Nonlinear effects of economic growth on environmental sustainability in Hungary: the roles of globalization and energy imports

As a post-transition economy with significant reliance on energy imports, Hungary faces ongoing challenges in harmonizing economic growth with environmental sustainability in the context of globalization and European integration. Existing empirical research predominantly assumes linear relationships between growth and the environment, resulting in a limited understanding of how environmental outcomes vary across different economic growth regimes and business cycle phases, particularly in post-transition settings. Drawing on the Environmental Kuznets Curve and decoupling frameworks, this study posits that the ecological footprint responds asymmetrically to economic growth and energy imports across low-, medium-, and high-growth regimes in these economies. Utilizing annual data for Hungary from 1970 to 2023, this study apply a Multiple-Threshold Autoregressive Distributed Lag (MT-ARDL) model, supplemented by structural break tests and frequency-domain Granger causality analysis, to identify regime-specific short- and long-run dynamics. The findings indicate that environmental degradation is most severe during low-growth periods, when economic growth exerts a disproportionately large positive elasticity on the ecological footprint. In contrast, medium- and high-growth regimes exhibit partial decoupling, driven by improvements in energy efficiency, expansion of renewable energy adoption and alignment with EU regulations. Energy imports exacerbate ecological pressure during moderate growth but mitigate environmental degradation during high-growth phases, reflecting cleaner energy substitution, technological advancements, and deeper market integration. Globalization positively contributes to long-term sustainability through institutional strengthening and the diffusion of green technology. Overall, the results demonstrate that environmental performance depends on the timing of economic growth rather than growth itself. This underscores the need for counter-cyclical, growth-regime-specific sustainability and energy policies, providing policy-relevant insights for ESG-oriented climate governance in Hungary and other post-transition and emerging economies.