Investigating the non-linear effects of globalization on material consumption in the EU countries: Evidence from PSTR estimation

Abstract

The efficient and sustainable use of resources has gained great importance in combating environmental threats and in keeping humanity out of resource scarcity. An effective way of monitoring and analyzing the state of ecological assets for sustainable resource policy is to understand the triggers of material consumption. To this end, this study follows a STIRPAT approach to reveal how domestic material consumption reacts to economic growth/income level, total factor productivity, human capital, population and globalization. Considering the transition effects of globalization, the study performs panel smooth transition regression on yearly data covering the 2000-2017 period for the 28 EU countries. Empirical results indicate that economic growth, total factor productivity and population increase material consumption when globalization level is below the threshold level. However, human capital decreases material usage. On the other hand, higher levels of globalization help to decrease material consumption and thus contribute to sustainable resource management.