Examining the Impact of External Debt, Natural Resources, Foreign Direct Investment, and Economic Growth on Ecological Sustainability in Brazil

Abstract

Although some recent papers have explored the impacts of external debt on environmental sustainability, the impacts of external debt on the load capacity factor (LCF) have been ignored. In this regard, this work aims to examine the influence of renewable energy, FDI, and external debt on the LCF in Brazil over the period 1970–2021; this indicator implies the country’s strength to promote the population based on current lifestyles. This paper uses the novel augmented autoregressive distributive lag (A-ARDL) technique. The findings from the A-ARDL show that renewable energy positively influenced ecological sustainability by promoting the LCF by 0.451% in the short run and 0.038% in the long run. In addition, the findings show that an increase in the rent of natural resources promotes the LCF. In contrast, the outcomes illustrate that an increase in the external debt led to an adverse impact on ecological sustainability by decreasing the level of LCF by 0.093% in the short run and 0.162% in the long run. Furthermore, the findings demonstrated that FDI negatively affects the ecological sustainability quality by reducing the LCF in the country. The study provides beneficial recommendations to policymakers in Brazil for achieving sustainable development in Brazil.