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Modeling for Insights: Does Fiscal Decentralization Impede Ecological Footprint?
Guitao Qiao1, Dan Yang1, Mahmood Ahmad1
1Business School, Shandong University of Technology, Zibo 255000, China.
Summary
Fiscal decentralization and technological innovation improve environmental quality by reducing the ecological footprint. Economic development and energy use harm the environment, while globalization shows no significant impact.
Area of Science:
- Environmental Economics
- Sustainable Development
- Public Policy
Background:
- Environmental issues are a growing concern, with fiscal decentralization (FD) proposed as a key factor for environmental sustainability.
- The precise impact of FD on environmental quality remains debated.
- Understanding these dynamics is crucial for effective environmental policy.
Purpose of the Study:
- To investigate the effects of fiscal decentralization, economic development, technological innovation, economic globalization, and energy use on environmental quality.
- To analyze the mediating roles of technological innovation and economic growth in the relationship between FD and the ecological footprint (EF).
- To provide policy recommendations for enhancing environmental sustainability in APEC economies.
Main Methods:
- Utilized the STIRPAT framework and the CS-ARDL method for robust short-run and long-run analyses.
- Accounted for slope heterogeneity and cross-sectional dependence in the empirical models.
- Examined data from eight Asia-Pacific Economic Cooperation (APEC) member countries.
Main Results:
- Fiscal decentralization and technological innovation were found to significantly reduce the ecological footprint.
- Economic development, energy consumption, and urbanization were identified as detrimental to environmental quality.
- Economic globalization did not show a significant relationship with the ecological footprint in the studied economies.
Conclusions:
- Fiscal decentralization positively influences environmental quality primarily through technological innovation, not economic growth.
- Policy interventions should focus on optimizing environmental management responsibilities between central and local governments.
- Encouraging technological innovation is vital for mitigating the negative environmental impacts of economic activities and energy consumption.
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