A double-edged sword? Exploring the heterogeneous effects of industrialization, energy efficiency, and disaggregated financial development on environmental management.

This study investigates the impact of industrialization, technological innovation, financial sector development, and energy efficiency on the ecological footprint within emerging and growth-leading economies (EAGLE) countries (i.e., Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) over the period 1990-2022. Recognizing the interconnectedness of these economies, the analysis accounts for cross-sectional dependence and heterogeneity by employing advanced second-generation panel econometric techniques, particularly the Method of Moments Quantile Regression (MMQR). The empirical results reveal that industrialization, energy inefficiency, and disaggregated financial development exert a significant and positive influence on environmental degradation across all quantiles. Conversely, well-developed financial institutions and markets demonstrate a mitigating effect on ecological footprint in the long run. Notably, the interaction between technological innovation and financial development (both institutions and markets) unexpectedly contributes to an increase in ecological footprint across the emissions distribution, suggesting an asymmetric and complex dynamic. The Dumitrescu-Hurlin panel causality test further indicates a unidirectional causality running from ecological footprint to industrialization, while bidirectional causality exists between ecological footprint and technological innovation, energy intensity, and financial development. Based on these findings, the study offers critical policy recommendations aimed at fostering sustainable development and improving environmental quality in EAGLE economies.