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Article

Globalization and Sustainable Development: Empirical Evidence from CIS Countries

by
Oruj Gasimli
1,
Ihtisham ul Haq
2,*,
Shahid Munir
2,
Muhammad Hasnain Khalid
3,
Sisira Kumara Naradda Gamage
4,*,
Alam Khan
2 and
Muhammad Ishtiaq
5
1
Department of Economics and Management, Azerbaijan University, 71 Jeyhun Hajibeyli St. Nasimi District, Baku AZ 1007, Azerbaijan
2
Department of Economics, Kohat University of Science and Technology, Kohat 26000, Pakistan
3
Department of Economics, University of Haripur, Haripur 22620, Pakistan
4
Department of Economics, Faculty of Social Sciences and Humanities, Rajarata University of Sri Lanka, Mihintale 50300, Sri Lanka
5
School of Economics and Management, Beijing University of Technology, Beijing 100124, China
*
Authors to whom correspondence should be addressed.
Sustainability 2022, 14(22), 14684; https://doi.org/10.3390/su142214684
Submission received: 23 September 2022 / Revised: 26 October 2022 / Accepted: 4 November 2022 / Published: 8 November 2022
Versions Notes

Abstract

:
Sustainable development is the ultimate objective of the nations around the world, and the adoption of development strategies is the driving force for obtaining long-run economic growth, environmental protection and social inclusion. On other hand, globalization integrates the countries around the globe economically, politically and socially. Thus, it is vital to conduct a study on the impact of globalization on sustainable development in Commonwealth of Independent States (CIS) countries, as most of the countries are in a transition state from socialism to capitalism and are opening their doors to the world. Globalization comprises three main components, which are economic, political and social. Henceforth, this study investigates the effect of economic globalization, political globalization and social globalization on sustainable development. Energy has been highlighted in the literature and received attention from researchers as a factor of income and environmental quality; thus, it is added as a control variable in this study. The long-run relationships among variables are established through panel cointegration once the order of integration is determined. This study finds a positive and significant effect of economic globalization and political globalization on sustainable development, whereas energy consumption is deteriorating in CIS countries. Policy implications are recommended.

1. Introduction

Sustainable development (SD) is a popular term mostly used in scientific literature. The concept of sustainable development (SD) has been interpreted differently by researchers, government and international organizations [1,2], which has resulted in a comprehensive debate on concept and interpretation of SD [3,4]. The concept of sustainable development emerged during the 18th century from the concept of sustainable forest management, which was primarily initiated to keep the balance among three pillars: economic, ecological, and culture [5,6]. The modern concept of SD is derived from the Brandtland commission report 1987, which defined SD as “Development that meets the needs of the present generation without harming the ability and needs of future generations” [7]. This definition has received lots of criticism, as its lacks the comprehensive meaning of the term “needs” and the ways to meet those needs [8]. Since we do not know the consequences of our actions, so we can hardly predict the harm in the future [9]. The most universal definition of SD is that productivity should be organized in such a way that it maintains ecological soundness and social acceptability [10,11]. This definition has three categories: economic, ecological and social aspects. The economic aspects indicate the present and future needs and abilities of the present and future generations, while ecological aspects indicate the establishment of borders of the ecological environment that should not be crossed. Similarly, the social aspects represent the ability to interact and resolve social issues as well as the inclusion of all in the development process [12,13]. Sustainable development is measured by the Sustainable Development Index (SDI), which measures the ecological efficiency of the human development of a country. The idea was created to update the human development index (HDI). The SDI is calculated by dividing HDI by ecological overshoot. SDI is high for those countries which have high HDI scores with low ecological overshot [14]. Therefore, sustainable development is the ultimate objective of nations around the world, and the sustainable development strategies are the main driving force behind economic growth, environmental protection and social inclusion. For sustainable development, it is necessary to interconnect all these three elements for the welfare of the masses [15].
Globalization is the interaction and integration of peoples, companies and governments worldwide. Globalization is defined as the “process of integrating nations, societies, individuals, and organizations in the economic, political, cultural, and intellectual domains through means like capital, production, exchange, and data owned and controlled unevenly by different states, classes, organizations, and people” [16]. It is also referred to as the increasing integration of markets and nations, which are mediated by various flows such as individuals, data, ideologies, capital, and goods [17]. Globalization has a significant impact on socioeconomic, environmental and political aspects of nations; therefore, many countries have driven their growth through globalization. Globalization leads to rising interdependence among countries through the production of goods and services, investment, technological change and knowledge [18]. In addition to the rapid growth in trade liberalization, economic growth and financial development, there is serious concern growing regarding environmental degradation as every nation aspires to develop their economies through industrialization. However, as a result of industrialization, the demand for key energy sources increases, and consequently, environmental quality is degrading [19,20,21]. In most research studies, it is argued that globalization has made the world a better place in terms of economic prosperity, political freedom and social aspects [22,23]. Studies reveal that globalization is an important engine of economic growth [24]; however, economic growth may lead to environmental degradation [25,26]. Although globalization has benefited many countries worldwide, its impacts on developing economies remain a challenge. Thus, the growing integration of global economies demands sustainable management methodologies for combining the social, ecological and economic aspects and overcoming and controlling the risks of the globalization process [27].
According to the Kyoto Protocol of 1997, emerging markets and transition economies are bound to reduce carbon emissions to improve environmental quality [28]; under that treaty, advanced economies over the year shifted their traditional energy source to green energy, while in transition economies, two factors have significantly contributed to their environmental quality. First, economic growth in transitioning economies leads to the increase in energy demand as traditional energy sources are not enough for energy security. Thus, they are trying to fulfill their energy requirements from traditional as well as renewable energy sources. Second, environmental quality needs legislation to reduce the carbon emission and polluting environment, but some transition economies have varying levels of environmental issues such that they cannot properly manage their nuclear and fossil energy sources [29]. The literature on determinants of sustainable development is scarce, and the researcher only identified a single research study on the effect of globalization on sustainable development in the European Union context [30]. We also found one study on the impact of globalization on environmental degradation in Uzbekistan [31]. There are some studies conducted on factors of environmental degradation in the Commonwealth of Independent States (CIS) countries [32,33]; however; researchers did not come across any study that is conducted on the nexus between globalization and sustainable development in CIS countries. This study considers sustainable development compared to environmental degradation as sustainable development encompasses income, health and environmental indicators. Therefore, it is a novel study in the context of CIS countries that investigates the impact of globalization on sustainable development.
This study is structured as follows. First, a review of the literature is discussed in Section 2. Section 3 describes the materials and methods along with the empirical model of the study. The results and discussion are presented in Section 4 and Section 5, respectively, which are followed by the conclusion of the study.

2. Literature Review

The theoretical framework for globalization and sustainable development can be found in international trade theory in general and particularly in Heckscher–Ohlin trade theory. The advocates of trade theories emphasize that it leads to competition and consequently lowers global inflation along with increasing income and equality. The increase in global competition also discourage local monopolies. Additionally, globalization enhances consumer surplus as it leads to an increase in income and purchasing power [34]. The competition among producers due to globalization encourages the application of new technology and innovation. Moreover, competition from foreign firms in the global world enhances efficiency as a result of increasing specialization due to comparative advantage, thus lowering the opportunity cost of production [35]. Globalization, especially economic globalization, lowers the cost of production due to economies of scale and increases employment opportunities [36,37,38]. Likewise, Panayotou [39] argued that trade theories postulate that trade liberalization, one of the many manifestations of globalization, leads to reallocating resources from inefficient producers to efficient producers who are producing with least cost. He further argued that this least cost encompasses all possible social and environmental costs. Thus, global production is produced with least environmental cost; henceforth, trade liberalization leads to sustainable development.
Theoretically different channels are identified in the literature that show how globalization affect sustainable development. The first channel can be referred as the scale effect of globalization, as this effect explains that there would be an extensive use of natural resources as economic activities and income generation opportunities are produced due to globalization; thus, they result in environmental degradation, especially in those economies where policy as well as market failure exists. The second channel of how globalization affect sustainable development is income effect. Globalization is responsible for an increase in income level that consequently increases consumption, and thus, it may affect environmental quality. However, an increase in income level also bring awareness about environmental quality and health status [40,41,42]. Moreover, an increase in income level also enhances public and private spending on the environment, and so it enhances environmental quality. Another channel of how globalization affects sustainable development is its effect on the structure of the economy. This depends on an economy’s comparative advantage in resource endowments; globalization brings structural changes from resource extraction and processing to final goods if the stage of the development is taken into account. This economic structure eventually helps the economy restrain environmental degradation; henceforth, globalization leads to sustainable development [41,42]. In a nutshell, globalization affects sustainable development through the sharing of ideas and information, know-how, access to capital and green technologies [43,44].
Since the industrial revolution, globalization has fostered cross-border trade and investment, which in turn enhances the growth of industrial production and consumption [45]. The growth of the industrial sector is considered the major source of greenhouse gas emission [46]. The growth in the industrial sector increases the demand for electricity and energy sources [47]. As in many countries, electricity generation still uses the conventional means of fossil fuel energy sources (coal and oil), which provides an intensification of greenhouse gases emission and global warming [48]. For decades, developed countries that pioneered the industrial sector have been responsible for the lion’s share of pollution in the environment (the US has a 20% share in global pollution), but during recent years, the rapid growth of developing countries entered into the list of the most polluting countries [49]. The rapid growth in these developing countries, due to globalization in turn, forced them to use more energy consumption. For instance, China fulfills its energy requirement by establishing a new coal-based energy generation plant every week [50]. In general, globalization increased the growth of the industrial sector in both developed and developing nations, which negatively affects the environment [51].
Globalization affects the environment and sustainable development [39]. Globalization contributes positively to economic growth [52] and negatively to environmental degradation [53]. The main channels through which globalization affects the environment are industrial production and consumption, transportation, and deforestation [54]. The main cause of environmental deterioration is an excessive emission of greenhouse gases (GHG), especially carbon emissions [55]. Globalization is the key driver of the increase in transportation systems, and urban transportation is considered the main factor in increasing ecological disequilibrium. This ecological disequilibrium is due to the increasing carbon emissions, rising temperature and declining air quality in many cities [54,56]. Likewise, in recent years, the demand for air cargo has increased, as international trade and cross-borders activities have increased tenfold [57]. Similarly, Winnes et al. [58] found that shipping is one of the fastest growing sectors, accelerating the greenhouse gases emission. During the period 1990 to 2004, carbon emission from air traffic witnessed a record increase of 86%, and now, air traffic contributes to 4–9% of total greenhouse gases emissions. Similarly, sea transport contributes 2–4% of the total fuel consumption of the planet every year [54,59]. Studies have suggested that the growing impact of globalization on transportation and carbon emission is not solely the single contributing factor of greenhouse gas emissions [54]. Technological improvement and efficiency in transportation have yet to overcome the environmental degradation and growing threat of global warming [60].
Globalization, agricultural land use and urbanization have a positive impact on deforestation [61]. Deforestation is considered an indirect contributor to greenhouse gas emissions, as the cutting and burning of forests reduce the absorption of carbon emissions [62]. Globalization causes deforestation as forests are removed for the sake of land cultivation [63] in order to increase the agricultural production for the mass population and agricultural exports [64]. Deforestation is linked with the growing demand and needs of the urban population [65]. Empirical findings suggest that globalization, land use and deforestation are positively linked in the long run, whereas population density improves air quality by reducing deforestation. Likewise, economic growth, population density and urbanization significantly lead to deforestation in the short run [61]. The above literature revealed that globalization accelerates growth, and growth accelerates urbanization, which in turn increases deforestation and environmental degradation.
In the previous literature, researchers have analyzed the impact of trade openness and economic globalization on environmental degradation [66,67]. However, trade openness does not consider various aspects of globalization, which are political participation, technological development, capital control, and the flow of information across borders [68,69]. For that reason, various studies considered the KOF index as a measure of globalization, which includes economic, political and social globalization. Liu et al. [69] conducted a study on the impact of globalization on environment degradation by employing the KOF index for measuring globalization and concluded that globalization has a negative impact on environmental degradation. The results are similar to the study conducted by [70] for China and [47] for South Africa. Similarly, Shahbaz et al. [71] and Khan and Ullah [72] conducted studies on globalization and its impact on environmental degradation in Japan and Pakistan respectively and concluded that globalization increases environmental degradation in both countries. Likewise, Kanjilal and Ghosh [73] concluded that globalization aggravates environmental degradation in India, while Christmann and Taylor [74] concluded that globalization positively affects environmental quality in China. Lee and Min [75] studied the impact of globalization on carbon emissions for 255 countries using panel data from 1980 to 2011 and concluded that globalization reduces carbon emissions. Similarly, Shahbaz et al. [76] concluded that globalization reduces carbon emissions in African countries. In contrast, globalization has negatively affected environmental quality in the case of Sub-Saharan African countries [77]. Shahbaz et al. [78] investigated the impact of globalization on environmental quality using panel data for 25 developed countries and concluded that globalization deteriorates environmental quality.
Studies have looked at the linkages between economic growth, energy consumption and carbon emissions using panel data. Kais and Sami [79] concluded that energy consumption and economic growth significantly increased the carbon emissions in fifty-eight countries in three regions, namely European and North Asian, Latin American and Caribbean, and the Middle Eastern, North African and sub-Saharan regions. Similarly, Wang et al. [50] analyzed the causality between the energy consumption, economic growth and carbon emissions in twenty-eight provinces of China using panel data and found a bidirectional causality between energy consumption and carbon emissions. Du et al. [80] confirmed the existence of the Environmental Kuznets Curve (EKC) in the case of China by using panel data of 27 provinces. In a comparative study for China and India, Jayanthakumaran et al. [81] examined the impact of energy use on carbon emissions and confirmed the existence of EKC. They also concluded that energy has a positive impact on environmental degradation in both China and India. Guo [82] examined the effect of regional income on carbon emissions in China to test the validity of the EKC hypothesis. The study confirmed the EKC and concluded the negative impact of income on carbon emission. Li and Li [83] examined the impact of energy (coal) consumption on economic growth, where coal consumption is used as a proxy for carbon emissions and henceforth for environmental degradation. They concluded that coal consumption has a positive impact on economic growth and suggested that efficient technology may reduce environmental degradation and be helpful to achieve sustainable development in both China and India.
As discussed earlier, globalization is a global phenomenon that affects human life economically, politically and socially [26]. Globalization could have positive and negative impacts on economic growth, but empirical findings suggest that it has more positive effects than negative effects in terms of poverty reduction and income inequality in developing nations [83]. Similarly, the empirical findings of [24] reveal that globalization removes trade barriers and enhances the free flow of goods and services that boost the economic growth of a country. However, high-income countries receive more benefits than low-income groups [24,62]. Although globalization stimulates economic growth, various studies find the nexus between globalization, economic growth and environmental degradation [84]. In a panel setting, Kihombo et al. [85] examined the impact of financial globalization on ecological footprints and investigate the relationship between financial globalization, economic growth and population density in West Asian and Middle East nations. The findings of this study revealed the long-run integration among the variables and concluded that financial globalization is an important factor in environmental sustainability.
The literature on the nexus between globalization and sustainable development is limited [30], and only a few studies have been carried out in the context [30,86,87]. The study [30] examined the short-run and long-run impacts of globalization on sustainable development in the new EU members and concluded that globalization positively influence sustainable development in both time spans, i.e., short run and long run. Likewise, the study [43] found that the nexus between globalization and sustainable development is in the context of road and belt initiatives countries through regional integration. However, they found a negative impact of globalization on sustainable development. In the study [86], the researchers determined the nexus between globalization and sustainable development indicators and reached the conclusion that globalization can lead to sustainable development.

3. Materials and Methods

The primary objective of this study is to analyze the impact of globalization on sustainable development (SD) in CIS countries. It can be deduced from the literature discussed above that globalization and its components are determinants of income, environmental degradation and sustainable development. Likewise, energy is also reflected as a determinant of income, health and environmental degradation, whereas sustainable development encompasses income, inequality, health and environmental quality; thus; this study developed the following model:
S D = f E G , P G , S G , E N
After considering panel setting and taking log, the empirical model can be expressed as
l o g S D i t = β 0 i + β 1 i l o g E G i t + β 2 i l o g P G i t + β 3 i l o g S G i t + β 4 i l o g E N i t + ϵ i t
where i denotes the cross-sectional unit (i = 1, 2, 3, ……………N), t denotes the time period (t = 1, 2, 3,…………T) and β 0 , β 1 , β 2 i , β 3 , β 4   and ϵ denote the intercept, slopes and error term, respectively. Similarly, SD represents sustainable development, EG represents economic globalization, PG represents political globalization and EN is energy consumption. The study includes nine CIS countries which are Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine and Uzbekistan. The panel data used in the analysis for CIS countries cover the period from 2000 to 2019. SD is proxy with SD index and is collected from [14]. Data on components (economic, political and social) of globalization are collected from [87], whereas data on energy are collected from [88]. The variables, measurement and sources are depicted in Table 1. As this is panel data analysis, the first step is to figure out whether the data are trending over time. If the data are trending over time, there will be no constant mean, variance and covariance over time and the data will be non-stationary. For this purpose, this study will apply two distinct panel unit root tests [89,90]. If the data are non-stationary at this level, then we check for this problem at first difference. When it is determined that variables under consideration are trending over time, one cannot opt for ordinary least squares, as in such a case, an overestimation will result in biased estimates. Henceforth, we have to move to apply a technique that considers variables at first difference and also provides long-run information about the relationships among variables. This is the reason that this study will apply panel cointegration [91]. The result of this panel cointegration will determine whether these variables under study are cointegrated in the long run or not. If variables are cointegrated over the long run, then we have to apply a panel cointegration technique for long-run estimates such as fully modified ordinary least squares (FMOLS). It was developed by Phillips and Hansen [92], whereas [93] augmented to fit for panel data. The great advantage of FMOLS is it provides efficient and consistent estimates. These estimates are also free from the simultaneity biases that may arise as a result of the cointegration process. Moreover, the long-run estimates are also free from the autocorrelation problem.

4. Results

Descriptive statistics show mean, median, maximum and minimum values along with standard deviation. Sustainable development is an index and it carries a mean of 0.71 for selected CIS countries. Its maximum and minimum values are 0.82 and 0.36, respectively. All the components of globalization are also measures in indexes. Economic globalization has a mean value of 56.17, and its maximum and minimum values are 71.77 and 32.63, respectively. Political globalization has a mean value of 61.60, and its maximum and minimum values are 92.50 and 30.96, respectively. Likewise, social globalization has a mean value of 55.58, and its maximum and minimum values are 72.37 and 31.53, respectively. Energy consumption is measured in quadrillion BTU and has a mean of 4.59. The maximum and minimum values of energy consumption are 33.25 and 0.09, respectively. Table 2 presents descriptive statistics of the variables of the study. Moreover, descriptive statistics for individual CIS countries are provided in Table 3. Armenia has the highest SD mean among CIS countries, and Moldova has the highest EG mean among CIS countries, whereas Russia has the highest PG and SG mean among CIS countries. Kazakhstan has the lowest SD index mean among CIS countries.
Table 4 presents the results of correlation. It can be witnessed from these results that all components of globalization (economic, political and social) are positively correlated with sustainable development, whereas energy consumption is negatively correlated with sustainable development in CIS countries. Additionally, correlation helps to detect a multicollinearity problem through the value of tolerance and variance inflation factor (VIF). The value of tolerance and VIF are not greater than 0.2 and 5, respectively. Thus, there is no severe presence of multicollinearity between the independent variables of the study, which are economic globalization, political globalization, social globalization and energy consumption.
The panel unit root tests results are portrayed in Table 5. These results confirm that all variables of the study are not stationary when considered at their level; however, all variables become stationary at their first difference. These results recommend that one cannot apply panel least squares, as these data are violating one of the assumptions of the least squares: that data have to be free from non-stationarity problems. Thus, these results recommend one has to apply a cointegration test in order to find a long-run relationship among variables that considers variables at first difference and does not lose any long-run information if it exists.
This study applied the Pedroni panel cointegration test to detect cointegration (long-run relationship) among the variables of the study. The Pedroni panel cointegration test consists of within-dimension tests and between-dimension tests, and it can be witnessed that a null hypothesis of no cointegration can be rejected as the majority of the tests statistics are significant. Hence, it is concluded from results of Pedroni panel cointegration tests that a long-run relationship among variables is present, and one can apply panel cointegration regression for long-run estimates and also panel VECM causality. Moreover, these panel cointegration results indicate that components of globalization and energy consumption are determinants of sustainable development in CIS countries. Henceforth, this result of the study endorsed the main research objective of the study: that globalization is a determinant of sustainable development in the context of CIS countries and one can determine its effect on sustainable development. The results of the panel cointegration test are provided in Table 6.
The long-run results are provided in Table 7. All independent variables are significant factors of sustainable development except for social globalization. These results indicate that economic globalization and political globalization have a positive effect on sustainable development in CIS countries, and a 1% increase in economic globalization and political globalization will increase sustainable development 0.24 and 0.13%, respectively. The effect of social globalization is negative but insignificant. The facts and figures during the study period show that all the selected CIS countries improved on all the components of globalization [88] and also achieved well on some aspects of sustainable development especially responsible consumption and production, clean water and sanitation, and hunger [14]. Energy consumption has a negative effect on sustainable development and a 1% increase in energy consumption will deteriorate sustainable development by 0.16%. This negative effect of energy on sustainable development can be attributed to the fact that all the selected CIS countries except Tajikistan did not perform well on the clean and affordable energy, and most of the CIS countries are stagnating on this aspect of sustainable development [14]. It can be deduced from these long-run estimates that globalization is helping CIS countries have sustainable development, whereas energy consumption is harming it. From the long-run result estimates, it can be deduced that this study achieved its main objective: that globalization is a determinant of sustainable development and has a positive effect on sustainable development in CIS countries.
This study finds through panel VECM that in the long run, bidirectional causality is found between sustainable development and political globalization, between sustainable development and social globalization, and between sustainable development and energy consumption. Likewise, bidirectional causality is found between political globalization and social globalization, between political globalization and energy consumption, and between social globalization and energy consumption in the long run. Additionally, long-run results confirmed that causality runs from economic globalization to sustainable development. The causality results show that one-way causality is running from sustainable development to economic globalization as well as political globalization and energy consumption; likewise, one-way causality is running from political and social globalization to economic globalization in the short run. In contrast, two-way causality is found between economic globalization and energy consumption. The results of panel causality are provided in Table 8.

5. Discussion

The purpose of this study was to figure out the impact of globalization on sustainable development in CIS countries; however, energy consumption is also considered a factor of sustainable development. This study provides a proxy for sustainable development through the sustainable development index, which incorporates human development along with environmental concerns. Moreover, human development itself incorporates income, health and education. Thus, this study used the sustainable development index as a proxy for sustainable development in CIS countries and argued that it is a useful indicator for sustainable development. Henceforth, the positive impact of globalization on sustainable development means it will enhance human development in CIS countries along with controlling for environmental degradation. In order to achieve the objective of the study, this study first trended the data before applying the cointegration test. Henceforth, it is concluded that all variables are free from the non-stationarity problem at first difference, whereas the result of the cointegration test indicates that studied variables are cointegrated with each other in the long run; thus, globalization and energy are determinants of sustainable development in CIS countries. This study finds that economic globalization has a positive and significant effect on sustainable development. This finding of the study is in contrast to the findings of the studies [66,67] who found that economic globalization is not endorsing sustainable development, as economic globalization is deteriorating environmental quality. Likewise, this study also finds a positive and significant effect of political globalization on sustainable development. This finding of the study is opposing the findings of [31,72], who determined a positive effect on environmental degradation and concluded that globalization is not helping to achieve sustainable development. As for as the effect of social globalization is concerned, this study found that social globalization is not a significant factor of sustainable development. In a nutshell, globalization is ensuring sustainable development in CIS countries through economic and political globalization. This conclusion of the study resembles the conclusions of [30] and [87], as both these studies found a positive impact of globalization on sustainable development, whereas it opposes the conclusion of the study [84], which reached the conclusion that globalization hinders sustainable development. This study finds a negative and significant effect of energy consumption on sustainable development. This may be attributed to the negative impact on the environment compared to other components of sustainable development such as income and health and education. This result also implies that CIS countries are not utilizing energy efficiently in the consumption, production and distribution of goods and services. This study also carried out causality analysis, and bidirectional causality is found between sustainable development and political globalization as well as between sustainable development and social globalization. Moreover, long-run results confirmed that causality runs from economic globalization to sustainable development. This study addressed the research problem by concluding that globalization is ensuring the sustainable development in CIS countries.
This study recommends that CIS countries should encourage and integrate with the world economically and politically for their sustainable development. The CIS countries economically can integrate well with the world by removing and relaxing trade barriers, encouraging FDI in all sectors, and allowing foreign banks and following internationals financial rules. Politically, the CIS countries may engage in regional as well as in global forums. Although the CIS countries are in transition from socialism to capitalism, these countries have to establish a production and consumption system to preserve the ecological basis that is necessary for sustainable development. As CIS countries are moving from socialism to a market-based economy, this transition is increasing the demand for energy and has led to the shortages in fossil fuel supply in urban areas in some CIS countries. Additionally, rural areas are also demanding more fossil fuels, thus putting more pressure on forests and unsustainable forest cutting. Henceforth, it is recommended for CIS countries to curtail environmental degradation and benefit from renewable energies such as bioenergy sources. The CIS countries may utilize efficient energy technologies in natural resources and for rural development. To transition from a conventional economy to a green economy, it is recommended for CIS to look for alternative financial models such as subsidizing alternative energy production and consumption, imposing environmental taxes and introducing green financing.

6. Conclusions

Trade theories postulate that trade liberalization, one of the many manifestations of globalization, leads to reallocating resources from inefficient producers to efficient producers who are producing with least cost. This least cost encompasses all possible social and environmental costs. Thus, global production is produced with least environmental cost; henceforth, trade liberalization leads to sustainable development. Additionally, globalization affects sustainable development through its effect on the structure of the economy, and it is also responsible for the increase in income level, which leads to an increase in public and private spending on the environment. Thus, it enhances environmental quality, indicating that globalization affects the environment and sustainable development. The literature on the effect of globalization on sustainable development is limited and there is no study on the effect of globalization on sustainable development in the context of CIS countries. Therefore, it is a novel study in the context of CIS countries that investigates the impact of globalization on sustainable development. Most of the CIS countries are in a transition state from socialism to capitalism. Globalization comprises three main components which are economic, political and social. Henceforth, this study investigates the effect of globalization on sustainable development in CIS countries. Energy is also considered as a factor of sustainable development in the literature; henceforth, energy is used as a control variable. Data have been tested for unit root and long-run relationships among variables are established through panel cointegration once the order of integration is determined. This study finds a positive and significant effect of economic globalization and political globalization on sustainable development, whereas energy consumption is deteriorating it in CIS countries. This study also carried out causality analysis, and a bidirectional causality is found between sustainable development and political globalization, between sustainable development and social globalization, and between sustainable development and energy consumption in the long run. Similarly, bidirectional causality is found between political globalization and social globalization, between political globalization and energy consumption, and between social globalization and energy consumption in the long run. Moreover, long-run results confirmed that causality runs from economic globalization to sustainable development. In a nutshell, this study addressed the research question: does globalization influence sustainable development in CIS countries? The results of this study indicate that globalization is a determinant of sustainable development in the context of CIS countries and is positively contributing to sustainable development in CIS countries.
The policy implications of this study are that CIS countries should encourage and integrate with the world economically and politically for their sustainable development. The CIS countries economically can integrate well with the world by removing and relaxing trade barriers, encouraging FDI in all sectors, and allowing foreign banks and following internationals financial rules. Politically, the CIS countries may engage in regional as well as in global forums. This study recommends that the CIS countries have to establish a production and consumption system to preserve the ecological basis that is necessary for sustainable development. As CIS countries are moving from socialism to a market-based economy, this transition is increasing the demand for energy and has led to the shortages in fossil fuel supply in urban areas in some CIS countries. Additionally, rural areas are also demanding more of fossil fuels, thus putting more pressure on forests and unsustainable forest cutting. Henceforth, it is recommended for CIS countries to curtail environmental degradation to benefit from renewable energies such as bioenergy sources. The CIS countries may utilize efficient energy technologies in natural resources and for rural development. To transition from a conventional economy to a green economy, it is recommended for CIS to look for alternative financial models such as subsidizing alternative energy production and consumption, imposing environmental taxes and introducing green financing.
The foremost limitation of the study is that data are not available for all CIS countries. This study determined the effect of globalization on sustainable development, which is considered as an external factor, so future studies may also consider internal factors of sustainable development such as education, financial development, inflation, tourism development, etc. This study is completed as panel study, so future studies may be carried out on individual countries of the CIS or on other countries, as the level of globalization and sustainable development differs from country to country.

Author Contributions

Conceptualization, O.G., I.u.H. and S.M.; methodology, O.G., I.u.H., S.M., M.H.K. and A.K.; validation, O.G., I.u.H., S.M., M.H.K., S.K.N.G., A.K. and M.I.; formal analysis, O.G., I.u.H., S.M., M.H.K. and S.K.N.G.; investigation, O.G., I.u.H., S.M. and M.H.K.; resources, O.G., I.u.H., S.K.N.G. and M.I.; data curation, O.G., I.u.H., S.K.N.G., M.H.K. and A.K.; writing—original draft preparation, O.G., I.u.H., S.M. and M.H.K.; writing—review and editing, O.G., I.u.H., S.K.N.G. and M.I.; supervision, I.u.H., S.K.N.G. and O.G.; project administration, O.G., I.u.H., S.K.N.G. and M.I. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Data Availability Statement

Data are freely available.

Conflicts of Interest

The authors declare no conflict of interest.

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Table
Table 1. Variables Description.
Table 1. Variables Description.
VariableDescription and MeasurementSources
SDSustainable development is measured through sustainable development index[14]
EGEconomic globalization measured through KOF EG index[88]
PGPolitical globalization measured through KOF PG index[88]
SGSocial globalization measured through KOF SG index[88]
ENEnergy consumption measured in total energy consumption in quadrillion BTU[89]
Table
Table 2. Descriptive Statistics.
Table 2. Descriptive Statistics.
SDEGPGSGEC
Mean0.7156.1761.6055.584.59
Median0.7358.1058.7856.640.58
Maximum0.8271.7792.5072.3733.25
Minimum0.3632.6330.9631.530.09
Std. Dev.0.109.1017.0910.809.13
Table
Table 3. Individual CIS countries’ descriptive statistics.
Table 3. Individual CIS countries’ descriptive statistics.
CountriesVariableMeanMedianS.Dev. CountriesVariableMeanMedianS.Dev.
ArmeniaSD0.790.800.03AzerbaijanSD0.750.770.03
EG67.4068.002.21EG62.2060.505.98
PG54.3052.0011.94PG56.0057.009.47
SG60.6563.506.05SG51.6056.507.85
EN0.130.140.02EN0.580.590.05
KazakhstanSD0.500.480.11KyrgyzstanSD0.710.710.02
EG54.3554.504.25EG60.0560.502.61
PG58.6562.5010.34PG56.2057.504.98
SG58.6061.008.92SG55.0557.009.26
EN3.023.260.49EN0.220.220.02
MoldovaSD0.760.770.03RussiaSD0.710.720.03
EG64.0563.51.47EG50.9502.71
PG60.9564.59.98PG91.25921.02
SG61.35638.96SG64.15686.76
EN0.130.130.01EN29.8230.162.07
TajikistanSD0.670.690.04UkraineSD0.760.760.01
EG47.1463.18EG59.2614.65
PG45.6489.39PG85.1862.83
SG41.7544.55.87SG63.466.58.24
EN0.220.220.02EN5.185.411.04
UzbekistanSD0.700.700.04
EG40.35405.21
PG45.746.54.93
SG4343.54.01
EN2.022.050.12
Table
Table 4. Correlation Results.
Table 4. Correlation Results.
logSDlogEGlogPGlogSGlogEN
logSD1.00
logEG0.311.00
logPG0.100.251.00
logSG0.070.530.781.00
logEN−0.25−0.380.600.221.00
Table
Table 5. Unit root tests results.
Table 5. Unit root tests results.
VariablesIm, Pesaran
and Shin Test		Breitung TestDecision
LevelFirst Diff.LevelFirst Diff.
logSD1.45−2.89 a1.09−3.95 aI (1)
logEG−0.28−2.15 a0.20−1.71 bI (1)
logPG1.05−3.82 a0.04−5.18 aI (1)
logSG5.48−3.39 a3.61−1.81 bI (1)
logEN−1.41−4.42 a−1.73 b−3.82 aI (1)
a and b denote significance at 1% and 5%, respectively.
Table
Table 6. Panel cointegration test results.
Table 6. Panel cointegration test results.
Within-DimensionBetween-Dimension
TestStatisticTestStatistic
Panel rho-Stat.1.95Group rho-Stat.2.79
Panel PP-Stat.−1.90 bGroup PP-Stat.−3.69 a
Panel ADF-Stat.−2.08 bGroup ADF-Stat.−2.54 a
a and b denote significance at 1% and 5%, respectively.
Table
Table 7. Long run results.
Table 7. Long run results.
Dependent Variable: logSD
RegressorsCoefficientSEt-Stat.
logEG0.24 a0.064.18
logPG0.13 a0.043.45
logSG−0.030.03−0.88
logEN−0.16 a0.04−4.21
R20.78Adj. R20.76
a denotes significance at 1%.
Table
Table 8. Panel causality results.
Table 8. Panel causality results.
VariableF-Stat.ECT
Δ(logSD)Δ(logEG)Δ(logPG)Δ(logSG)Δ(logEN)
Δ(logSD)--0.890.710.140.17−3.30 a
Δ(logEG)2.70 c--6.85 a2.61 c2.60 c0.26
Δ(logPG)8.62 a0.82--0.870.85−5.40 a
Δ(logSG)0.560.770.52--0.52−4.16 a
Δ(logEN)6.78 a2.96 c1.611.72--−2.85 a
a and c denote significance at 1% and 10%, respectively.
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Gasimli, O.; Haq, I.u.; Munir, S.; Khalid, M.H.; Gamage, S.K.N.; Khan, A.; Ishtiaq, M. Globalization and Sustainable Development: Empirical Evidence from CIS Countries. Sustainability 2022, 14, 14684. https://doi.org/10.3390/su142214684

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Gasimli O, Haq Iu, Munir S, Khalid MH, Gamage SKN, Khan A, Ishtiaq M. Globalization and Sustainable Development: Empirical Evidence from CIS Countries. Sustainability. 2022; 14(22):14684. https://doi.org/10.3390/su142214684

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Gasimli, Oruj, Ihtisham ul Haq, Shahid Munir, Muhammad Hasnain Khalid, Sisira Kumara Naradda Gamage, Alam Khan, and Muhammad Ishtiaq. 2022. "Globalization and Sustainable Development: Empirical Evidence from CIS Countries" Sustainability 14, no. 22: 14684. https://doi.org/10.3390/su142214684

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