A panel data analytics framework for financial development, global integration, and environmental performance across industrial supply chains

The study examines the relationship between ecological footprint and financial development, considering the moderating roles of globalization and human development during 1990-2018 in OECD countries. These countries have policies aimed at preventing environmental degradation, which are considered crucial in achieving the United Nations Sustainable Development Goals. It also controls for foreign direct investment (FDI) and technological innovation. The long-term coefficient estimates indicate an inverted U-shaped connection between financial development and the ecological footprint. Additionally, globalization, human development, technological innovation, the interaction between financial development and globalization, and the interaction between financial development and human development all contribute to reducing the ecological footprint. In contrast, FDI increases environmental footprints, supporting the pollution haven hypothesis in OECD countries. Therefore, it can be argued that globalization may reduce the ecological footprint by encouraging the diffusion of environmentally friendly technology and sustainable practices. In contrast, it may increase the ecological footprint by directing FDI towards countries with weak environmental regulations, thereby increasing polluting activities. In the context of these findings, it is observed that targets focusing on stable financial development in OECD countries will support environmental sustainability by attracting higher levels of research and development investment. Additionally, investments in human development and innovation in these countries can support the knowledge economy and more efficiently use environmental resources. Policymakers should focus on promoting technological innovation and strengthening the financial sector to achieve the Sustainable Development Goals (SDGs 8 and 13).