environmental degradation from growing urbanization as the interaction between both variables significantly abates pollution in the E7 bloc. Overall, the study suggests some policy ideas including the establishment of clean discovery regulation and the implementation of conservation initiatives, enhanced human capital investment initiatives, and carefully designed economic integration policies to attract foreign investors with innovative technologies to maximize environmental pros of the era of globalization.