The impact of natural threats on sustainable development: The NIC countries case

In this study, the impacts of natural threats, economic growth, digitalization, and clean electricity generation on the Human Development Index (HDI) for NIC countries were examined. In the study, panel data analysis methods were employed by taking into account the cross-sectional dependence among the series. Stationarity analyses were conducted using CIPS, MADF, and KT structural break unit root tests, while the cointegration relationships among the variables were examined using Kao, Pedroni, and Fisher-Johansen tests. For long-run coefficient estimations, the Fixed Effects Driscoll-Kraay (DK-FE) and the Fixed Effects Quantile Regression (FE-QR) based on the Method of Moments Quantile Regression (MM-QR) approach which accounts for outliers and non-normal distributions in the series were utilized. Short term relationships were analyzed using the Dumitrescu-Hurlin (DH) Granger causality test. The results of the cointegration analysis indicated that HDI and the explanatory variables are cointegrated in the long run. In the long run, increasing natural threats reduce the human development index, whereas the digitalization of the economy, increases in clean electricity generation and per capita income, accelerated urbanization, and population dynamics enhance the human development index, thereby contributing to sustainable development. The short-run causality analysis results revealed a bidirectional Granger causality relationship between HDI and natural threats, per capita income, and the urbanization rate; alongside a unidirectional Granger causality running from the digitalization index to HDI, and from HDI to clean electricity generation and population. Therefore, prioritizing policies that will increase welfare and accelerate digital and green transformation in the examined countries is of critical importance, simultaneously supporting the disaster risk reduction policies of these countries.