Is Achieved Economic Development Environment Friendly? A New Insight From Central and Eastern Europe

Abstract

Over the last few years, the linkage between economic development and environmental degradation has become a provocative question. Although this nexus has been studied vastly, some of the critical variables of economic development and their impacts on the environment need more focus. The present study explores the association between economic development, outward foreign direct investment, financial development, renewable energy consumption, natural resource rents, trade openness, and ecological footprint in Central and Eastern European economies. The panel data estimators such as augmented mean group and common correlated effect mean group are employed from 1990 to 2017. Empirical findings document that outward foreign direct investment, financial development, trade openness, natural resource rents, and renewable energy consumption increase economic development, implying that they positively affect economic development. Findings validate the inverted U-shaped EKC for concerned economies in case of the ecological footprint. The results show that the interaction term of GDPC with NR, outward foreign direct investment, and RE are eco-friendly indicators. The study results develop imperative policy implications for the selected region to attain sustainable development goals.