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Nexus of Natural Resources, Renewable Energy, Capital Formation, Urbanization, and Foreign Investment in E7 Countries

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  • Zuyao Wang

    (Business School, University of New South Wales, Sydney, NSW 2052, Australia)

  • Runguo Xu

    (School of International Relations, Yonsei University, Seoul 03722, Republic of Korea)

Abstract

The global trend of rapid economic development and urbanization has created questions regarding the quality of the environment. In the group of emerging economies (E7), environmental challenges have intensified due to specific dynamics unique to these nations. This research is focused on determining the influence of urbanization (UBNZ), renewable energy (RWNE), capital formation (CPFR), foreign direct investment (FDIN), and natural resources (NTRR) on the ecological footprint (ECLF) of the E7 economies. The study employs the Panel Autoregressive Distributed Lag (PMG-ARDL) approach to examine these relationships, utilizing data spanning the period of 1990–2022. The results reveal that a 1% increase in the CPFR, NTRR, and UBNZ leads to increases in the ECLF of 0.0581%, 0.0263%, and 0.0299%, respectively. Conversely, a 1% increase in RWNE and FDIN reduces the ECLF by 0.0207% and 0.0556%, respectively, in the E7 economies. The study’s findings are further validated through robustness testing via the fully modified ordinary least squares (FMOLS) method. The study concludes with actionable policy recommendations aimed at enhancing environmental quality within these economies. These recommendations include promoting renewable energy adoption, attracting environmentally sustainable foreign investments, and implementing strategies to manage urbanization and natural resource use effectively.

Suggested Citation

  • Zuyao Wang & Runguo Xu, 2024. "Nexus of Natural Resources, Renewable Energy, Capital Formation, Urbanization, and Foreign Investment in E7 Countries," Sustainability, MDPI, vol. 16(24), pages 1-22, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:24:p:11290-:d:1550650
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