Financial Development and Sustainable Competitiveness in Arctic Region: A Dynamic Panel Data Analysis

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Farzan Yahya

farzan.yahya@yahoo.com

Ghulam Abbas

g_abbas@iba-suk.edu.pk

Muhammad Hussain

hussain.hed@gmail.com

Muhammad Waqas

mwaqas@mail.ustc.edu.cn

Abstract

The present study investigates the effect of financial development on sustainable competitiveness and its components (natural capital, resource intensity, and social cohesion) in the Arctic region. We employ bank-based, stock-market based, and composite index to measure financial development. To deal with endogeneity bias, system GMM is utilized. The results show a positive and significant effect of financial development on sustainable competitiveness. The estimates also assert that financial development encourages resource efficiency and social cohesion in the region. In contrast, we find the negative effect of financial development on natural capital. This suggests that overexploitation of natural resources may provide short-term benefits to the local and regional communities but it may threaten the long-term sustainability of the Arctic. Thus, the financial sector should be guided to support financing and investing activities in alternative eco-friendly technologies and ventures for reducing excessive natural resource utilization.

Keywords:

sustainable competitiveness, financial development, social cohesion, resource intensity, natural capital

References

Article Details

Yahya, F., Abbas, G., Hussain, M., & Waqas, M. (2022). Financial Development and Sustainable Competitiveness in Arctic Region: A Dynamic Panel Data Analysis. Problemy Ekorozwoju, 17(1), 267–278. https://doi.org/10.35784/pe.2022.1.24

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