The impact of globalization on the ecological footprint: do convergence clubs matter?

Abstract

In this paper, we examine the impact of globalization on ecological footprint within the framework of the environmental convergence hypothesis for 130 countries over 1980–2016. To do so, we follow a two-stage empirical procedure. First, we test the overall convergence in ecological footprint across countries and identify possible convergence clubs using the nonlinear time-varying factor model developed by Phillips and Sul (2007). Then, we perform panel unit-root and panel cointegration tests used under the presence of cross-sectional dependence to analyze the impact of globalization and economic growth on the ecological footprint both for the full panel sample and convergence clubs. Finally, we estimate long-run coefficients using the Common Correlated Effects Mean Group (CCE-MG) and Augmented Mean Group (AMG) techniques. The club clustering algorithm identifies five convergence clubs, each converging to a different ecological footprint level. The results show cointegration between variables for the full panel sample and two of the five convergence clubs. Furthermore, there is no significant relationship between ecological footprint and globalization, whereas economic growth is significantly and positively related to the ecological footprint for full panel sample and one of the five convergence clubs. In other words, the impact of globalization and economic growth on ecological footprint differs across full panel sample and convergence clubs.