Exploring the impact of economic growth on environmental pollution in South American countries: how does renewable energy and globalization matter?

Abstract

Most emerging economies and the South American Countries are no exception to the negative consequences of trade-off between economic growth and environmental sustainability decisions. This study draws strength from the United Nations Sustainable Development Goals (UN-SDGs-7, 11, 12, and 13). Therefore, this study examines the environmental nexus between economic growth, globalization, renewable, and non-renewable energy, in South America from 1995 to 2020. We deployed the pooled mean group (PMG), mean group (MG), and dynamic fixed effects (DFE). Cross-sectional dependence, panel unit root, and cointegration tests were performed. Finally, we used the Dumitrescu and Hurlin test of causality to determine the long-run association between variables. The finding indicates that while environmental pollution increases with increasing economic growth, it decreases with increasing renewable energy both in the short and long term. Whereas economic globalization positively affects environmental pollution in the long term, social globalization and the moderation effect between political globalization and renewable energy improves environmental quality in the long run. Finally, a bidirectional causality was found between economic growth and environmental pollution, with a unidirectional causality running from economic, political, and social globalization, renewable, and non-renewable energy to environmental pollution. Given these findings, we discussed potential policy measures.

Keywords: Economic growth; Environmental pollution; Renewable energy; South America.