The impact of natural resource rent, global value chain participation, and financial development on environmental footprints: A global analysis with fresh evidence

Abstract

AbstractThe motivation for conducting this research is the growing awareness of the increasing number of environmental issues on a global scale. As the world is facing the necessity of tackling environmental degradation, this study intends to uncover the fundamental links between global value chain participation, financial development, and their aggregate influence on environmental footprints in the context of the global economies (selected 60 countries) from 1996 to 2018. This study utilized a modern and novel technique known as the “Quantile Autoregressive Distributed Lagged Model.” The research results revealed that, in the selected economies, more natural resource rent, better financial development, and greater participation in the global value chain all positively contributed to environmental degradation across different quantiles. This implies an increasing environmental burden because of higher financial development, enhanced global value chain participation, and rising rents for natural resources. The study's findings have important policy implications, stressing the need for authorities or policymakers to incorporate environmental concerns into economic and financial policies. The authors also recommended that governments should think about enacting laws that support environmentally conscious behavior, such as rewarding investments in eco‐friendly technology and penalizing actions that harm the environment.