Ecological footprint in a global perspective: the role of domestic investment, FDI, democracy and institutional quality

Abstract

Purpose The continuous increase in the negative gap between biocapacity and ecological footprint has remained globally persistent since early 1970. The purpose of this study is to examine the effect of foreign capital, domestic capital formation, institutional quality and democracy on ecological footprint within a global panel of 101 countries from 1995 to 2017. Design/methodology/approach The empirical procedure is based on data mix. To this end, this study uses a battery of testing and estimation approaches both conventional (no cross-sectional dependence [CD]) and novel approaches (accounting for CD). Among the battery of estimation techniques used, there are the dynamic ordinary least square, the mean group, the common correlation effect mean group technique, the augmented mean group technique, the Pooled mean group and the dynamic common correlation effect technique with the desire to obtain outcomes robust to heteroskedasticity, endogeneity, cross-correlation and CD among others. Findings The estimated outcomes indicate that using different estimators’ domestic capital formation consistently degrades the environment through an increase in ecological footprint, while institutional quality consistently enhances the quality of the environment. Further, the outcome reveals that, though foreign capital inflow degrades the environment, the time period is essential, as it shows a short-run environmental improvement and a long-run environmental degradation. Democratic activities show a mixed outcome with short-run degrading effect and a long-run enhancement effect on environmental quality. Practical implications Green investment should be the policy target of all economies, and these policies should be adopted to target both domestic capital and foreign capital alike. Second, the adoption of democratic practices will produce good leaders that will not just design short-term policies to blindfold the populace temporary but those that will produce long-term-oriented practices that will better and enhance the quality of the environment through the reduction of the global footprint. Equally, enhancing the institutional framework like respect for the rule of law in matters of abatement should be encouraged. Originality/value Although much research on the role of macroeconomic indicators on environmental quality has been done this far, democratic practices, intuitional quality and domestic capital have been given little attention. This research fills this gap by considering robust empirical techniques.

Nexus between foreign direct investment and ecological footprint in BRICS and Next-11: the moderating role of green innovation

“…Theoretically and empirically, there is mixed evidence on the relationship between FDI and environmental degradation. Studies by Pao and Tsai (2011), Munir and Ameer (2020), Shahbaz et al (2020), Yasmeen et al (2022), Emmanuel et al (2023), Naqvi et al (2023), Raza et al (2023) and Tabash et al (2023) found the worsening effect of FDI on environmental quality, which supports the pollution haven hypothesis. However, Zafar et al (2019), Rajpurohit and Sharma (2020), Arif et al (2022), Dada et al (2022), Saqib et al (2023), Sun et al (2022) and Ullah et al (2023) have shown that FDI has a favourable effect on environmental quality by supporting the pollution halo hypothesis.…”

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Resource abundance: Blessing or curse? Comparative analyses of point and diffuse resources

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Greening the BRICS: How Green Innovation Mitigates Ecological Footprints in Energy-Hungry Economies

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