Abstract:

This study aims to determine the effect of economic growth, foreign direct investment, and financial development on environmental degradation. For this purpose, it is examined the relationship between selected economic variables and ecological footprint in US and China, the greatest economic power among all countries, where environmental consumption is high in return for economic activities. According to the empirical results, economic growth and financial development increase environmental degradation, while foreign direct investment contributes to environmental quality in the USA and China. However, the negative impact of economic growth and the positive impact of foreign direct investment on the environment are greater in the USA than in China. The causality tests results support this relationship between economic growth and financial development and ecological footprint for the USA. The findings show that the use of more environmentally friendly technologies and renewable energy sources in production will make contribute substantially to sustainable growth on a global scale.

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