A VECM Analysis on the Impact of Agricultural Exports, Financial Openness and Trade Openness on India's Ecological Footprint

Abstract

The 21st century has witnessed a surge in concerns surrounding environmental degradation, prompting investigations into its contributing factors. This study delves into the impact of agricultural exports and financial openness on the ecological footprint of India, utilizing time series data for a comprehensive analysis. Employing unit root tests and the VECM model for cointegration analysis, the study offers compelling insights. The findings reveal a positive association between agricultural exports and a reduction in India’s ecological footprint in both the long and short run, suggesting that increased agricultural exports contribute to environmental sustainability. The study demonstrates a positive association between financial openness and the ecological footprint, indicating that increasing financial openness leads to environmental sustainability in India. These findings align with previous studies highlighting the potential trade-offs between economic growth and environmental protection. Conversely, the study identifies trade openness is negatively associated with the Ecological Footprint, increase in trade openness leads to an increase in environmental degradation. Furthermore, the study identifies economic growth as an additional factor significantly impacting India’s ecological footprint. These findings underscore the complex interplay between various economic and environmental forces. This study contributes to the ongoing dialogue on sustainable development by providing valuable empirical evidence on the specific case of Ind. The findings offer policymakers crucial insights for crafting strategies that promote economic growth while minimizing environmental harm.