The Effect of Political Risk,, Uncertainty, and Complexity on Ecological Footprint in Oil-Exporting Developing Countries

Document Type : Original Article

Authors

1 Department of Economics, Shiraz University

2 Shiraz University

3 Department of Economics, Faculty of Economics, management and Social Science, Shiraz University, Shiraz, ,Iran

10.48308/jem.2024.235137.1906

Abstract

The main goal of this study is to investigate the effect of political risks, uncertainty, and economic complexity on the ecological footprint in a selection of developing oil-exporting countries. We estimate our model using the Systemic Generalized Moments method (SYS-GMM) for a panel of 22 oil-exporting developing countries. The method allows us to resolve the possible endogeneity problem. Other control variables include economic growth, human capital, and trade openness. The estimation results show that reducing political risks increases the quality of the environment. Moreover, an increase in the world uncertainty index improves the quality of the environment because it reduces investment and output growth in oil-exporting developing countries and, hence, decreases the use of natural resources. In addition, we also find that economic complexity increases the ecological footprint. In other words, higher complexity might result in lower environmental quality in oil-exporting economies. Furthermore, higher per capita GDP growth rate, human capital, and trade openness increase the ecological footprint. It means these variables are likely to increase environmental degradation in oil-exporting countries. Our results might have important policy implications for policymakers. Our research emphasizes the significance of mitigating political risks to enhance environmental quality.

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