Do Economic and Financial Determinants Drive Sustainable Development? Evidence From Nordic Countries

This study explores the relationships among productivity, financial development, financial globalization, economic freedom, and CO2 emissions in the Nordic countries Denmark, Finland, Iceland, Norway, and Sweden over the period 2000–2022. The primary aim of the study is to assess how economic and financial indicators influence environmental sustainability and to provide insights into the balance between economic development and environmental quality. Owing to their strong institutional frameworks, high standards of living, and environmentally oriented policies, the Nordic countries are widely regarded as a leading example of a transition toward carbon-neutral and low-carbon development pathways. Within this framework, the analysis conducted in this study provides valuable insights. The study employs advanced econometric techniques that account for cross-country heterogeneity. The empirical results indicate that productivity and financial development contribute to reducing CO2 emissions. In contrast, the impacts of financial globalization and economic freedom vary depending on countries' structural characteristics, financial systems, and policy environments.