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The nexus between economic growth, energy use, international trade and ecological footprints: the role of environmental regulations in N11 countries

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Abstract

Diversified human activities and inappropriate economic growth strategies have induced a trade-off between economic growth and environmental degradation worldwide. Consequently, the aggravating environmental concerns have warranted regulations to be enforced for safeguarding the welfare of the global environment. However, the effectiveness of such environmental regulations in reducing environmental deterioration has received equivocal empirical evidence in the literature. Against this backdrop, this study investigates the influence of environmental regulations on the ecological footprints in the context of the Next Eleven countries between 1990 and 2016. The results from the econometric analysis, controlling for cross-sectional dependency issues in the data, reveal that the existing environmental regulations legislated in the Next Eleven countries are ineffective in reducing the ecological footprints of these nations. Besides, greater energy consumption and openness to international trade are found to boost ecological footprints. Moreover, the Environmental Kuznets Curve hypothesis is also authenticated for the panel of the Next Eleven nations. The country-specific findings indicate that energy consumption anonymously degraded the environment in all the eleven nations, while heterogeneous impacts of environmental regulations, economic growth and international trade on the environment are ascertained. Hence, these findings, in a nutshell, recommend the Next Eleven nations to strengthen and enforce the environmental regulations, adopt sustainable economic growth policies, reduce fossil fuel dependency and participate in sustainable trade to ensure environmental sustainability.

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Availability of data and materials

The data sets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Notes

  1. BRICS refers to Brazil, Russia, India, China and South Africa.

  2. The EKC hypothesis posits an inverted-U-shaped relationship between economic growth and environmental quality. The hypothesis refers to economic growth being both the cause and the panacea to the environmental problems. For more information on the EKC hypothesis, see Murshed and Dao (2020).

  3. The EF are calculated by dividing the human ecological demands by the natural capacities of different land types (croplands, pasture lands, fishing bodies, forests, built-up lands and natural energy resources) to meet the resource demand. Hence, higher levels of EF can be interpreted as environmental deterioration, while lower values indicate environmental betterment. For more information on the EF, see Wackernagel and Rees (1998) and Caviglia-Harris et al. (2009).

  4. The pollution haven hypothesis postulates a negative relationship between FDI inflows and environmental quality (Murshed et al. 2020b). Thus, inflows of dirty FDI can be expected to induce deterioration of the environment within the FDI-hosting nations.

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The author expresses his gratitude to the anonymous reviewers for their efforts in reviewing the paper and suggesting key modifications that have enhanced the quality of the article. The authors also thank the editor for his cooperation during the review process.

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Nathaniel, S.P., Murshed, M. & Bassim, M. The nexus between economic growth, energy use, international trade and ecological footprints: the role of environmental regulations in N11 countries. Energ. Ecol. Environ. 6, 496–512 (2021). https://doi.org/10.1007/s40974-020-00205-y

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