Achieving resource sustainability and energy security with financial development in developing countries: The moderating role of industrialization

Abstract

This research investigates the impact of Financial Development on Energy Security and Resource Sustainability across 117 oil-exporting developing countries from 2013 to 2022 using System-GMM methodology. The study focuses on examining how Financial Development influences Energy Security and Resource Sustainability, as measured by Material Footprint, with Industrialization acting as a moderating variable in these nations.“Two measures of Financial Development are employed: a comprehensive index and Domestic Credit of the Private Sector, to ensure robustness of findings. The results indicate that Financial Development contributes to enhancing Energy Security and Resource Sustainability by facilitating greater access to capital resources and reducing Material Footprint. Across four geographical data groups—comprising all oil-exporting countries, Asia, Africa, and Latin America—the relationship between Financial Development and Energy Security varies. Positive correlations are observed in models encompassing all oil-exporting countries and Asia, while negative correlations are found in Africa and Latin America.”These divergences suggest that Financial Development plays a critical role in fostering economic growth, particularly in developing contexts. This research underscores several policy implications for ecological sustainability. Governments are encouraged to support small businesses in adopting green technologies through financial assistance. Policy measures such as financial subsidies, carbon taxes on emissions-intensive enterprises, and incentives for eco-friendly industries are recommended to mitigate resource consumption in the studied regions