Environmental concern in the era of industrialization: Can financial development, renewable energy and natural resources alleviate some load?

Economic development accelerates the process of industrialization that has amplified the worth of extracted natural resources. Extensive exploitation of natural resources through total reserves, financial development, and renewable energy can influence the atmosphere. In view of this, this study examines the influence of industrialization, total reserves and the expansion of financial, renewable and natural resources on the ecological footprint. This research applies panel data for the period from 1990 to 2019 in newly industrialized countries. The findings of the augmented mean group (AMG) panel algorithm are robust to heterogeneity, and cross-sectional dependence points to the heterogeneous effect of industrialization, total reserves and financial development in significantly driving environmental pollution in these countries. In contrast, the abundance of natural resources and renewable energy significantly mitigates environmental pollution in the long-run. These results are also consistent with long-run and disaggregate level estimation. Moreover, the panel Dumitrescu and Hurlin causality test results revealed a unidirectional causality association from industrialization and renewable energy to ecological footprint and from ecological footprint to natural resources. A bidirectional causality relation was also found between financial development and total reserves, and the ecological footprint. Finally, several important policy implications are suggested to protect environmental quality in newly industrialized countries.

Automated summary

This study examines the influence of industrialization, total reserves, financial development, renewable energy, and natural resources on the ecological footprint in newly industrialized countries. The findings suggest that industrialization, total reserves, and financial development significantly drive environmental pollution, while the abundance of natural resources and renewable energy mitigates it. The study also identifies causal relationships between these factors and the ecological footprint.