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Impact of globalization on CO 2 emissions based on EKC hypothesis in

developing world: the moderating role of human capital

Article  in  Environmental Science and Pollution Research · March 2022

DOI: 10.1007/s11356-021-17062-9

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Environmental Science and Pollution Research
https://doi.org/10.1007/s11356-021-17062-9

RESEARCH ARTICLE

Impact of globalization on ­CO2 emissions based on EKC hypothesis

in developing world: the moderating role of human capital
Atif Jahanger1 

Received: 25 August 2021 / Accepted: 11 October 2021

© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2021

Abstract
In the last 3 decades, developing economies continuously have increased their manufacturing industries with an impressive
growth rate. Rising the trend of globalization, these underdeveloped economies are receiving economic growth at the cost of
environmental degradation. In this context, this study investigates the impact of globalization and human capital on carbon
emissions ­(CO2) in the 78 developing economies from 1990 to 2016. Our findings based on robust system generalized method
of moments (GMM) indicate that human capital and political globalization significantly reduce environmental degradation
while economic, social, and overall globalization decrease the environmental quality. Furthermore, our empirical results
support the inverted U-shaped environmental Kuznets curve (EKC) hypothesis. However, globalization (without interactive
term with human capital) appears to have no significant association with ­CO2 emissions, while (with an interactive term) it
appears to have a significant negative influence on environmental quality. Moreover, our results are robust to various robust-
ness checks; I have performed for scrutiny the consistency of our findings. This study also offers useful policy implications
for stakeholders, policymakers, and governments for promoting environmental sustainability.

Keywords  Carbon emissions · Human capital · Globalization · EKC hypothesis · GMM

Introduction (GHG) emissions. Existing literature has revealed that car-

Climate change is one of the major threats faced by human
beings on this planet. It has increased concerns about what
the inclusive atmosphere will be like during the ­21st cen-
tury and beyond (Qader et al. 2021). Many regions around
the world, melting glaciers, and changing rainfall caused
by the increase in the world’s average surface temperature
have gravely affected the superiority of local water posses-
sions (Wongtanachai et al. 2012). Over the last few dec-
ades, many empirical studies argued that climate change
and global warming problems are liable for environmen-
tal degradation. Extensive literature, such as Balsalobre-
Lorente et al. (2018), Usman et al. (2021a), Adedoyin et al.
(2020), Shahbaz et  al. (2019), and Buhari et  al. (2020)
suggested that these problems are due to greenhouse gas
Responsible Editor: Roula Inglesi-Lotz
* Atif Jahanger
atif_jahanger@hotmail.com
1
School of Economics, Hainan University,
Haikou City 570228, Hainan, China
bon dioxide (­ CO2) emissions are the decisive factors for cli-
mate change and global warming (Raheem et al. 2020; Yang
et al. 2020; Jahanger et al. 2021a). Since the signature of the
Kyoto Protocol, the issue of carbon emission has received
great attention in academic literature (Khalid et al. 2021).
The ­CO2 emissions of the total world in 2019 aggregated
to 33,891.79 million tons, which have enlarged by 1.37%
periods compared with the equal in 1970 (BP 2020).
Globalization is extensively understood in terms of help-
ing individuals, economies, and firms to increase their out-
sourcing industry, trading goods and services, and mitigating
migration at the universal stage. In another sense, globaliza-
tion attaches all developed and developing countries to share
their public policies and culture. It benefits all countries in
preceding the process of growth and development, which
is necessary to resolve the rising issues of unemployment,
poverty, and inequality. In addition to the environmental pen-
alty, globalization is found to have damaged all economies
extensively. For example, as the need increases, the economic
growth of a nation than energy consumption will be increased.
The process of achieving economic growth via industriali-
zation, urbanization, and energy consumption also results

13
Vol.:(0123456789)

in ­CO2 emissions, which deteriorates environmental excel-
lence. The increased defeat of environmental quality is due to
global warming, ecological crises, and climate change. Taken
together, global warming and climate change influence the
socioeconomic life of humans in the world (Balsalobre-Lor-
ente et al. 2020; Agboola et al. 2021; Jahanger et al. 2021b;
Yang et al. 2021a; Usman et al. 2020b, 2020c).
The role of globalization has been measured as an essen-
tial problem since 1970 in the field of applied energy and has
recognized much experiential regularity within the specific
panel and time-series data framework (Balsalobre-Lorente
et al. 2020). This is also investigative of an increasing ten-
dency in climate change and global warming; the results of
which have been felt in society in the form of loss of biodi-
versity, deforestation and rising sea levels, rainfall, massive
crop failures, and unusual wind patterns (Schatzberg 2002).
Such ecological inequity has become a challenging worry
for policymakers, academics, and governments throughout
the Earth (Panayotou 1997). The exponents of globalization
argue that it is not detrimental for an economy because it
contributes to improved environmental quality by reducing
carbon emissions (Shahbaz et al. 2015; Lee and Min 2014;
Shin 2004; Christmann and Taylor 2001). Nevertheless,
the adversary of globalization declares that it is destruc-
tive because it causes damage to the environmental qual-
ity by enhancing ­CO2 emissions Further, researchers argue
that globalization encourages economic action at the cost
of environmental excellence if the methods of consumption
and production processes remain unchanged (Yang et al.
2020). Globalization not only enhances economic growth
in developing countries but also accelerates environmental
devastation and natural resource depletion ( Wijen and Van
Tulder 2011).
Globalization, being a universal phenomenon, has been
influencing each human being in all parts of the globe in
their political-socioeconomic characteristics of life. Glo-
balization typically connects all the nations through foreign
direct investment and trade on goods and services, and its
effects are abundant. Considerable empirical researches have
attempted to point out how enlarged trade is, directly and
indirectly, degradation of the environment and how all the
dimensions of globalization such as (social, political, and
economic) the effects on environmental degradation. Glo-
balization allows the transfer of updated equipment from
developed to developing countries, facilitates the promo-
tion of division of labor, and enhances the comparative ben-
efit of different countries—globalization boots up the TFP
(total factor productivity) and economic activities via foreign
direct investment (Kamal et al. 2021). Globalization gives
investment chances through foreign direct investment and
increases financial markets. Globalization increases inter-
nationalization, interdependence, and integration. Regions,
social groups, and sectors that are negatively affected owed
13
Environmental Science and Pollution Research
to international trade are mainly concerned with ­CO2 emis-
sions and environmental degradation.
The government has used different strategies in combat-
ing ­CO2 emissions in the last decades, introducing other
sources of energy, and spending investment in clean coal
machinery in combination with several procedures in con-
trolling ­CO2 emissions at the national, local, and state lev-
els. Particularly, the main focus of this research is to relate
globalization influences on carbon emissions; I think of the
KOF Index of Globalization. Dreher (2006) has developed
the KOF Index of Globalization considering three dimen-
sions (social, political, and economic) of globalization
separately. I believe this index is suitable in determining
globalization effects in developing economies compared to
the other determinants of openness. Economic globalization
detains trade flows of capital, goods, and services. To cap-
ture the determination of economic globalization, two indi-
cators are measured. One indicator includes foreign direct
investment, portfolio investment, and actual flows of trade.
The second indicator comprises trade barriers and capital
employing hidden import restrictions, taxes on trade, and
tariff rates. Political globalization includes the number of
embassies in a country, the number of multinational compa-
nies, and the number of United Nations peace tasks a coun-
try contributed. Social globalization comprises the flow of
ideas, culture, information, internet users, numbers of radios,
and international tourism, etc.
Human capital is one of the vital input factors employed
in the production procedure for value-added (Zhang et al.
2016; Fang 2016). Education, training, competency, knowl-
edge, work experience, and skills are included in the human
capital structure. Human capital can be classified into three
elements. First, general human capital, including human
capital stock, which is a mixture of general experience and
education. Second, firm-specific human capital, which is
related to skills, education, and training. Third, task-specific
human capital, also known as knowledge, skills, experience,
and training (Fang 2016). The development of human capital
can be used to minimize the utilization of fossil fuel in the
manufacturing process (Intisar et al. 2020; Pablo-Romero
and Sánchez-Braza 2015). Yang and Zhao (2014) examine
the dynamic relationship between energy consumption and
human capital and exposed that human capital helps mini-
mize energy consumption in the production process. It is
believed that human capital plays a vital function in C ­ O2
emission reduction by increasing energy competence (Kwon
2009). The linkage between globalization, human capital,
and ­CO2 emission has gained attention in the literature.
At the broad level, globalization can be interpreted as a
procedure or situation of the economic, training, education,
political, cultural, technological meeting, ideas and mixing
of people, and regional borders which have been supposed
to control the environment during the late twentieth and
Environmental Science and Pollution Research
twenty-first centuries. According to the Stopler–Samuelson
trade theorem of Heckscher–Ohin (H-O), globalization is
connected to increase per capita income, diminish the pov-
erty gap, control the environment, and also train workers.
Globalization at the country level may move toward a cred-
ible system such as an idea, technology, knowledge, cross
border culture, information and openness to international
trade, investments in innovations, and well-organized distri-
bution of resources (Le Goff and Singh 2014). Globalization
and human capital are highly interrelated to control the envi-
ronment. Hickman and Olney (2011) found that globaliza-
tion increases the efficiency of human capital. Furthermore,
human capital is recognized as an important determinant of
sustainable economic growth and technological innovation
performance of countries (Teixeira and Queirós 2016). Inter-
estingly, the economic mechanism through which human
capital influence economic growth are also relevant to ­CO2
emission/environmental quality. Human capital helps to
minimize the use of energy consumption and fossil fuel in
the production process (Robalino-López et al. 2015). Techni-
cal education increases a human’s skill to understand energy
security and environmental pollution problems. It is believed
that human capital could play a vital role in C ­ O2 emission
reduction by improving energy competence (Kwon 2009).
Specifically, as mentioned in the background that glo-
balization is a multidimensional phenomenon comprised of
three categorical dimensions, i.e., social, political, and eco-
nomic globalization. Each of the dimensions is unique, and
it is not a rationale to consider the impacts of each of these
dimensions on ­CO2 emissions identical. However, existing
literature only used an overall index of globalization to study
its impact on ­CO2 emission, which leads to the oversimpli-
fication of the phenomenon. Therefore, I conjecture that the
impact of each of the dimensions on ­CO2 emissions is not
identical. For pragmatic policy, the formulation is impera-
tive to know how each of the dimensions of globalization
influence ­CO2 emissions. Against this backdrop, the cur-
rent study will contribute to the literature by investigating
the impact of overall globalization as well as each of the
dimensions of globalization on C ­ O2 emissions to provide a
holistic view of the globalization and C­ O2 emission nexuses
for effective policy formulation.
Besides this, existing literature only used (human devel-
opment index, primary education, etc.) as a measure of
human capital and which is unable to fully measure the
human capital as identified in the literature. For example,
give refer argue that this proxy does not capture fully human
capital. I will use the human capital index from the Penn
World Table version 9.0 (Feenstra et al. 2015) database and
check the effects of the laborers who have completed pri-
mary and secondary school education that can control car-
bon emission. Furthermore, human capital can also influence
environmental quality via its interaction with globalization
as identified in the background of the study. However, it
has not been considered in the existing literature. Hence, I
am intended to study the impact of human capital on ­CO2
emissions and how it influences C ­ O2 emissions by interact-
ing with globalization by using a comprehensive measure of
human capital and in the context of the developing econo-
mies panel. Therefore, our study carries huge importance for
stakeholders seeking a source to control ­CO2 emission and
enhance environmental quality.
The rest of the study is organized as follows: the next sec-
tion presents a literature review and hypotheses; in Data and
Methodology, I discuss our data description and variables.
Empirical Results and Discussions and Robustness Checks
provide empirical strategy and discussions, respectively.
Finally, the last section discusses the conclusion and policy
implications.
Literature review and hypothesis
development
The nexus between globalization, human capital, economic
growth, and C
­ O2 emissions have been documented in vari-
ous empirical studies, and I discussed these studies in the
following headings.
Nexus between globalization and ­CO2 emissions
Globalization allows the transfer of updated technology
from developed to developing countries and boost up the
comparative benefit of different countries. Globalization
enhances the total factor productivity (TFP) by growing
trade and economic growth through foreign direct invest-
ment (FDI). In the last 3 decades, many researchers have
used different determinants of globalization to investigate
its influence on environmental deprivation. Grossman and
Krueger (1991) have investigated the impact of globalization
(trade openness) on the environment through scale, composi-
tion, and technique effects. In the era of globalization, eco-
logical modernization theory argues that the increased rate
of a multinational organization, technological development,
capitalism, and economic growth is not only possibly appro-
priate with environmental sustainability but also could be
key points of ecological reform (Buttel 2020). Shahbaz et al.
(2018) study the asymmetric impact of globalization, eco-
nomic growth, and energy consumption on C ­ O2 emissions in
Japan with the asymmetric threshold of the ARDL method,
and their empirical findings indicate that energy consump-
tion and economic growth has a significant positive effect
on ­CO2 emissions, whereas globalization could increase
­CO2 emissions in the short run. For Gulf Cooperation
Council (GCC) countries, Yang et al. (2021a) investigated
the effects of globalization on environmental degradation
13

by applying the second-generation methods and found that
globalization and financial development are significantly
deteriorating the environmental quality. Sethi et al. (2020)
explored the relationship between financial development,
globalization, economic growth, energy consumption, and
carbon emissions in India from 1980 to 2015 with the vector
error correction model (VECM) Granger causality test and
conclude that economic growth, energy consumption, and
globalization are contributing directly to carbon emission,
whereas financial development has an adverse impact on
carbon emissions through economic growth channels. Umar
et al. (2020) employed the relationship between a natural
resource, globalization, and financial development based on
the ARDL bound test and the time series data of China over
the period of 1980–2017. Their empirical result shows that
economic growth and natural resource could degrade envi-
ronmental quality while globalization has a negative impact
on ­CO2 emissions. Further, their empirical findings demon-
strate that financial development has no significant impact
on ­CO2 emissions. Yang et al. (2020) examine the dynamic
linkage between remittance, energy consumption, globaliza-
tion, and ­CO2 emissions based on the GMM approach and
the panel data of 97 countries over the period of 1990–2016.
Further, the authors divided the sample into two subsam-
ples: first, developed countries, and second, developing and
emerging countries. Their empirical results indicate that
globalization can improve environmental quality, whereas
energy consumption and remittances could degrade the envi-
ronment. Yang et al. (2021b) used the second-generation
tests to observe the nexus between globalization, healthcare
expenditure, and industrialization in the top ten healthcare
expenditure countries. Their empirical results indicate that
globalization and industrialization improve the environmen-
tal quality, while economic growth is more responsible for
increasing the environmental level.
Summing up, after discussing the literature review and
focusing on the impact of globalization on C ­ O2 emissions, I
found that the effect of globalization on ­CO2 emissions var-
ies from country to country. Given the empirical and theo-
retical backdrop, this leads to our first testable hypothesis.
Hypothesis 1: globalization significantly impacts C
­ O2
emission in developing economies.
Nexus between human capital and ­CO2 emissions
At the micro level, there are many channels recommend-
ing that the association between human capital and carbon
emissions should be negative. In the production sector, there
is confirmation that better-educated labor builds innovation
through research and development (R&D) and the well-
organized usage of energy (Jacksohn et al. 2019; Ireland
and Clausen 2019). An industrial firm with a large number
13
Environmental Science and Pollution Research
of skilled human capital is less probable to violate the
external ecological rules (Blackman and Kildegaard 2010).
Endogenous growth theory proposes that human capital is
a driver of technological innovation and accompaniment
to investment in R&D (Vandenbussche et al. 2006; Romer
1990). Technological innovation enhances the efficiency in
the production function and organizes the energy use and
facilitates well to move to renewable energies, thus reduc-
ing ­CO2 emissions (Churchill et al. 2018). Azam (2019)
investigated the influence of human capital, financial devel-
opment, physical capital, and environment based on the
Fully Modified OLS (FMOLS) method and the panel data
of Brazil, Russia, India, China, and South Africa (BRICS)
countries over the period of 1981 to 2015. The empirical
results indicate that financial development could increase
­CO2 emissions while physical capital and human capital
could increase environmental quality. Ullah et al. (2020)
analyzed the relationship between industrialization, urbani-
zation, human capital, and ­CO2 emissions in South Africa
over the period of 1980–2018. Their results revealed that
urbanization and industrialization have employed a positive
influence on C ­ O2 emissions, whereas human capital could
improve environmental quality. Kim and Go (2020) have
investigated the nexus between human capital and environ-
mental degradation based on 72 countries. Their empirical
results indicate that the role of human capital enhances envi-
ronmental quality.
Ulucak et al. (2020) used the panel smooth transition
regression (PSTR) to observe the nexus between human cap-
ital, population, economic growth, and total factor productiv-
ity and environmental sustainability in 24 EU countries over
the period of 2000–2017, and the result demonstrates that
population, economic growth, and total factor productivity
increase the environmental degradation, while human capi-
tal improves the environmental quality. Khan et al. (2021)
the dynamic linkage between fiscal decentralization, insti-
tutional quality, human capital, and C­ O2 emission based on
the second-generation methods and the panel data over the
period of 1990–2018. Their findings indicate that the indi-
rect influences of fiscal decentralization on environmental
degradation through human capital and institutional quality
are found. Van Tran et al. (2019) used a system-generalized
method of moment (SGMM) approach to examine the nexus
between energy consumption, human development, and car-
bon emissions for 93 countries covering a period from 1990
to 2014. The empirical results found that increased human
development leads to minimized ­CO2 emissions. The fur-
ther finding indicates no significant relationship between
­CO2 emission and human development. Nathaniel et al.
(2021) studied the causality relationship among the natural
resources, human capital, renewable energy, and ecologi-
cal footprint based on second-generation methods over the
period of 1992–2016. The empirical results indicate that
Environmental Science and Pollution Research
natural resources and economic growth increase environ-
mental degradation, whereas human capital is not yet at a
desirable stage to mitigate environmental pollution.
Resting on the given, theoretical, and empirical literature,
I suggest our second testable as a hypothesis as follows:
Hypothesis 2: human capital has a negative impact on
­CO2 emission in developing economies.
Globalization and ­CO2 emissions: the role of human
capital
Heron (2008) argues that there are two main theoretical
schools of thought between human capital and globalization,
namely, the hegemonic view and neoliberal perspectives.
According to the neoliberal assessment of globalization
considers the phenomenon is an unescapable strength of
“creative destruction” in the way it impacts international
trade, investment across borders through foreign direct
investment, competence in production cycles, and innova-
tions in technology through knowledge, skills, and equip-
ment (Tsai 2007). Hence, globalization creates new oppor-
tunities for laborers to increase their wages, skills, and
improve living standards. Consistent with Firebaugh and
Goesling (2004), the advantage of globalization can be more
globalized if the labor market replies to variations in demand
and supply. Varsava (2003) argues that the globalization pro-
ject has fast-tracked the development of industrialization in
developing economies; within this stand, Asongu and Odhia-
mbo (2019) investigated that trade openness enhances the
institutional morals that are appropriate in driving economic
prosperity in less-developed economies.
On the contrary, hegemonic perspective, the phenomenon
of globalization as a project with a hidden agenda intended
to deprive developing/poor economies and further improve
wealthy countries while Rodrik et al. (2004) argue that glo-
balization builds a new world architecture in which universal
influences (i.e., industrial zones and international financial
organizations) have as an essential objective that facilitates
free-market competition and gives more opportunities for
labors to enhance their income. The linkage between glo-
balization, human capital, and ­CO2 emission has gained
attention in the literature. At the broad level, globalization
can be interpreted as a procedure or situation of the eco-
nomic, training, education, political, cultural, technological
meeting, ideas and mixing of people, and regional borders
which have been supposed to control the environment during
the late 20th and 21st centuries. The hegemonic school of
thought is also consistent with the development of human
capital to the negative influence of globalization on eco-
nomic development and environmental sustainability (Brand
and Wissen 2013).
Hypothesis 3: human capital moderates the relationship
between globalization and C
­ O2 emissions in developing
economies.
Economic growth and ­CO2 emissions
The pioneering work of Grossman and Krueger (1991)
investigated the association between income level and envi-
ronment based on the EKC hypothesis supposing an inverted
U-shaped influence of income per capita on the environment.
Dogan and Inglesi-Lotz (2020) observed the link between
economic growth and ­CO2 emission in European countries
for the period 1980 to 2014 and found a U-shaped linked
between economic growth and ­CO2 emission and confirmed
the existence of the U-shaped EKC hypothesis. By using
the FMOLS method in the panel data, Destek and Sinha
(2020) examined the impact of economic growth and ­CO2
emission within the framework of the EKC hypothesis by
dividing countries into 24 organizations for economic coop-
eration and development of countries for the period from
1980 to 2014. Their results support the U-shaped relation-
ship between ­CO2 emission and economic growth. Nizam
et al. 2020) checked the links between economic growth and
­CO2 emission for the 65 Belt and Road Initiative (BRI) using
two-stage least squares (2SLS) regressions over the period
from 2000 to 2016. Their results confirmed the inverted
U-shaped EKC hypothesis in upper-middle and high-income
countries. Koc and Bulus (2020) studied the causality rela-
tionship among economic growth, energy consumption,
trade openness, and C ­ O2 emissions for the Korean economy
over the period of 1971–2017. The empirical results do not
support the EKC hypothesis. Sarkodie and Ozturk (2020)
explored the EKC for Kenya over the period of 1971–2013.
Following the ARDL method, the empirical result confirms
the inverted U-shaped EKC hypothesis in the case of Kenya
with a turning point of $86,809.55.On the other hand, the
same study by Suki et al. (2020) on the Malaysian economy
over the period of 1970–2018 was the first EKC hypothesis
estimation study for carbon emissions to arrive at an inverted
U-shaped EKC hypothesis.
Resting on the given, theoretical, and empirical literature,
I suggest our fourth testable as a hypothesis as follows:
Hypothesis 4: environmental Kuznets curve exists in the
case of developing economies.
Besides our explanatory variables, the literature also
identified several important variables that significantly influ-
ence ­CO2 emissions, and overlooking these variables in the
empirical model can lead to omitted variable bias and biased
estimation. Therefore, following the empirical literature, I
have also included (economic growth, financial develop-
ment, trade openness, urban population, labor force, gross
13
 Environmental Science and Pollution Research

capital formulation) various control variables in our model
for robust and consistent estimators (Usman and Hammar
2020; Kamal et al. 2021; Usman and Jahanger 2021; Usman
and Makhdum 2021; Qader et al. 2021; Usman et al. 2020a,
2021b, 2021c; Balsalobre-Lorente et al. 2019; Leitão et al.
2021; Zhang et al. 2021; Zeraibi et al. 2021; Khalid et al.
2021; Qayyum et al. 2021; Jahanger 2021).
Data and methodology
Variables, data presentation, and model
construction
where GDP shows economic growth, GDPS indicates the
square of economic growth, TGL specifies the overall glo-
balization and three dimensions of globalization (i.e., eco-
nomic, social, and political), FDI stands for foreign direct
investment; FD is for financial development; TRD means
trade openness; URP is for urban population, and ENG is
for energy consumptions. Further, this study proposes that
human capital and globalization might have an interactive
role besides its direct effect on ­CO2 emissions in developing
economies. To check the moderation impact of human capi-
tal and globalization on ­CO2 emission, I added an interactive
term in Eq. (4) and got a new equation as follows:
( ) ( ) ( ) ( )
ln CO2it = 𝛽0it + ln 𝛽1 HCit + ln 𝛽2 TGLit + ln 𝛽3 TGLit ∗ HCit

The objective of this study is to investigate the effect of

( ) ( ) ( ) ( )
+ ln 𝛽4 GDPit + ln 𝛽5 FDIit + ln 𝛽6 FDit + ln 𝛽7 TRDit
human capital and globalization on ­CO2 emissions for the
( ) ( )
+ ln 𝛽8 URPit + ln 𝛽9 ENGit + 𝜀it
panel of 78 developing economies. I sorted these countries (4)
based on the availability of annual data for the period 1990 ( ) ( ) ( ) (
ln CO2it = 𝛽0it + ln 𝛽1 HCit + ln 𝛽2 EGit + ln 𝛽3 EGit ∗ HCit
)
to 2016. Additionally, I classify the developing economies ( ) ( ) ( )
based on the United Nations country classification1 to cre-
+ ln 𝛽4 GDPit + ln 𝛽5 FDIit + ln 𝛽6 FDit

ate a better assessment. Though dissimilar, these countries

( ) ( ) ( )
+ ln 𝛽7 TRDit + ln 𝛽8 URPit + ln 𝛽9 ENGit + 𝜀it
share standard features include rising population and top (5)
­CO2 emissions over the past 3 decades. (Please refer to the ( ) ( ) ( ) (
ln CO2it = 𝛽0it + ln 𝛽1 HCit + ln 𝛽2 SGit + ln 𝛽3 SGit ∗ HCit
)
Appendix Table 10 for the country classification that I have ( ) ( )
+ ln 𝛽4 GDPit + ln 𝛽5 FDIit
used in our research). For this intention, the panel version of ( ) ( ) ( )
the econometric model is expressed as follows: + ln 𝛽6 FDit + ln 𝛽7 TRDit + ln 𝛽8 URPit
( )
+ ln 𝛽9 ENGit + 𝜀it
(1)
( )
CO2it = f HCit , TGLit , Xit , 𝜀it (6)
( ) ( ) ( ) ( )
where ­CO2 denotes the C ­ O2 emission metric tons per ln CO2it = 𝛽0it + ln 𝛽1 HCit + ln 𝛽2 PGit + ln 𝛽3 PGit ∗ HCit
capita, it is a dependent variable, TGL indicates overall
( ) ( )
+ ln 𝛽4 GDPit + ln 𝛽5 FDIit
globalization, and its three dimensions (political, economic, ( ) ( ) (
+ ln 𝛽6 FDit + ln 𝛽7 TRDit + ln 𝛽8 URPit
)
and social globalization), HC denotes human capital and ( )
+ ln 𝛽9 ENGit + 𝜀it
expletory variables, and X is the vector of control variables
(7)
which comprises economic growth, the square of economic
growth, financial development, foreign direct investment, where subscript i represents cross-sections ( i = 1,
urban population growth, and energy efficiency I will con- 2….78) and t represents the time period (1990–2016),
vert all variables into a natural logarithm to attain reliable represents stochastic error terms. is constant, are the
results (Manning 1998). The log-linear specification of our parameters to be anticipated. PG indicates political
empirical model is given in Eq. 2. globalization; SG illustrates social globalization, and
PG is political globalization. All the data of variables
were collected from the World Bank indicators (2020)2
( ) ( ) ( ) ( )
ln CO2it = 𝛽0 + ln 𝛽1 HCit + ln 𝛽2 TGLit + ln 𝛽3 Xit + 𝜀it
(2) database, except from the globalization and human capital,
Additionally, I add GDP square to check the Environmen- which were obtained from the KOF Swiss Economic
tal Kuznets Curve (EKC) hypothesis. The extended form of Institute 3 (Dreher 2006) and Penn World Table version
the EKC hypothesis can be written as: 10.0 4 (Feenstra et  al. 2015) database. The variable
( ) ( ) ( ) ( ) description is given in Table 1.
ln CO2it = 𝛽0it + ln 𝛽1 HCit + ln 𝛽2 TGLit + ln 𝛽3 GDPit

(3)
( ) ( ) ( )
+ ln 𝛽4 GDPSit + ln 𝛽5 FDIit + ln 𝛽6 FDit
( ) ( ) ( )
+ ln 𝛽7 TRDit + ln 𝛽8 URPit + ln 𝛽9 ENGit + 𝜀it

2
  https://​data.​world​bank.​org/​indic​ator
3
1
 See more details: https://​www.​un.​org/​devel​opment/​desa/​dpad/​wp-​   https://​kof.​ethz.​ch/​en/
4
conte​nt/​uploa​ds/​sites/​45/​WESP2​019_​BOOK-​ANNEX-​en.​pdf   https://​www.​rug.​nl/​ggdc/​produ​ctivi​ty/​pwt/?​lang=​en

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Environmental Science and Pollution Research

Table 1  Variable descriptions
Variables Acronyms Definition

CO2 per capita
Human capital index
Overall globalization TGL
Economic globalization index EG
Social globalization index
Political globalization index
GDP per capita
Financial development
Trade
Urban population growth
Energy consumptions
CO2 CO2 emission (metric tons per capita): WB (2020)
HC Human capital index, based on years of schooling and returns to education. Source: Penn World
Table version 9.1 (Feenstra et al. 2015) database
KOF Index (0–100), source: KOF Index (Dreher 2006)
Economic globalization index: is measured by the trade flow with other countries, FDI and portfolio
investment, and restriction on these inflows and outflows. Source: KOF Index (Dreher 2006)
SG The social globalization index is measured by personal contact, information flows, and culture near-
ness. Source: KOF Index (Dreher 2006) database
PG Political globalization index is measured by the embassy’s numbers in other countries, international
organization membership, UN Security Council mission meeting group, and a number of treaties
signed with other countries. Source: KOF Index (Dreher 2006) database
GDP GDP per capita (Constant 2010 US $), source: WB (2020)
FD Domestic credit provided by the financial sector (% of GDP), source: WB (2020)
TRD Trade (% of GDP), source: WB (2020)
URP Urban population growth % of annual source: WB (2020)
ENG kg of oil equivalent per capita. Source: World Bank (2020)

WB, World Bank indicators; UNDP, United Nations Development Programme

Generalized method of moments (GMM) estimators Table 3 presents the correlation matrix of all the variables
in our main regression. suggested the rule of thumb is that
Generalized Method of Moments is a generic approach if the zero-order or pair-wise correction coefficient between
for estimating parameters in the statistical model and the two regressors is higher than 0.85%, then multicollinear-
mostly employed estimation model in the panel data. OLS ity is a severe problem. So, as per the above arguments,
estimator is inappropriate in the presence of nonstationary Table 3 shows that all variables’ coefficients are less than
data as they would have a consistent endogenous problem. 0.85; which suggests that our models are free from multicol-
Therefore, GMM (Arellano and Bond 1991) was applied linearity among regressions.
to overcome the endogenous problem. Furthermore,
compared with the one-step GMM, the two-step system Baseline results
GMM estimator produces more asymptotic well-organized
values, especially in conditions where autocorrelation and OLS estimator was implemented for understanding the
heteroscedasticity problems. Therefore, I implemented two- stability and initial trend of the coefficients of the model.
system GMM techniques to estimate our model. I adopted
the “Xtabond2” command to make the estimation models
inclusive. Further, the Hansen test was used to corroborate Table 2  Descriptive statistics
the effectiveness of the instrument variable instead of Variable Mean Std. dev. Min Max
the Sargan test. Roodman (2009) investigated that the
Sargan test is not robust to deal with autocorrelation or LCO2 0.059536 1.63597 −3.867432 4.249098
heteroscedasticity problems. LHC 0.673257 0.269033 0.029175 1.337384
LTGL 3.928236 0.252449 3.072693 4.446175
LEG 3.84789 0.311356 2.657633 4.556875
LSG 3.706113 0.472899 1.883706 4.479336
Empirical results and discussions LPG 4.097725 0.293274 2.736127 4.530664
LGDP 7.86525 1.370701 5.105599 11.15166
The objective of the study was to understand the influence of LFDI 19.82655 2.497062 4.60517 26.39625
human capital and globalization process on carbon emission LFD 3.543762 0.809982 1.014113 5.517056
across developing countries. Table 2 presents the descriptive LTRD 4.150069 0.695404 1.787264 6.08068
statistics such as mean, median, maximum, and standard LURP 1.036645 0.603932 4.999264 2.87709
deviation of the entire variable and the summary statistics LENG 15.46665 1.616863 2.25634 10.00425
of our variables from 1990 to 2016 through a box plot (see   min and max show the minimum and maximum value of all vari-
Fig. 1). ables; Std. dev. is the standard deviation

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 Environmental Science and Pollution Research

6 1.6
0.046
1.4 0.04446(Max)
4.2491(Max) 1.33738(Max) 0.044
4
1.2
0.042
1.0
2 0.040

Range
Range

Range
0.8 0.038
0 0.6 0.036

0.4 0.034
-2
0.2 0.032
0.03073(Min)
-3.86743(Min) 0.0 0.02918(Min) 0.030
-4

-0.2 0.028
LCO2 LHC LTGL

(a). LCO2 (b). LHC (c). LTGL

5.0 5.0
5.0

4.5 4.55687(Max)
4.5 4.47934(Max) 4.5 4.53066(Max)

4.0
4.0
4.0
Range
Range

Range
3.5

3.5
3.0
3.5

3.0 2.5

3.0
2.65763(Min) 2.0
1.88371(Min)
2.5 2.73613(Min)
1.5
LSG 2.5
LEG LPG

(d). LEG (e). LSG (f). LPG

30 7
12
26.39625(Max) 6
11 11.15166(Max) 5.51706(Max)
25
5
10
20 4
9
Range

3
Range

Range

8 15
2
7
1
10
6 0

5 5.1056(Min) 5 -1
4.60517(Min) -1.01411(Min)

4 -2
LGDP 0
LFDI LFD

(g). LGDP (h). LFDI (i). LFD

Fig. 1  Box plot summary statistics of our key variables (developing world)

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Environmental Science and Pollution Research

8 4 12

2.87709(Max)
6 6.08068(Max) 2 10 10.00425(Max)

4 0 8
Range

Range

Range
2 -2 6

0 -4
4
-4.99926(Min)
-2 -1.78726(Min)
-6 2.25634(Min)
2

LTRD LURP
LENG

(j). LTRD (k). LURP (l). LENG

Fig. 1  (continued)

Table 3  Correlation matrix
LCO2 LHD LTGL LEG LSG LPG LGDP LFDI LFD LTRD LURP LENG

LCO2 1
LHC 0.3137* 1
LTGL 0.3175* 0.7535* 1
LEG 0.4208* 0.5878* 0.7277* 1
LSG 0.3853* 0.7837* 0.7925* 0.6979* 1
LPG 0.1476* 0.3313* 0.6259* 0.1022* 0.3249* 1
LGDP 0.6664* 0.7412* 0.6716* 0.5938* 0.7422* 0.1554* 1
LFDI 0.1421* 0.5445* 0.6557* 0.4174* 0.5063* 0.5726* 0.4695* 1
LFD 0.2084* 0.4902* 0.4926* 0.3663* 0.4482* 0.3065* 0.3899* 0.3485* 1
LTRD 0.2008* 0.2905* 0.3949* 0.5457* 0.3934* 0.029 0.2935* 0.0795* 0.1784* 1
LURP 0.0622* 0.4380* 0.3404* 0.1813* 0.3409* 0.2583* 0.2585* 0.2320* 0.2664* 0.0703* 1
LENG 0.2593* 0.0393 0.0475* 0.2989* 0.2089* 0.5797* 0.2125* 0.4809* 0.1397* 0.4117* 0.0589* 1

***, **, and * shows the coefficients are significant at the 1%, 5%, and 10% level of significance, respectively

I reported our baseline regression results in Table 4. The
results of model 1 indicate that HC could reduce C­ O2 emis-
sions while TGL can increase C ­ O2 emissions. These find-
ings support our first and second hypotheses that HC sig-
nificantly reduces C­ O2 emission while TGL decreases the
environmental quality. The coefficient of HC in model 2 is
also a negative influence on C ­ O2 emissions while EG is a
positive influence on ­CO2 emissions. However, the results
in model 3 signify the negative and statistically significant
effect of human capital on C­ O2 emissions, whereas SG also
decreases the environmental performance. The results of HC
and SG also support our first and second hypotheses. The
results in model 4 indicate that HC has a negative influence,
whereas the coefficients of PG have a positive influence on
­CO2 emissions.
According to Table 5, the negative coefficient of the inter-
active term (HC*EG) shows that human capital negatively
moderates the relationship between economic globalization
and ­CO2 emissions mean when human capital increases than
more improve environmental quality because promoting
effects of economic globalization. Further in model 1, social
globalization has decreased the environmental quality while
political globalization has improved environmental perfor-
mance. The coefficient of the interactive term (HC*SG) in
model 2 is negative and statically significant at 5% on ­CO2
emission, which means that when human capital improves

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Table 4  HC, TGL, and ­CO2 Variables Model 1 Model 2 Model 3 Model 4

emissions: OLS fixed effects
baseline results HC −0.192*** −0.207*** −0.248*** −0.218***
(0.0557) (0.0557) (0.0554) (0.0568)
LTGL 0.417***
(0.0856)
LEG 0.147***
(0.0430)
LSG 0.240***
(0.0445)
LPG −0.0263
(0.0513)
LGDP 0.978*** 1.193*** 0.733*** 1.170***
(0.145) (0.139) (0.162) (0.142)
LGDPS −0.0264*** −0.0392*** −0.0114 −0.0368***
(0.00966) (0.00942) (0.0106) (0.00956)
LFDI 0.00191 0.00304 0.00495 0.00711
(0.00446) (0.00451) (0.00434) (0.00436)
LFD 0.0906*** 0.0947*** 0.0967*** 0.0983***
(0.0112) (0.0111) (0.0110) (0.0111)
LTRD 0.0126 0.0152 0.0255 0.0304*
(0.0164) (0.0167) (0.0160) (0.0161)
LURP 0.00959*** 0.00916** 0.00839** 0.00795**
(0.00359) (0.00360) (0.00357) (0.00360)
LENG −0.223*** −0.220*** −0.180*** −0.219***
(0.0464) (0.0466) (0.0467) (0.0474)
Observations 1934 1934 1934 1934
Number of countries 78 78 78 78
R-squared 0.514 0.511 0.516 0.508

based on the authors’ estimations

this table reports baseline results obtained using OLS fixed effects estimator. The robust standard errors are
reported in parenthesis. ***, **, and * show the coefficients are significant at the 1%, 5%, and 10% level of
significance

more, ­CO2 emissions decrease more due to the promotion
of social globalization. Regarding the other variables, eco-
nomic globalization can increase C ­ O2 emissions, whereas
political globalization could improve environmental quality.
However, based on the results in model 3, the interactive
term (HC*PG) has a negative and statistically significant
effect on C ­ O2 emissions, which means that when human
capital improves more (technical education, health benefits,
etc.), ­CO2 emissions decreases more due to more encourage-
ment on political globalization. These results provide initial
support to our forecast on the role of human capital and
political globalization on C ­ O2 emissions in hypothesis 3.
Based on the results reported in model 4, the interactive term
between overall globalization and human capital has a nega-
­ O2 emissions.
tive and statically significant influence on C
Still, our results indicate that human capital has played a
vital role in controlling C
­ O2 emissions. Regarding the other
variable, overall globalization has a positive influence on
­CO2 emissions.
Results of the system GMM estimator
Considering, the inconsistent and potentially biased esti-
mates of our baseline fixed effects model due to omitted
variables, endogeneity, etc. issues, I applied the two-step
system GMM method to get more reliable outcomes. Table 6
reports the results of system GMM. Sargan’s and Hansen’s
test displays that I cannot reject the null hypothesis of over-
identifying restrictions which confirms that instruments are
valid. Furthermore, the first-order serial correlation AR (1)
is significant at the 1% level, second-order serial correla-
tion AR (2), and the Hansen test was insignificant. These
misspecification tests proved the correctness of the GMM
specification. This suggests that the choice of the two-step
system GMM technique is more appropriate in our case,
and the empirical outcomes can be relied upon for statis-
tical implication. The negative and statistically significant
coefficient of HC in model 1 is consistent with our baseline
fixed effects results, which supports our Hypothesis 1, which

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Environmental Science and Pollution Research

Table 5  Interactive terms Variables Model 1 Model 2 Model 3 Model 4

between HC and TGL on ­CO2
emissions: OLS fixed effects LHC −0.264*** −0.151* −0.201** −3.447***
baseline results
(0.0663) (0.0820) (0.0845) (1.107)
LEG 0.221*** 0.101** 0.106**
(0.0641) (0.0425) (0.0426)
LSG 0.0165*** 0.0212*** 0.0184***
(0.00187) (0.00211) (0.00185)
LPG −0.0991** −0.0587 −0.247***
(0.0501) (0.00108) (0.0739)
LEG*LHC −0.00158***
(0.000592)
LSG*LHC −0.00301***
(0.000795)
LPG*LHC -0.00189**
(0.000741)
LTGL 0.00313*
(0.0170)
LTGL*HC −0.0113*
(0.00608)
LGDP 0.518*** 0.526*** 0.503*** 1.066***
(0.0347) (0.0344) (0.0344) (0.267)
LFDI 0.00187 0.000510 0.00159 0.108***
(0.00442) (0.00445) (0.00443) (0.0389)
LFD 0.0876*** 0.0858*** 0.0844*** −0.00809***
(0.0110) (0.0110) (0.0110) (0.00234)
LTRD 0.00648 0.00581 0.00453 −0.371***
(0.0162) (0.0162) (0.0162) (0.138)
LURP 0.0101*** 0.00989*** 0.00991*** −0.0829***
(0.00350) (0.00350) (0.00350) (0.0303)
LENG −0.140*** −0.143*** −0.171*** 3.931***
(0.0460) (0.0447) (0.0451) (0.292)
Constant −3.627*** −3.092*** −3.293*** −3.945***
(0.852) (0.797) (0.812) (0.985)
Observations 1934 1934 1934 1934
Number of countries 78 78 78 78
R-squared 0.532 0.533 0.532 0.562

based on the authors’ estimations

This table reports baseline results obtained using OLS fixed effects estimator. The robust standard errors
are reported in parenthesis. ***, **, and * show the coefficients are significant at the 1%, 5%, and 10%
level of significance

holds that human capital has a negative influence on ­CO2
emissions. This means that the human capital could improve
the environmental quality. The value of the coefficient dis-
closes that a 1% increase in human capital leads to a 0.195%
decrease in ­CO2 emissions. This finding is consistent with
those of Van Tran et al. (2019), who showed the negative
relationship between human capital and ­CO2 emission. In
Sub-Saharan Africa, the most essential stakeholders such as
the disabled, marginalized, and poor people are not carried
out along in the movement for environmental sustainability.
The government can interfere in the market by enhancing the
situation of employment, work hours, wage structure, good
education, and health care facilities.
In model 1, the relationship between globalization and
­CO2 emissions per capita was positive at a 1% level of signif-
icance, indicating that a 1% increase in globalization led to a
1.086% increase in ­CO2 emission. These results corroborate
those found by Omoke et al. (2020). This may be clarified
by the fact in developing economies due to trade openness;
most developed countries shifted their polluting industries to

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 Environmental Science and Pollution Research

Table 6  HC, TGL, and ­CO2 emissions: system-GMM that a 1% increase in economic growth to 1.693% increase
Variables Model 1 Model 2 Model 3 Model 4 in ­CO2 emission, while a 1% increase in GDPS decreases
carbon emission by 0.0192% in the long run. In short, these
LHC −0.195** −1.088*** −1.509*** −0.266*** empirical results are conforming to the inverted U-shaped
(0.0949) (0.0785) (0.136) (0.0518) relationship between ­CO2 emission and economic growth
LTGL 1.086*** in the developing countries under study. These results are
(0.182) consistent with the finding of Mert et al. (2019) and Zhang
LEG 0.0362*** et al. (2021) which supports my second Hypothesis.
(0.00151) In model 2, the coefficient of human capital has a negative
LSG 0.0327*** significant effect on ­CO2 emissions, but I can readily observe
(0.00211) that for model 1 and model 2, respectively, they were pretty
LPG −0.729*** close with each other, while the coefficient of LHC in model
(0.0633) 2 was evidently greater than the model 1. It is noted that a
LGDP 1.693*** 2.394*** 2.468*** 1.474*** 1% increase in LHC leads to a 1.088% reduction in ­CO2
(0.394) (0.316) (0.365) (0.203) emissions. Our findings are consistent with those of Azam
LGDPS −0.0192 −0.0593*** −0.0672*** −0.0244** (2019), and this result also supports our second hypothesis.
(0.0224) (0.0172) (0.0206) (0.0118) The relationship between economic globalization and ­CO2
LFDI −0.320*** −0.252*** −0.205*** 0.0753*** emissions was positive, statically significant at a 1% level.
(0.0169) (0.0107) (0.0114) (0.00473) It is indicating that a 1% increase in economic globalization
LFD 0.0249 0.0793*** 0.105*** 0.230*** led to a 0.0362 increase in ­CO2 emissions. Our finding also
(0.0198) (0.0203) (0.0161) (0.0116) supports the ecological modernization theory. This result
LTRD 0.391*** 0.280*** 0.412*** 0.197*** is also in line with the finding of Destek (2020). Basically,
(0.0546) (0.0519) (0.0429) (0.0223) economic globalization is measured through foreign direct
LURP −0.0357** −0.192*** −0.132*** −0.00184 investment, portfolio investment, and trade. The first rea-
(0.0178) (0.0124) (0.0126) (0.00904) son, developed countries through FDI shifted their polluted
LENG 0.590*** 0.605*** 0.506*** 0.174*** industries to developing countries because these countries
(0.0372) (0.0289) (0.0376) (0.0193) have low environmental regulations. Second, several climate
Constant −20.45*** −20.24*** −19.26*** −12.29*** change agreements between trade and the environment have
(1.490) (1.434) (1.536) (0.806) failed to produce the desired outcome in developing econo-
Observations 1891 1891 1891 1891 mies. The positive and negative values of the coefficients of
Number of 78 78 78 78 GDP and GDP square with C ­ O2 emission express the con-
countries
cept of the EKC. It is noted that a 1% increase in economic
AR (1) −3.640 −3.610 −3.740 −3.320
growth to a 2.394% increase in C ­ O2 emission, while a 1%
Prob. value (0.000) (0.000) (0.000) (0.001)
increase in GDPS decreases carbon emission by 0.0593%
AR (2) −1.000 −1.260 −1.020 −0.970
in model 2.
Prob. value (0.317) (0.207) (0.308) (0.334)
Interestingly, in Table 6 and model 3, the coefficients of
Hansen 26.10 30.24 32.48 29.91
human capital are also negative and significant at a 1% level,
Prob. value (0.513) (0.352) (0.255) (0.368)
but the coefficient is greater than the other models (1 to 2).
 based on the authors’ estimations Its mean 1% increase in LHC leads to a 1.509% decrease in
This table reports our main results obtained using the two-step system ­CO2 emissions. This result also supports the human capi-
GMM estimator. The robust standard errors are reported in parenthe- tal theory. The negative and statistically significant coeffi-
sis. ***, **, and * show the coefficients are significant at the 1%, 5%, cient of HC in model 3 is consistent with our baseline fixed
and 10% level of significance
effects results. This conclusion is consistent with the work
of Ahmed et al. (2020). The sign of social globalization (SG)
appears consistently positive and has a significant impact
developing countries because these countries have low envi- on ­CO2 emission. The value of the coefficient discloses that
ronmental regulations, and developing economies also focus a 1% increase in SG leads to a 0.0327% increase in C ­ O2
on maximum growth instead of environmental quality. The emission. This finding is consistent with those of (Sasana
positive and statistically significant coefficient of LTGL in 2018). The empirical results support the famous theory of
model 1 is consistent with our baseline fixed effects results, ecological modernization and world polity theory. I meas-
which supports our Hypothesis 1. The positive and nega- ure social globalization through personal contact, cultural
tive values of the coefficients of GDP and GDP square with nearness, and information. Disli et al. (2016) has investi-
­CO2 emission express the concept of the EKC. It is noted gated that globalization cause issues in the field of culture,

13
Environmental Science and Pollution Research
e.g., loss of the native culture of a country or a region, the
existence of destruction of cultural values, decreased taste
patriotism, lifestyle, and nationalism that enhances did not
match the custom.
The negative and statistically significant coefficient of
human capital in model 4 is consistent with our baseline
fixed effect and also supports the human capital theory. But
the coefficient is greater than model 1 and less than models
2 and 3. Its mean 1% increase in LHC leads to a 0.266%
decrease in ­CO2 emissions. This finding is consistent with
those of Ahmed et al. (2020) who showed the negative rela-
tionship between human capital and C ­ O2 emission. In model
4, the relationship between political globalization and ­CO2
emissions is negative and significant at a 1% significance
level, indicating that a 1% increase in political globalization
led to a 0.729% decrease in ­CO2 emissions. The empiri-
cal results support the famous theory of the world polity
theory. This finding is consistent with those of Shahbaz et al.
(2017) that show political globalization could decrease the
­CO2 emissions in China.
The results of control variables are mixed and consistent
with the theoretical and empirical literature, and I found no
anomaly regarding the findings of control variables.
Table 7 and model 1 show the coefficient of the interac-
tive term (LEG*LHC) significantly negatively influences
­CO2 emissions which shows that human capital negatively
moderates the impact of economic globalization on ­CO2
emissions. I argue that human capital can improve through
foreign direct investment because the inward investment
could be hiring and training local workers, thus increase
human resource development. When human capital
increases, it decreases C­ O2 emissions, promoting the effect
of economic globalization. The negative and statistically
significant coefficient of an interactive term in model 1 is
consistent with our baseline fixed effects results. It is indicat-
ing that a 1% increase in interactive term (LEG*LHC) led
to a 0.0348% decrease in ­CO2 emissions, whereas LHC has
a negative influence on ­CO2 emissions and also supports
our hypothesis 3. According to model 2, the negative coef-
ficient of an interactive term (LSG*LHC) shows that human
capital negatively moderates the relationship between social
globalization and C ­ O2 emissions. I argue that human capital
can improve through culture. According to Gudykunst et al.
(1988), culture is defined as a total of knowledge that a per-
son needs in a certain situation, opinion, habit, norm, and
knowledge of the language. When human capital increases,
it is decreasing the ­CO2 emissions and promoting the effects
of social globalization. The negative and statistically sig-
nificant coefficient of the interactive term (LSG*LHC) in
model 2 is consistent with our baseline fixed effects results.
It is noted that a 1% increase in LSG*LHC led to a 0.0480%
decrease in ­CO2 emissions.
Therefore, the result of the interactive term between
LPG*LHC has a significant negative influence on ­CO2 emis-
sions and shows that human capital negatively moderates
the impact of LPG on C ­ O2 emissions. I argue that human
capital could improve through the international organization
because multinational companies share skills and knowl-
edge and educate people on how to control ­CO2 emissions.
When human capital increases, it decreases ­CO2 emissions,
promoting the effect of political globalization. The nega-
tive and statistically significant coefficient of the interac-
tive term in model 3 is consistent with our baseline fixed
effects results. The value of the coefficient discloses that a
1% increase in LPG*LHC leads to a 0.0584% decrease in
­CO2 emissions and supports our Hypothesis (3). The nega-
tive and statistically significant coefficient of the interactive
term (LTGL*LHC) in model 4, shows that human capital
negatively moderates the relationship between overall glo-
balization and ­CO2 emissions. I argue that human capital
can improve through globalization because globalization
allows the transfer of updated technology from developed
to developing countries and boost up the comparative benefit
of different countries. Globalization enhances the total factor
productivity (TFP) by growing trade and economic growth
through foreign direct investment (FDI). Globalization offers
investment chances through FDI and improves financial mar-
kets. Globalization boots up trade and economic growth that
directly influences the energy demand and environmental
quality. When human capital increases, it decreases C ­ O2
emissions, promoting the effects of globalization. The nega-
tive and statistically significant coefficient of the interac-
tive term (LTGL*LHC) in model 2 is consistent with our
baseline fixed effects results. It is noted that a 1% increase
in LTGL*LHC led to a 0.0649% decrease in C ­ O2 emissions,
whereas LHC has a negative influence on ­CO2 emissions. It
is noted that a 1% increase in LHC leads to a 6.987% reduc-
tion in C
­ O2 emissions, which also supports our hypothesis
3. The results of control variables are mixed and consistent
with the theoretical and empirical literature, and I found no
anomaly regarding the findings of control variables.
Robustness checks
As discussed in the above section, I measured HC by using
the human capital index, based on years of schooling and
return to education for our main analysis. Nevertheless,
I used an alternative measure of human capital, i.e., the
human development index (HDI) 5. This proxy is also
widely used in the literature review to measure human
5
 See more details: http://​hdr.​undp.​org/​en/​conte​nt/​human-​devel​
opment-​index-​hdi
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Table 7  Interactive terms Variables Model 1 Model 2 Model 3 Model 4

between HC and TGL on ­CO2
emissions: system-GMM LHC −3.617** −6.818** −7.916*** −6.987**
(1.728) (3.236) (2.614) (3.302)
LEG 5.833*** 0.157*** 0.218***
(1.736) (0.0432) (0.0198)
LSG 0.244*** 2.883** 0.0977**
(0.0746) (1.402) (0.0483)
LPG −10.72*** −7.521*** 0.0648***
(1.771) (1.792) (0.0222)
LEG*LHC −0.0348**
(0.0153)
LSG*LHC −0.0480***
(0.0138)
LPG*LHC −0.0584***
(0.0141)
LTGL 0.0913**
(0.0414)
LTGL*LHC −0.0649***
(0.0150)
LGDP 3.986*** 8.376*** 8.906*** 8.500***
(0.431) (0.718) (0.362) (0.365)
LFDI −0.928*** −1.923*** −2.241*** −0.592***
(0.199) (0.376) (0.0680) (0.0306)
LFD −0.122 −0.00416 −0.742*** 0.958***
(0.321) (0.0100) (0.187) (0.0887)
LTRD 0.00321 0.00944 −0.907* −1.785***
(0.661) (0.0113) (0.465) (0.187)
LURP 0.772*** 0.516*** 0.858*** 3.992***
(0.184) (0.143) (0.0415) (0.146)
LENG 2.146*** 2.992*** 3.025*** −0.225
(0.395) (0.602) (0.274) (0.305)
Constant −22.90*** −50.80*** −64.58*** −40.07***
(7.362) (8.504) (5.207) (5.772)
Observations 1941 1941 1941 1941
Number of countries 78 78 78 78
AR (1) −1.000 −2.250 −2.420 −0.680
Prob. value (0.317) (0.024) (0.016) (0.498)
AR (2) −1.340 −1.010 −1.020 −1.620
Prob. value (0.181) (0.313) (0.309) (0.106)
Hansen 21.850 23.810 33.170 33.630
Prob. value (0.745) (0.641) (0.191) (0.177)

based on the authors’ estimations

This table reports our main results obtained using the two-step system GMM estimator. The robust stand-
ard errors are reported in parenthesis. ***, **, and * show the coefficients are significant at the 1%, 5%,
and 10% level of significance

capital. So, it is consistent with Liu and Fraumeni (2014) measure of HC, i.e., HDI using System GMM. Tables 8
that used an alternative proxy of human capital for robust- and 9 show that in terms under alternative measurer of
ness checks. I have estimated our model with an alternative LHC, i.e., LHDI at least in terms of the same direction of

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Environmental Science and Pollution Research

Table 8  Robustness with and Variables Model 1 Model 2 Model 3 Model 4

an alternative measure of LHC
(LHDI) LHDI −9.000*** −7.202*** −9.368*** −4.105***
(0.681) (0.671) (0.842) (0.412)
LTGL 1.374***
(0.141)
LEG 0.0187***
(0.0164)
LSG 1.065***
(0.110)
LPG −0.298***
(0.0679)
LGDP 2.611*** 2.628*** 2.204*** 2.296***
(0.292) (0.279) (0.312) (0.248)
LGDPS −0.0548*** −0.0618*** −0.0295* −0.0549***
(0.0153) (0.0144) (0.0167) (0.0129)
LFDI 0.00804*** 0.000597 −0.0101*** 0.0192***
(0.00238) (0.00220) (0.00273) (0.00209)
LFD 0.353*** 0.387*** 0.389*** 0.324***
(0.0306) (0.0290) (0.0281) (0.0205)
LTRD 0.0936*** −0.0476* 0.133*** 0.182***
(0.0243) (0.0285) (0.0284) (0.0216)
LURP −0.137*** −0.0726*** −0.121*** −0.0282**
(0.0131) (0.0105) (0.0131) (0.0116)
LENG 0.0954*** 0.134*** 0.190*** 0.130***
(0.0355) (0.0352) (0.0416) (0.0300)
Constant −20.24*** −16.59*** −18.47*** −15.15***
(1.465) (1.384) (1.563) (1.166)
Observations 1891 1891 1891 1891
Number of countries 78 78 78 78
AR (1) −1.71 −2.16 −1.06 −2.52
Prob. value (0.087) (0.031) (0.288) (0.012)
AR (2) −1.59 −1.77 −1.63 −1.63
Prob. value (0.112) (0.076) (0.102) (0.103)
Hansen 20.21 29.21 28.58 32.63
Prob. value (0.822) (0.351) (0.382) (0.209)

 based on the authors’ estimations

 This table reports the two-step system GMM results when I use LHDI as an alternative measure of LHC
for robustness. The robust standard errors are reported in parenthesis. ***, **, and * show the coefficients
are significant at the 1%, 5%, and 10% level of significance

the relationship with ­CO2 emissions and overall signifi-
cance. The alternative proxy has a negative and statisti-
cally significant impact on ­CO2 emissions in a model (1–4)
and supplements the consistency of our primary findings.
Finally, our robustness test has confirmed the consistency
of the above empirical results.
Conclusion and policy implication
This study investigates the causal relationship between
human capital, globalization, and C
­ O2 emissions in the con-
text of the EKC hypothesis using the sample of 78 develop-
ing economics from 1990 to 2016. Our finding based on

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 Environmental Science and Pollution Research

Table 9  Robustness for interactive terms with an alternative measure robust system generalized method of moments (GMM) indi-
of LHC (LHDI) cates that economic, social, and overall globalization are
Variables Model 1 Model 2 Model 3 Model 4 significantly decreasing the environmental quality, while
political globalization abates the ­CO2 emissions signifi-
LHDI −14.49*** −15.82*** −3.862*** 7.093***
cantly. Furthermore, human capital has a negative influence
(3.794) (4.683) (1.192) (0.593)
on ­CO2 emissions, which means human capital enhances
LEG 1.378*** 0.196*** 2.713***
the environmental quality in developing economies. Human
(0.0825) (0.0606) (0.959)
capital contains skills and knowledge that increase the
LSG 0.0797** 0.461*** 0.0583**
value of economic growth. Hence, formal education, tech-
(0.0388) (0.150) (0.0274)
nical skills, and knowledge do not solely reinforce human
LPG −0.110*** −0.118** −3.505***
capital, but the development of skill and knowledge over
(0.0317) (0.0460) (1.305)
time diagonally over the lifetime. This advises that human
LEG*LHDI −1.273***
capital loses performance over time when they are unskilled/
(0.0937)
uneducated, thus, a degradation of the environmental qual-
LSG*LHDI −0.678***
ity. Moreover, the estimates of GDP and square GDP sug-
(0.205)
gest that there is strong evidence against the existence of
LPG*LHDI −0.114**
an inverted U-shaped EKC hypothesis relationship in the
(0.0502)
context of developing economies.
LTGL 0.0956***
However, the results of the economic, social, and over-
(0.0108)
all globalization are fascinating because, without interac-
LTGL*LHDI −0.142***
tive terms, it appears there is no significant effect on ­CO2
(0.0131)
emissions, but after adding the moderation effect (human
LGDP 13.66*** 11.40*** 4.837*** 0.976***
capital and globalization), which is our main contribution
(0.412) (1.750) (0.332) (0.0272)
in this study, the coefficient of social, economic, and over-
LFDI −2.582*** −1.693*** −0.394*** 0.0172***
all globalization shows a significantly negative influence
(0.0989) (0.581) (0.0951) (0.00264)
on environmental degradation. The results of interactive
LFD −1.546*** 0.0141 0.651** 0.204***
terms (LHCX*LEG), (LHCX*LSG), (LHCX*LPG), and
(0.204) (0.0167) (0.266) (0.0132)
(LHCX*LTGL), discloses a significant negative influence on
LTRD −1.797*** −0.430 −0.206 0.0574**
­CO2 emissions. The interactive terms between globalization
(0.492) (0.891) (0.387) (0.0247)
and human capital enhance environmental quality. Human
URP 0.677*** 1.443** 2.072*** 0.0798***
capital plays a moderating role between globalization and
(0.0395) (0.629) (0.304) (0.0141)
­CO2 emissions. Our main results for the effect of human
LENG 4.852*** 2.779*** 0.784*** 0.0561**
capital on ­CO2 emissions can be successful, and overcom-
(0.335) (1.004) (0.265) (0.0264)
ing these challenges of globalization throughout attaining
Constant −151.0*** −107.8*** −38.96*** −14.48***
higher education and training programs will help to produce
(7.965) (19.92) (8.489) (0.699)
more efficient and skilled labor in the future. Education and
Observations 1845 1845 1845 1845
skilled labor play a vital role in the professional way to use
Number of coun- 78 78 78 78
tries
energy by adopting new technologies, which help to reduce
AR (1) −2.47 −1.87 −1.50 −1.77
­CO2 emissions.
Prob. value (0.014) (0.062) (0.617) (0.076)
The empirical analysis recommends the following policy
AR (2) −1.40 −1.60 −1.80 −1.31
implications.
Prob. value (0.162) (0.11) (0.074) (0.189)
Hansen 26.94 21.96 20.28 22.36
1. Last few decades, the increasing ­CO2 emissions have
Prob. value (0.467) (0.739) (0.819) (0.669)
become a universal environmental matter which estab-
lished extensive attention. According to the World
based on the authors’ estimations Bank (2020), the world’s C ­ O2 emissions (metric tons
  This table reports the two-step system GMM results when I use per capita) is 3.1 in 1960 but intensely increased to 4.99
LHDI as an alternative measure of LHC for robustness. The robust in 2019. (WB 2020). The estimated result indicated
standard errors are reported in parenthesis. ***, **, and * show the
coefficients are significant at the 1%, 5%, and 10% level of signifi- that human capital has a significant role in curbing ­CO2
cance emissions. Therefore, policy attention is recommended
to the government; they should make an investment in
public/private education and encourage organizations to
implement environmental regulations by using environ-

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Environmental Science and Pollution Research

Table 10  List of countries Algeria Chile Honduras Mali Paraguay Tunisia

Angola China India Mauritania Peru Turkey

Argentina Colombia Indonesia Mauritius Philippines UAE
Bahrain Congo, Rep. Iran, Islamic Rep. Mexico Qatar Uruguay
Bangladesh Costa Rica Israel Morocco Rwanda Venezuela, RB
Barbados Cote d'Ivoire Jamaica Mozambique Saudi Arabia Vietnam
Benin Ecuador Jordan Myanmar Senegal Zambia
Bolivia Egypt Kenya Namibia Sierra Leone Zimbabwe
Botswana El Salvador Kuwait Nepal Singapore
Brazil Gabon Lesotho Nicaragua South Africa
Brunei Darussalam Gambia, The Liberia Niger Sri Lanka
Burkina Faso Ghana Madagascar Nigeria Sudan
Burundi Guatemala Malawi Pakistan Thailand
Cameroon Haiti Malaysia Panama Togo

country classification (UN 2020)

mental-friendly production techniques, training work-
ers on advanced machinery which facilitates boosting
of economic growth and minimizes ­CO2 emissions.
2. Overall globalization is positively related to ­CO2 emis-
sions which means globalization decreases the environ-
mental quality in the case of developing economies. The
government of developing countries may enforce taxes
on ­CO2 emissions, which is an assured way to mini-
mize carbon emissions in those countries with less strict
environmental rules and regulations. Furthermore, the
government should sign a number of agreements to min-
imize environmental pollution. Societies and policymak-
ers of developing economies should be creating more
awareness of ­CO2 emissions through seminars, confer-
ences, and workshops. As economic development and
globalization in developing economies have increased,
environmental issues overall will deteriorate with the
probable increase in energy consumption. Developing
economies should change their energy strategy into
renewable energy. Further, the government should focus
on trade promotion among the developing economies by
environment-friendly supplies, trading renewable energy
sources and efficacy technology, i.e., hydropower, sun-
light, wind power, biomass power, geothermal heat,
waste base energy, solar power, and employ environmen-
tal regulation policies such as imposing carbon tax/quota
system on emission-intensive products which could help
to minimize environmental degradation.
3. This study finds that the effects of economic growth on
­CO2 emissions follow a strict enhancing trend contrary
to the standard EKC theory, which assumes an inverted
U-shaped association between GDP and ­CO2 emissions.
It is recommended that developing economies make it
necessary for firms in their industrial part to subscribe
to green technologies and implement green manufactur-
ing strategies in their production procedures. This will
go a long way to improve the environmental quality and
minimize the ­CO2 emissions connected with expansions
in economic growth.
4. Our results confirm that foreign direct investment signif-
icantly decreases the ­CO2 emissions in the case of devel-
oping economies. The empirical results presented the
following implication. First, since foreign direct invest-
ment can be a mechanism for green technologies, so it
is essential to develop and apply stricter eco-friendly
principles for low emissions to attract net FDI.
This study has some limitations which can be pointed out
in future research work. Since, I did not consider the impor-
tant variables such as institutional quality, economic com-
plexity in our analytical framework, future researchers can
compare these relationships with developed and developing
economies and make a substantial contribution to literature
and recommend some pragmatic policy implications.
Appendix
Table 10
Availability of data and materials  The datasets used and/or analyzed
during the current study are available from the corresponding author
on reasonable request.
Authors contribution  Atif Jahanger: conceptualization, methodology
and software, formal analysis, conclusion, writing-original draft prepa-
ration, and revised the manuscript.
Declarations 
Ethics approval and consent to participate  Not applicable.

13
 Environmental Science and Pollution Research

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