Productive use of energy to offset the mutual exclusivity regarding natural resource dependence and sustainable environments

Resource-rich countries are largely reliant on their natural resources, which are typically unclean. Consequently, these nations find it challenging to promote environmental sustainability while simultaneously enhancing their natural resource-based economic output growth rates. Therefore, considering data from eight leading natural resource-rich countries, this study checks how natural resource dependency and productive use of energy affect the objective of establishing environmental sustainability, while controlling for other fundamental economic factors. Notably, ‘ ecological deficit ’ of the chosen resource-rich countries is innovatively used as the environmental sustainability indicator, whereby larger ecological deficits denote less sustainable environmental conditions, and vice-versa. Overall, from empirical findings, natural resource dependency is found to widen ecological deficits. Hence, the mutual exclusivity between high dependence on natural resources and establishment of a sustainable environments is duly verified by this finding. Besides, making productive use of energy is found to not only reduce ecological deficits directly, but also indirectly by lessening the extent of the abovementioned mutual exclusiveness. More precisely, productive use of energy resources is found to partially absorb the ecological deficit-widening effects associated with natural resource dependency. Furthermore, findings validate the pollution halo effect hypothesis in these countries by certifying the ecological deficit-reducing effects exerted by incoming foreign direct investments. Likewise, more international trade openness and urbanization are found to reduce ecological deficits, as well. Conversely, rule of law establishment is found to account for larger ecological deficits. Thus, based on the above findings, environmental sustainability policies are recommended.