Capital flow and environmental quality at crossroads: designing a sustainable policy framework for the newly industrialized countries

Mehmet Akif Destek, Avik Sinha, Ferda Nakipoglu Ozsoy, Muhammad Wasif Zafar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

It is extremely difficult for emerging economies to achieve the Sustainable Development Goals (SDGs), and in order to close this policy gap, a comprehensive policy framework is needed. The purpose of this research is to determine the proportional impacts of domestic and foreign capital to environmental degradation in newly industrialized nations (NICs). For this reason, panel data methodology is used to evaluate, for the years 1991 to 2018, how the ecological footprint is affected by stock market capitalization, foreign direct investment, economic growth, urbanization, and energy intensity. Using the squared terms of stock market capitalization and foreign direct investment, respectively, it is also looked at whether domestic and foreign capital may have non-linear effects on the environment. According to the empirical findings, whereas local capital growth worsens the environment, increasing international capital prevents environmental degradation. There is an inverted U-shaped link between domestic capital and environmental degradation in the event of non-linearity, but foreign capital has a monotonically declining effect on environmental degradation. The study outcomes are utilized to design a policy framework to address the objectives of SDG 7, SDG 11, and SDG 13.

Original languageEnglish
Pages (from-to)76746-76759
Number of pages14
JournalEnvironmental Science and Pollution Research
Volume30
Issue number31
DOIs
Publication statusPublished - Jul 2023
Externally publishedYes

Keywords

  • Ecological footprint
  • Environmental degradation
  • Foreign direct investment
  • Stock market

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