Achieving sustainable development in emerging economies: Interplay between markets, resources, and environment

Abstract

The rapid growth in economic activities, feeble resource utilizations, and financial assistance for energy extensive megaprojects alarm significant environmental challenges in emerging economies. Therefore, this research delves into investigating the effects of the stock market, financial development, renewable energy, economic complexity, natural resources, and globalization on environmental sustainability in emerging economies. The pooled mean group (PMG), mean group (MG), and dynamic fixed effect (DFE) estimation approaches are adopted to examine the long-run relationship, which accounts for cross-sectional dependence and slope heterogeneity among panels. The Dumitrescu-Hurlin panel Granger causality test was adopted to analyze the causal relationships among the modeled variables. The study's findings demonstrate that renewable energy, the stock market, economic complexity, and globalization have a negative impact on the ecological footprint. It demonstrates that renewable energy, the stock market, economic complexity, and globalization increase environmental sustainability in emerging economies by reducing ecological footprints. However, financial development and natural resources are positively related to ecological footprints, indicating that financial development and natural resource consumption boost ecological footprints, and their unsustainable use causes ecological problems. Additionally, the causal relationship shows that the stock market causes ecological footprints. Bidirectional causal links between renewable energy, natural resources, financial development, and globalization have been detected. Governments and policymakers need to establish policies to boost the sustainable use of both financial development and natural resources to enhance environmental quality in selected emerging economies.