Spillover Effects of Financial Development and Globalisation on Environmental Quality in EAEU Countries

Sergei Vladimirovich Shkiotov (), Maksim Igorevich Markin, Galina Alekseevna Rodina, Margarita Izrailevna Berkovich and Yuri Viktorovich Korechkov
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Sergei Vladimirovich Shkiotov: Department of Economics and Management, Yaroslavl State Technical University, Yaroslavl 150023, Russia
Maksim Igorevich Markin: Department of Economics and Management, Yaroslavl State Technical University, Yaroslavl 150023, Russia
Galina Alekseevna Rodina: Department of Economics and Management, Yaroslavl State Technical University, Yaroslavl 150023, Russia
Margarita Izrailevna Berkovich: Institute of Management, Economics and Finance, Kostroma State University, Kostroma 156005, Russia
Yuri Viktorovich Korechkov: Department of Economics and Public Administration, International Academy of Business and New Technologies, Yaroslavl 150003, Russia

Sustainability, 2025, vol. 17, issue 4, 1-25

Abstract: One of the unexpected consequences of interregional integration is the risk of environmental degradation. The lack of barriers for goods, services, and economic resources within the area of integration association results in monetary expansion and facilitates economic growth. Indeed, the further consequence is environmental degradation in accordance with the Kuznets environmental curve hypothesis. Therefore, the dynamics of trade turnover and the GDP of the Eurasian Economic Union (EAEU) countries for 2023, the lack of the environmental empirical studies in the EAEU, and the impact of integration processes on environmental quality within the integration association are extremely relevant. The aim of this study is to identify the impact of integration spillover effects on the ecological footprint of five EAEU countries between 1992 and 2023. In order to achieve this research objective, an analysis sequence was carried out through the following steps: analyse the stationarity of the variables; check for cross-sectional dependence; evaluate the consistency of an estimator; calculate the Moran’s I index; estimate research results using the Spatial Error Model (SEM), Spatial Autoregressive Model (SAR), and Spatial Dubin Model (SDM), or eliminate the spatial models; analyse and diagnose the model; correct multicollinearity. By applying the Common Correlated Effects Mean Group (CCEMG) model (the model obtained showed a high coefficient of determination R-squared ~69%), the results are summarised: (1) Economic growth and integration processes have a positive and statistically significant impact on ecological footprints. (2) Financial development does not have a long-term statistically significant impact on environmental quality in the EAEU countries. These findings underscore the urgent need for a sustainability-oriented approach to economic integration within the EAEU. This study proposes a comprehensive roadmap for policymakers, emphasising the integration of green finance mechanisms, the adoption of sustainable trade practices, and the establishment of a regional environmental governance framework.

Keywords: spillover effects of integration; ecological footprint; financial development; economy growth; environmental Kuznets curve; sustainable development of the EAEU (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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