IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v34y2026is2p170-181.html

Sustainable Development Pathways: How Fiscal Policy, Green Innovation, and Environmental Governance Shape Ecological Footprints in G‐20 Economies?

Author

Listed:
  • Yang Sun
  • Elizabeth Stephen

Abstract

Sustainable development requires addressing the ecological impacts of economic growth and resource dependence. The ecological footprint (EF) is a key indicator of sustainability, yet its relationship with fiscal policy, natural resource rents, innovation, and governance remains underexplored. This study examines the dynamic effects of fiscal policy (FP), natural resource rents (NRR), environmental governance (EG), and green innovation (GI) on EF in G‐20 economies from 1990 to 2023. Using the Cross‐Sectional Autoregressive Distributed Lag (CS‐ARDL) model, which accounts for cross‐sectional dependence and slope heterogeneity, the analysis reveals that GI and strong EG significantly reduce ecological pressures, while FP measures and NRR tend to exacerbate them. Governance is shown to moderate these relationships, enabling economies with stronger institutions to leverage innovation more effectively for sustainability gains. The significant negative coefficient of the error‐correction term confirms long‐run convergence despite external shocks, with long‐run effects found to be stronger than short‐run dynamics. These findings highlight the importance of aligning fiscal strategies with sustainability goals and strengthening governance to enhance the effectiveness of green innovation. The study contributes to policy debates by identifying key levers for reducing ecological footprints, offering actionable insights for governments, environmental agencies, and international organizations seeking to promote sustainable development transitions.

Suggested Citation

  • Yang Sun & Elizabeth Stephen, 2026. "Sustainable Development Pathways: How Fiscal Policy, Green Innovation, and Environmental Governance Shape Ecological Footprints in G‐20 Economies?," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(S2), pages 170-181, March.
    • Handle: RePEc:wly:sustdv:v:34:y:2026:i:s2:p:170-181
    DOI: 10.1002/sd.70310
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.70310
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sd.70310?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pan, Kai & Cheng, Chengping & Kirikkaleli, Dervis & Genç, Sema Yılmaz, 2021. "Does financial risk and fiscal decentralization curb resources curse hypothesis in China? Analyzing the role of globalization," Resources Policy, Elsevier, vol. 72(C).
    2. Khan, Irfan & Hou, Fujun & Le, Hoang Phong & Ali, Syed Ahtsham, 2021. "Do natural resources, urbanization, and value-adding manufacturing affect environmental quality? Evidence from the top ten manufacturing countries," Resources Policy, Elsevier, vol. 72(C).
    3. Li, Ke & Lin, Boqiang, 2018. "How to promote energy efficiency through technological progress in China?," Energy, Elsevier, vol. 143(C), pages 812-821.
    4. Chien, Fengsheng & Anwar, Ahsan & Hsu, Ching-Chi & Sharif, Arshian & Razzaq, Asif & Sinha, Avik, 2021. "The role of information and communication technology in encountering environmental degradation: Proposing an SDG framework for the BRICS countries," Technology in Society, Elsevier, vol. 65(C).
    5. Ahmad, Manzoor & Zheng, Jianghuai, 2021. "Do innovation in environmental-related technologies cyclically and asymmetrically affect environmental sustainability in BRICS nations?," Technology in Society, Elsevier, vol. 67(C).
    6. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    7. Wang, Jinxing & Li, Wanming, 2024. "Natural resources-financial innovation-carbon neutrality nexus: The role of policy robustness," Resources Policy, Elsevier, vol. 89(C).
    8. Jiachong Hu & Jin Xu & Lei Tong & Ummara Razi, 2022. "The dynamic role of film and drama industry, green innovation towards the sustainable environment in China: fresh insight from NARDL approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 5292-5309, December.
    9. Abbasi, Kashif Raza & Hussain, Khadim & Redulescu, Magdalena & Ozturk, Ilhan, 2021. "Does natural resources depletion and economic growth achieve the carbon neutrality target of the UK? A way forward towards sustainable development," Resources Policy, Elsevier, vol. 74(C).
    10. Francis Teal & Markus Eberhardt, 2010. "Productivity Analysis in Global Manufacturing Production," Economics Series Working Papers 515, University of Oxford, Department of Economics.
    11. Pesaran, M. Hashem & Vanessa Smith, L. & Yamagata, Takashi, 2013. "Panel unit root tests in the presence of a multifactor error structure," Journal of Econometrics, Elsevier, vol. 175(2), pages 94-115.
    12. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    13. Sun, Li & Wang, Yang, 2021. "Global economic performance and natural resources commodity prices volatility: Evidence from pre and post COVID-19 era," Resources Policy, Elsevier, vol. 74(C).
    14. Ahmad, Mahmood & Jiang, Ping & Majeed, Abdul & Umar, Muhammad & Khan, Zeeshan & Muhammad, Sulaman, 2020. "The dynamic impact of natural resources, technological innovations and economic growth on ecological footprint: An advanced panel data estimation," Resources Policy, Elsevier, vol. 69(C).
    15. Tariq Ahmad Mir & R. Gopinathan & D.P. Priyadarshi Joshi, 2023. "Revisiting long-run dynamics between financial inclusion and economic growth in developing nations: evidence from CS-ARDL approach," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 16(2), pages 176-193, November.
    16. Cheng Jin & Asif Razzaq & Faiza Saleem & Avik Sinha, 2022. "Asymmetric effects of eco-innovation and human capital development in realizing environmental sustainability in China: evidence from quantile ARDL framework," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 4947-4970, December.
    17. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    18. Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc.
    19. Shu Wu & Majed Alharthi & Weihua Yin & Qaiser Abbas & Adnan Noor Shah & Saeed ur Rahman & Jamal Khan, 2021. "The Carbon-Neutral Energy Consumption and Emission Volatility: The Causality Analysis of ASEAN Region," Energies, MDPI, vol. 14(10), pages 1-14, May.
    20. Xu, Chunguang & Li, Xiaohui, 2023. "The efficiency of natural resource consumption and government administration concerning green economic growth in Asian countries," Resources Policy, Elsevier, vol. 82(C).
    21. Minli Yu & Fu-Sheng Tsai & Hui Jin & Hejie Zhang, 2022. "Digital finance and renewable energy consumption: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-19, December.
    22. Halkos, George & Gkampoura, Eleni-Christina, 2021. "Where do we stand on the 17 Sustainable Development Goals? An overview on progress," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 94-122.
    23. Tomiwa Sunday Adebayo & Seyi Saint Akadiri & Husam Rjoub, 2022. "On The Relationship Between Economic Policy Uncertainty, Geopolitical Risk And Stock Market Returns In South Korea: A Quantile Causality Analysis," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 1-19, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chinazaekpere Nwani & Festus V. Bekun & Bright A. Gyamfi & Ekpeno L. Effiong & Andrew A. Alola, 2023. "Toward sustainable use of natural resources: Nexus between resource rents, affluence, energy intensity and carbon emissions in developing and transition economies," Natural Resources Forum, Blackwell Publishing, vol. 47(2), pages 155-176, May.
    2. Liu, Haiying & Saleem, Muhammad Mansoor & Al-Faryan, Mamdouh Abdulaziz Saleh & Khan, Irfan & Zafar, Muhammad Wasif, 2022. "Impact of governance and globalization on natural resources volatility: The role of financial development in the Middle East North Africa countries," Resources Policy, Elsevier, vol. 78(C).
    3. Fang, Shuya & Fang, Wei, 2023. "How fiscal decentralization and trade diversification influence sustainable development: Moderating role of resources dependency," Resources Policy, Elsevier, vol. 84(C).
    4. Bright Akwasi Gyamfi & Asiedu B. Ampomah & Festus V. Bekun & Simplice A. Asongu, 2022. "Can information and communication technology and institutional quality help mitigate climate change in E7 economies? An environmental Kuznets curve extension," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-20, December.
    5. Muntasir Murshed & Uzma Khan & Aarif Mohammad Khan & Ilhan Ozturk, 2023. "Can energy productivity gains harness the carbon dioxide‐inhibiting agenda of the Next 11 countries? Implications for achieving sustainable development," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 307-320, February.
    6. Chengyonghui, Duan & Ni, Soh Wei & San, Ong Tze & Rahim, Norhuda BT Abdul, 2023. "What role public debt plays to moderate the influence of natural resources on financial development? Appraising Resource-Curse Hypothesis in MENA Region," Resources Policy, Elsevier, vol. 86(PA).
    7. Lian Xue & Mohammad Haseeb & Haider Mahmood & Tarek Tawfik Yousef Alkhateeb & Muntasir Murshed, 2021. "Renewable Energy Use and Ecological Footprints Mitigation: Evidence from Selected South Asian Economies," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    8. Adel Ben Youssef & Mounir Dahmani, 2024. "Assessing the Impact of Digitalization, Tax Revenues, and Energy Resource Capacity on Environmental Quality: Fresh Evidence from CS-ARDL in the EKC Framework," Sustainability, MDPI, vol. 16(2), pages 1-23, January.
    9. Li, Tianqun & Chen, Yuhan & Zhou, Liangxiao, 2023. "Impact of trade, technology, and tourism on resources depletion across Belt and Road Node countries," Resources Policy, Elsevier, vol. 83(C).
    10. Dobdinga Cletus Fonchamnyo & Ongo Nkoa Bruno Emmanuel & Gildas Dohba Dinga, 2021. "The effects of trade, foreign direct investment, and economic growth on environmental quality and overshoot: a dynamic common correlation effects approach," SN Business & Economics, Springer, vol. 1(10), pages 1-27, October.
    11. Shiru Sun & Fei Meng & Muhammad Atif Nawaz & Sobia Hanif, 2025. "A re‐assessment of the Resource Curse Hypothesis in top resource‐rich developing countries: Fresh insights using method of moments quantile regression," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 2436-2462, August.
    12. Liang, Jinhao & Razzaq, Asif & Sharif, Arshian & Irfan, Muhammad, 2022. "Revisiting economic and non-economic indicators of natural resources: Analysis of developed economies," Resources Policy, Elsevier, vol. 77(C).
    13. Abdul Majeed & Chengang Ye & Ye Chenyun & Xu Wei & Muniba, 2022. "Roles of natural resources, globalization, and technological innovations in mitigation of environmental degradation in BRI economies," PLOS ONE, Public Library of Science, vol. 17(6), pages 1-22, June.
    14. Sun, Yanlei & Wang, Siyao & Xing, Zhanlei, 2023. "Do international trade diversification, intellectual capital, and renewable energy transition ensure effective natural resources management in BRICST region," Resources Policy, Elsevier, vol. 81(C).
    15. Liton Chandra Voumik & Mohammad Iqbal Hossain & Md. Hasanur Rahman & Raziya Sultana & Rahi Dey & Miguel Angel Esquivias, 2023. "Impact of Renewable and Non-Renewable Energy on EKC in SAARC Countries: Augmented Mean Group Approach," Energies, MDPI, vol. 16(6), pages 1-19, March.
    16. Hussein Moghaddam & Robert M. Kunst, 2023. "The Role of Natural Gas in Mitigating Greenhouse Gas Emissions: The Environmental Kuznets Curve Hypothesis for Major Gas-Producing Countries," Sustainability, MDPI, vol. 15(5), pages 1-20, February.
    17. Salih Türedi & Mustafa Şit & Haydar Karadağ & Chew Ging Lee, 2023. "Does healthcare sector development affect inbound tourism? Evidence from ASEAN countries," Tourism Economics, , vol. 29(6), pages 1662-1670, September.
    18. Malayaranjan Sahoo & Narayan Sethi, 2022. "The dynamic impact of urbanization, structural transformation, and technological innovation on ecological footprint and PM2.5: evidence from newly industrialized countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 4244-4277, March.
    19. Yang, Changjin & Qi, Huarui & Jia, Lijun & Wang, Yanjiao & Huang, Dan, 2024. "Impact of digital technologies and financial development on green growth: Role of mineral resources, institutional quality, and human development in South Asia," Resources Policy, Elsevier, vol. 90(C).
    20. Gulcan Doganay, 2024. "The Nexus Between Economic Development, Democracy, and Environmental Degradation: Testing the EKC Hypothesis in the BRICS + 6 Countries," RAIS Conference Proceedings 2022-2026 0438, Research Association for Interdisciplinary Studies.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:sustdv:v:34:y:2026:i:s2:p:170-181. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.