The Impact of Natural Resource Dependency and Economic Globalization on Environmental Sustainability in IRAN within the framework of the N-shaped Environmental Kuznets Curve

Introduction: Environmental quality and its determinants are among the most important issues in environmental economics. The dependence of Iran's economy on natural resource rent and the recognition that the country is on the path of development and commercial liberalization makes it crucial to examine the impact of natural resource rent, economic globalization, and economic growth on environmental quality in Iran. On the other hand, the classical Environmental Kuznets Curve (EKC (believes that the relationship between economic growth and environmental degradation follows an inverted U-shaped curve. In more recent studies, considering the criticisms of the classical EKC, the factors affecting environmental degradation have been examined using a cubic equation and within the framework of the N-shaped EKC. As such, the primary aim of this research is to investigate the impact of natural resource dependency and economic globalization on environmental degradation in Iran within the framework of the N-shaped EKC.Materials and Methods: The current descriptive-analytical and applied study model is designed using time series data from 1990 to 2021 and includes the variables of GDP per capita (as an economic growth index), square and cube of GDP per capita, share of natural resource rent from GDP (as an indicator of natural resource dependency), the economic dimension of the KOF globalization index and two indicators of environmental degradation (CO2 emissions and ecological footprint). The data used were collected from the databases of World Development Indicators belonging to the World Bank, KOF Economic Institute, and Global Footprint Network. In this study using Johansen-Juselius's cointegration test, the long-term relationship between the variables is evaluated. Finally, by the Vector Error Correction Model (VECM), the long-term and short-term coefficients of the variables have been estimated. Data analysis was also done with the help of Eviews12.0 software.Results: The estimation of the model using the VECM method shows that, in the long term, the impact of economic growth, its square, and cube on both environmental degradation indicators is significant and positive, negative and positive, respectively, confirming the hypothesis of an N-shaped EKC. According to other results, the long-term impact of natural resource dependency and economic globalization on both environmental degradation indicators is significant and positive and negative, respectively. With a one percent increase in the share of natural resources from GDP, CO2 emissions and ecological footprints increase by about 0.18 and 0.16 percent, respectively, and with a one percent increase in the KOF globalization index, CO2 emissions and ecological footprints decrease by about 0.49 and 0.54 percent, respectively. Also, the error correction coefficient is estimated to be around -0.22 to -0.25, and in the short term, only economic globalization had a significant effect on the environmental degradation indicators.Discussion: Achieving higher economic growth rates in the near future could lead to environmental degradation by crossing the second turning point of the N-shaped EKC. Therefore, efforts should be made to attain higher economic growth, which requires the use of more energy as one of the most important factors of production, by creating and strengthening clean energies. Also, the government should adopt the necessary control measures and policies to preserve and prevent excessive exploitation of natural resources and allocate a portion of the revenues from the sale of natural resources to investment in appropriate and environmentally friendly technologies by creating green funds. Furthermore, by confirming the global environmental management hypothesis that suggests economic globalization reduces environmental demand, moving towards an open economy can help improve environmental quality in Iran.