Unveiling the nexus of globalization, economic growth, and environmental sustainability

Kejia Bi, Rulia Akhtar, Muhammad Mehedi Masud, Sayema Sultana, Yan Zhao and Abdullah Al‐Mamun

Natural Resources Forum, 2025, vol. 49, issue 2, 1708-1731

Abstract: Malaysia's rapid economic development, although remarkable, has resulted in a significant contribution to carbon dioxide (CO2) emissions in Southeast Asia. Despite this environmental challenge, Malaysia is actively working to reduce its carbon footprint. However, a limited understanding persists regarding how economic globalization (EGB), gross domestic products (GDP), financial development (FD), population density (PD), and energy consumption (ENC) intricately influence the country's ecological footprint (EP). To address this gap, this study examines both symmetrical and asymmetrical short‐ and long‐term impacts of EGB, GDP, FD, PD, ENC, and EP in Malaysia using Autoregressive Distributed Lag (ARDL) and nonlinear ARDL cointegration methods, analyzing data from 1984 to 2021. The findings reveal both symmetrical and asymmetrical long‐term relationships between these variables and the ecological footprint, particularly concerning financial development. The results indicate that, as financial development increases, there is a reduction in Malaysia's ecological footprint. This implies that a more developed financial sector may contribute to environmentally sustainable practices or investments. The study's revelation that economic globalization is associated with an increase in Malaysia's ecological footprint raises important considerations. This finding may prompt a closer examination of the environmental consequences of global economic integration, emphasizing the need for sustainable development practices. The acknowledgment that both positive and negative changes in economic globalization led to decreased ecological footprints adds complexity to the relationship. This suggests that not all aspects of economic globalization have uniformly negative ecological consequences. Understanding these nuances is crucial for formulating balanced and informed environmental policies. These findings carry significant policy implications. Policymakers may need to consider the dual impact of economic globalization and the beneficial role of financial development in crafting effective environmental policies. Incorporating environmental considerations into economic planning can help strike a balance between economic development and ecological conservation.

Date: 2025
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https://doi.org/10.1111/1477-8947.12443

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Persistent link: https://EconPapers.repec.org/RePEc:wly:natres:v:49:y:2025:i:2:p:1708-1731

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