The role of financial development and globalization in the environment: Accounting ecological footprint indicators for selected one-belt-one-road initiative countries

Abstract

The pressure of globalization on our ecosystem is widely debated, and academics and researchers urge clear policies at all levels. In this regard, a plethora of research work use carbon dioxide (CO2) emissions as an indicator of environmental measure to show that both globalization and financial development have diverse impacts on the environment. In fact, CO2 emissions are only a portion of total greenhouse gas emissions, so a comprehensive measure is required to gauge total ecological deterioration. The ecological footprint (EF) indicator is a comprehensive environmental accounting tool that has streamlined input-output environmental assessments. This study investigates the role of financial development and globalization on the EF for selected one-belt-one-road initiative countries from 1990 to 2014. The pooled means group long-run panel estimation’s results show that the EF sparks off by 0.0211 percent global hectares (gha) in selected panel countries when there is a 1 percent rise in financial development. A 1 percent growth in globalization mitigates the EF by 0.0038 percent gha in the long-run, suggesting an inverse relationship. Moreover, the country-specific findings show that the EF increases (at various percentages in gha) due to upsurges in both financial development and globalization in thirty- and twenty-nine countries, respectively. However, the EF declines (at various percentages in gha) due to increase in financial development in fourteen countries and globalization in four countries. In addition, the pairwise Granger causality finding shows the feedback effects of both financial development and globalization on EF. The EF affects environmental degradation, so efforts to reduce ecological deterioration and even immediate intervention measures should be employed in support of a sustainable environment.