Balancing growth and sustainability: The impact of economic status, energy, trade and finance on the ecological footprint in selected ASEAN economies

Abstract

The present study investigates the impact of economic growth, energy intensity, financial development, human development and entrepreneurial trade on the ecological footprint (EF) in six selected Asian countries from 1995 to 2020. The results obtained through cointegration analysis confirm a long-run relationship between the considered variables and ecological footprint. Wavelet and panel data analyses depict that economic growth implies higher environmental degradation but with a diminishing effect in higher quantiles. Similarly, a positive and significant energy intensity effect on the EF is more pronounced within low levels of environmental degradation. In contrast, financial development is positive and increasing in its impact on the ecological footprint, which is especially pronounced in countries with higher levels of environmental degradation, while the human development index has, on the other hand, a negative and significant impact on the ecological footprint, implying that improvement in human capital contributes to the reduction in levels of environmental degradation. Finally, openness to trade also positively influences the EF but is statistically insignificant. The findings allow policymakers to design targeted interventions, such as promoting financial regulations that steer investments to sustainable practices, encouraging renewable energy transitions, and enhancing human development to dampen the ecological footprint.