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Militarization of NATO Countries Sparks Climate Change? Investigating the Moderating Role of Technological Progress and Financial Development

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  • Pata, Ugur Korkut
  • Destek, Mehmet Akif
  • Manga, Muge
  • Cengiz, Orhan

Abstract

This study evaluates the effects of military expenditures (MEX) on environmental pollution, as well as the moderating role of factors such as financial development and technological progress for 15 NATO member countries under the environmental Kuznets curve (EKC) hypothesis. Using the CS-ARDL estimator, the study analyzes the effects of MEX, income, energy consumption, financial development, and technical progress on carbon emissions spanning the period from 1991 to 2018. Additionally, interaction terms are employed to regularize the moderating effects of financial development and technical advancement. The results show that income, energy consumption, and MEX all contribute to a rise in emissions. It is also found that the financial sector does not eradicate the detrimental ramifications of MEX on the environment, but that technological progress has a moderating effect. A 1% increase in the interaction of technological progress with the military sector reduces environmental degradation by 0.36, but a 1% augment in the interaction of the financial sector with the military sector increases carbon emissions by 0.41%. For this reason, it is imperative to evaluate and revise the financing of MEX of NATO countries from an environmental perspective for sustainable development. Furthermore, as long-run income elasticity in NATO countries is lower than the short-run one, the EKC hypothesis is valid. Based on the overall findings, the study suggests that NATO allies should incorporate the benefits of income growth and technological development into their environmental policies to offset the negative effects of MEX.

Suggested Citation

  • Pata, Ugur Korkut & Destek, Mehmet Akif & Manga, Muge & Cengiz, Orhan, 2022. "Militarization of NATO Countries Sparks Climate Change? Investigating the Moderating Role of Technological Progress and Financial Development," MPRA Paper 117567, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:117567
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    More about this item

    Keywords

    Military expenditures; EKC; environment; energy consumption; technological progress; financial development;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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