The Symmetric Effect of Financial Development, Human Capital and Urbanization on Ecological Footprint: Insights from BRICST Economies

Abstract

Environmental degradation is a serious concern and its prevention strategies have become a central topic worldwide. It is widely accepted that improving environmental quality is essential for advancing sustainable development and societal well-being. From this perspective, the present research employed panel data from 1990 to 2022 from BRICST economies to assess the effects of financial development, human capital, urban population, energy consumption, and economic growth on environmental quality regarding ecological footprint. This study employs second-generation empirical techniques such as CIPS and CADF unit root tests, Westerlund bootstrap cointegration, and DFE/MG/PMG-ARDL models to examine the connections among the studied variables. The empirical findings of this study uncover that in the BRICST countries, environmental quality is exacerbated by human capital, urban population, energy consumption, and economic growth. On the other hand, financial development and GDP2 help improve environmental quality. Additionally, the interaction of the term financial development results with the terms human capital and urban population has a negative effect and reduces ecological footprint by improving environmental quality. From the policy perspective, the selected countries must implement policies that promote equitable financial resources, plan sustainable urbanization to promote compact cities and green infrastructure, and invest in green energy to address the adverse environmental consequences in BRICST economies.