Globalization, industrialization, and urbanization in Belt and Road Initiative countries: implications for environmental sustainability and energy demand.

ABSTRACT

This study investigates the influence of globalization, industrialization, urbanization, and financial development on energy demand and environmental quality. The current study uses annual data from 92 Belt and Road Initiative countries over the sample period 1995 to 2018. After the confirmation of cross-sectional dependency and cointegration among the variables, we applied System Generalized Method of Moment, Driscoll and Karry approach, and Dumitrescu and Hurlin causality test to check the long-run relationship and direction of causality, respectively. The results reveal that globalization, financial development, industrialization, urbanization, and economic growth significantly increase the energy demand and CO2 emissions over the sample period. In addition, the granger causality test confirms a one-way causal relationship between financial development and CO2 emissions, GDP per capita and CO2 emissions, and globalization and energy demand. Moreover, there is a two-way causal relationship between urbanization and energy demand and financial development and GDP per capita. Based on these findings, number of suitable policy recommendations presented in the prospective of Belt and Road Initiative countries.