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Published on: October 21, 2016
Comparing developed and emerging nations' Economic development with environmental footprint for low-carbon
Shanfei Zhang1, Guanghua Xu1, Ying Shu2,3
1School of Economics and Management, Nanjing University of Science and Technology, Nanjing, 210094, China.
Economic growth can reduce ecological footprint, especially with increased private sector credit. Despite environmental improvements, factors like energy consumption and GDP growth enhance global quality of life.
Area of Science:
- Environmental Economics
- Ecological Footprint Analysis
- Sustainable Development
Background:
- Growing concerns over the ecological impact of economic expansion.
- Need to understand the interplay between financial development and environmental quality.
- Global disparities in environmental performance and economic activity.
Purpose of the Study:
- To investigate the relationship between economic growth and ecological footprint across 131 nations from 2009-2019.
- To assess the role of financial sector development, particularly private sector domestic credit, in environmental outcomes.
- To examine the influence of energy consumption, foreign direct investment (FDI), and per capita GDP on ecological footprint and quality of life.
Main Methods:
- Utilized the CS-ARDL (Common Correlated Effects - Autoregressive Distributed Lag) methodology for robust analysis.
- Conducted a comprehensive assessment of ecological footprint data.
- Analyzed financial indicators including private sector domestic credit and FDI.
Main Results:
- A negative correlation was found between a reduced ecological footprint and increased private sector domestic credit.
- Diminishing bank-specific private sector credit correlated with augmented financial sector private sector credit.
- Increased energy consumption, FDI, and per capita GDP were linked to improved global quality of life.
- The 'pollution haven hypothesis' was validated in the global economic context.
- A notable reduction in the human population's adverse environmental impact was observed.
Conclusions:
- Global economic dynamics can potentially support environmental conservation efforts.
- Financial sector's role, specifically domestic lending, is crucial for environmental sustainability.
- While overall environmental impact reduced, economic growth drivers like energy and FDI improve quality of life.
- Regional variations in financial sector emphasis on environmental preservation are expected.
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