How Do Institutional Quality, Natural Resources, Renewable Energy, and Financial Development Reduce Ecological Footprint without Hindering Economic Growth Trajectory? Evidence from China

Muhammad Sohail Amjad Makhdum, Muhammad Usman, Rakhshanda Kousar (), Javier Cifuentes-Faura, Magdalena Radulescu () and Daniel Balsalobre-Lorente
Additional contact information
Muhammad Sohail Amjad Makhdum: Department of Economics, Government College University, Faisalabad 38000, Pakistan
Muhammad Usman: China Institute of Development Strategy and Planning, Center for Industrial Economics, Wuhan University, Wuhan 430072, China
Rakhshanda Kousar: Institute of Agricultural and Resource Economics, Faculty of Social Sciences, University of Agriculture, Faisalabad 38000, Pakistan
Javier Cifuentes-Faura: Faculty of Economics and Business, University of Murcia, Campus Universitario, 30100 Murcia, Spain
Magdalena Radulescu: Department of Finance, Accounting and Economics, University of Pitesti, 110040 Pitesti, Romania
Daniel Balsalobre-Lorente: Department of Political Economy and Public Finance, Economic and Business Statistics and Economic Policy, University of Castilla La-Mancha, 02071 Albacete, Spain

Sustainability, 2022, vol. 14, issue 21, 1-25

Abstract: Institutional quality, financial development, and natural resources primarily determine how economic representatives support their operational and production behaviors towards escalating the renewable energy share in the whole energy mix and protecting ecological quality. In this way, this paper is the first to investigate the influence of institutional quality, natural resources, financial development, and renewable energy on economic growth and the environment simultaneously in China from 1996 to 2020. The cointegration approaches verify the presence of a long-run association between the selected variables. The autoregressive distributed lag model outcomes reveal that institutional quality and renewable energy utilization greatly diminish ecological footprint. At the same time, other prospective indicators such as financial expansion and natural resources significantly enhance ecological footprint levels in the short- and long-run. Furthermore, institutional quality, financial expansion, renewable energy, and natural resources significantly trigger economic growth. Besides this, this study has revealed the unidirectional causal association from institutional quality and financial expansion to ecological footprint. In contrast, bidirectional causality occurs between renewable energy, natural resources, ecological footprint, and economic growth. The current research results offer some policy implications that will help to reduce the detrimental influence of environmental deprivation, without hindering the economic growth trajectory in the case of China.

Keywords: ecological footprint; institutional quality; natural resources; financial development; economic growth; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/21/13910/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/21/13910/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:21:p:13910-:d:954180

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().