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The Relevance of Financial Development, Natural Resources, Technological Innovation, and Human Development for Carbon and Ecological Footprints: Fresh Evidence of the Resource Curse Hypothesis in G-10 Countries

Author

Listed:
  • Emre E. Topaloglu

    (Department of Finance, Sirnak University, Sirnak 73000, Türkiye)

  • Daniel Balsalobre-Lorente

    (Department of Applied Economics I, University Castilla La-Mancha, 13071 Ciudad Real, Spain
    UNEC Research Methods Application Center, Azerbaijan State University of Economics (UNEC), Baku 1001, Azerbaijan
    Economic Research Center (WCERC), Western Caspian University, Baku 1001, Azerbaijan)

  • Tugba Nur

    (Department of Finance, Sirnak University, Sirnak 73000, Türkiye)

  • Ilhan Ege

    (Department of Business Administration, Mersin University, Mersin 33110, Türkiye)

Abstract

This study focuses on the effect of financial development, natural resource rent, human development, and technological innovation on the ecological and carbon footprints of the G-10 countries between 1990 and 2022. This study also considers the impact of globalization, trade openness, urbanization, and renewable energy on environmental degradation. The study uses Kao and Westerlund DH cointegration tests, FMOLS and DOLS estimators, and panel Fisher and Hatemi-J asymmetric causality tests to provide reliable results. Long-run estimates confirm an inverted U-shaped linkage between financial development and ecological and carbon footprints. Natural resource rent and technological innovation increase ecological and carbon footprints, while human development decreases them. Furthermore, globalization, trade openness, and renewable energy contribute to environmental quality, while urbanization increases environmental degradation. The Fisher test findings reveal that financial development, natural resource rent, human development, and technological innovation have a causal link with the ecological and carbon footprint. The results of the Hatemi-J test show that the negative shocks observed in the ecological and carbon footprint are affected by both negative and positive shocks in financial development, natural resource rent, and technological innovation. Moreover, positive and negative shocks in human development are the main drivers of negative shocks in the carbon footprint, while positive shocks in human development lead to negative shocks in the ecological footprint.

Suggested Citation

  • Emre E. Topaloglu & Daniel Balsalobre-Lorente & Tugba Nur & Ilhan Ege, 2025. "The Relevance of Financial Development, Natural Resources, Technological Innovation, and Human Development for Carbon and Ecological Footprints: Fresh Evidence of the Resource Curse Hypothesis in G-10," Sustainability, MDPI, vol. 17(6), pages 1-32, March.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:6:p:2487-:d:1610493
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