Rozaq, Hafiza
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Ecological Footprint in Developing Countries: Testing the Environmental Kuznets Curve Using a Dynamic Panel GMM Approach Rozaq, Hafiza; Idris, Idris
Journal of Accounting Research, Organization and Economics Vol 8, No 1 (2025): JAROE Vol. 8 No. 1 April 2025
Publisher : Universitas Syiah Kuala

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.24815/jaroe.v8i1.47801

Abstract

Objective This study examines the determinants of the Ecological Footprint (EF) and tests the validity of the Environmental Kuznets Curve (EKC) hypothesis.Design/Methodology This study employs a dynamic panel approach through the Two-Step System Generalized Method of Moments (SYS-GMM) method in 61 developing countries during the period of 19922021.Results This study provides strong evidence in favor of the EKC hypothesis. Renewable energy consumption, human development index, financial development, and industrial sector contributions were found to reduce EF. Conversely, trade openness and urbanization significantly increase the EF. Countries with high political stability have higher EF values, suggesting that stability, in the absence of effective environmental governance, may lead to unsustainable economic expansion.Research limitations/implications The political stability variable in this study is measured using a dummy indicator, which provides a general overview but does not fully reflect institutional complexity. This study also emphasizes the importance of formulating integrated development policies, including strengthening green financing, environmentally friendly industrial reforms, and sustainable trade regulations.Novelty/Originality The primary contribution of this study lies in the integration of social, economic, and institutional dimensions into the EKC framework, as well as the emphasis on the role of the financial development and political stability in supporting the transition toward sustainable development in developing countries.