Determinants of Economic Growth in D-8 Countries: The Role of Financial Integration, Human Development, and Climate Change

Abstract

This study investigates the primary determinants of economic growth in D-8 countries by examining the roles of financial integration, human development, and climate change. Using a panel dataset covering the period from 2002 to 2022, we apply both dynamic system GMM and quantile regression techniques to account for heterogeneity, endogeneity, and distributional differences in growth responses. Our findings indicate that financial integration does not have a consistently significant effect on growth, suggesting that its potential benefits are conditional on domestic absorptive capacities and institutional quality. In contrast, human development emerges as a key driver of economic growth, although its short-term impact appears muted in some specifications. Environmental indicators confirm a nonlinear relationship consistent with the Environmental Kuznets Curve (EKC), wherein emissions initially rise with income but decline beyond a threshold. These results underscore the importance of strategic policy alignment ensuring that financial openness supports productive investment, human capital development is prioritized, and climate policies are integrated into growth agendas