Economic Growth and Environmental Quality: Analysis of Government Expenditure and the Causal Effect

Abstract

Environmental expenditures (EX) are made by the government and industries which are either long-term or short-term investments. The principal target of EX is to eliminate environmental hazards, promote sustainable natural resources, and improve environmental quality (EQ). Thus, this study looks at the impact of economic growth (EG), and government finance expenditure (GEX) on EQ in Northern Africa and Southern Africa (NASA) republics from 2000–2016. The panel quantile regression (PQR) and panel vector autoregressive (PVAR) model in a generalized method of moment framework (GMM) were employed as a framework. The PQR results show that; (i) In Northern republics, GEX had a significant positive effect on EQ at 25%, 50%, and 75% quantiles levels. (ii) In the Southern republics, GEX had a significant negative impact on EQ at 25%. Moreover, the PVAR through the GMM established that EG and GEX are significantly positive while the parameter for CO2 is insignificant and negative in the North. However, in the South, GEX and CO2 were statistically significant, while EG positively impacts EQ. Lastly, the granger causality report in North indicates uni-directional causation running from LNGEX → LNGDPpc, LNCO2 → LNGDPpc, LNFF → LNGEX, and LNFDI → LNGEX. Similarly, there is uni-directional causation in South republics from LNGEX → LNGDPpc, LNCO2 → LNGEX, and LNFDI → LNGEX.

Determinants of the expenditure side of environmental federalism – panel data research on countries in Europe

“…Barrell et al (2021) confirmed the problem of deteriorating efficiency of environmental expenditures across the selected EU countries. Donkor et al (2022) found both positive and negative influence of government finance expenditures on environmental quality in different countries.…”

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Does Rising Resources Income, Consumer Prices, Government Outlay, and Globalisation Hinder Africa's Sustainable Development?

“…However, the agent computing outcome revealed a positive effect of government outlay on development indicators. However, Donkor et al (2022) employed the panel quantile regression and panel VAR techniques in submitting that government spending has a positive and substantial impact on ecological sustainability in northern and southern African countries Yameogo et al (2021) expressed with the GMM estimator that no significant effect existed between globalisation and ecological sustainability for 20 sub-Saharan Africa (SSA) countries. A mixed impact of globalisation on environmental sustainability was found by Leal and Marques (2021).…”

Carbon Dioxide Emissions and Its Socio-Economic Drivers Nexus: Empirical Evidence from MENA Countries

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