Impacts of industrialization, renewable energy and urbanization on the global ecological footprint: A quantile regression approach

Abstract

Abstract Debates on how growth and urbanization affect the environment have been intense, but they lack the global perspective. Therefore, this research examined those relationships, and to a greater extent other forms of global environmental degradation, such as foreign direct investment (FDI). It also explored the relationships between industrialization and technologies. The results, using Westerlund cointegration and quantile regressions over the period 1995–2017, show cointegration and regional heterogeneities in the environmental transmissions of economic development, industrialization, renewable energy, urbanization and FDI. The results show that economic development generates more environmental degradation in all quantiles at a global level, whereas urbanization and renewable energy reduce environmental degradation in all quantiles, with the highest effect being in the upper quantiles. On the other hand, industrialization affects the lower quantiles negatively and significantly but affects the upper quantiles positively. Finally, the empirical analysis supports the paradise haven or pollution halo hypothesis (PHH) for the 40th, 50th, 60th and 80th quantiles. This suggests that FDI inflows have a detrimental effect on the host country for these quantiles. Therefore, among the objectives of the policies are to give priority to more sustainable economic growth processes, which contribute to reducing environmental degradation, and furthermore to reinforce strict environmental laws on investment inflows and to build sustainable urbanization and industrialization processes for countries.

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