Natural resource, globalization, urbanization, human capital, and environmental degradation in Latin American and Caribbean countries

Abstract

The world is increasingly getting urbanized and globalized, and the increase in natural resource exploration could have a farreaching impact on environmental quality. Since most Latin American and Caribbean countries (LACCs) have proximity to the Amazon, they, therefore, rely heavily on agriculture and mining which develop via deforestation which could exacerbate the already increasing carbon dioxide emissions (CO2 emissions). Therefore, to the best of our knowledge, this study becomes the first to investigate the link between natural resources, globalization, urbanization, and environmental degradation in LACCs countries from 1990 to 2017 with advanced panel data econometric techniques. The unit root tests affirm all the variables to be stationary at first difference, and the Westerlund (Oxf Bull Econ Stat 69(6):709–748, 2007) cointegration test confirms the longrun relationship among the variables. The augmented mean group (AMG) and the common correlated effects mean group (CCEMG) results affirm that the aforementioned variables add to CO2 emissions, while human capital mitigates it. Further findings reveal that human capital performs a moderating role in promoting urbanization sustainability. The country-specific results confirm that economic growth adds to emissions in all the countries, except in the Dominican Republic. A feedback causality exists between economic growth, globalization, urbanization, and CO2 emissions. This study argues for the development of human capital, a gradual transition to sustainable growth-driven and knowledge-based industries, and the introduction of sustainability practices in the natural resource sector to mitigate CO2 emissions in LACCs.