Do natural resource rent and corruption governance reshape the environmental Kuznets curve for ecological footprint? Evidence from 158 countries

The current incompatibility between economic development and environmental protection gains growing attention. Exploring the validity of the Environmental Kuznets Curve (EKC) is crucial for the formulation of economic development and environmental protection policies, as EKC captures the economic-environmental relationship. Using the ecological footprint as a proxy variable for the environment, this study is to test the validity of the environmental Kuznets hypothesis, as well as the role of corruption and anti-corruption from the standpoint of natural resource rents and corruption governance. We investigated the nonlinear causality between variables using a panel threshold regression model of 158 countries and three income groups during 2002-18. Results show that economic growth contributes to the expansion of the ecological footprint, indicating that the EKC hypothesis is invalid. Natural resource rents strengthen the link between economic growth and environmental footprint. Controlling corruption weakens the positive relationship between economic growth and environmental footprint. Corruption exacerbates the negative impact of economic growth on the environment, whereas anti-corruption measures mitigate the negative impact of economic growth on the environment. Results from economic growth to the ecological footprint vary across three income groups. Specifically, in high-income and middle-income countries, impacts of economic growth on the ecological footprint decreases as natural resource rents rise, while the opposite for the low-income countries. However, controlling corruption reduces the environmental impacts in all three income groups but the magnitude of the impacts differs. Natural resource rents and corruption control had the greatest impact on the high-income group and the least impact on the lowincome group. Finally, specific policy recommendations are made to assist countries of all income levels in promoting environmental sustainability while also promoting economic growth.

Automated summary

The current incompatibility between economic development and environmental protection is receiving increasing attention. This study tests the validity of the Environmental Kuznets Curve (EKC) using the ecological footprint as a proxy variable for the environment, while also considering the roles of corruption and anti-corruption measures. The results indicate that economic growth contributes to the expansion of the ecological footprint, and controlling corruption weakens the positive relationship between economic growth and environmental footprint.