The Impact of Natural Resources Rent and Tourism on The Environment in South Asia

Abstract

The natural resources rent and tourism play significant roles in the economy of developing South Asian countries. Having a comprehension of how the exploitation of natural resources and tourism affects the environment in terms of economic growth is crucial to attaining sustainability. This impact analysis can help understand its severity and take appropriate action. This study creatively explores the important relationship between natural resource rents, international tourist arrivals, and economic growth their impact on the ecological footprints of the four South Asian countries, over a 24-year period from 1995 to 2019. For this purpose, the slope homogeneity tests, cross-sectional dependency tests, second generation unit root tests, and Westerlund co-integration test were applied. The Driscoll-Kraay table regression model was used to test the long-run relationship between the series. In addition, the Dumitrescu-Hurlin panel causality test was used to determine the paths of causal interactions. These tests help overcome heterogeneity and cross-dependency issues in panel data analysis. The results show inverted U-shaped EKC behavior in the selected countries, so there is a negative relationship between natural resources and ecological footprint, and tourism shows a positive relationship with the ecological footprint. This implies that natural resource rents contribute to the improvement of environmental quality in selected South Asian countries.