Governance, CO2 Emissions and Inclusive Human Development in Sub-Saharan Africa

Abstract

This study investigates the relevance of government quality in moderating the incidence of environmental degradation on inclusive human development in 44 sub-Saharan African countries for the period 2000-2012. Environmental degradation is measured with CO2 emissions and the governance dynamics include: political stability, voice and accountability, government effectiveness, regulation quality, the rule of law and corruption-control. The empirical evidence is based on the Generalised Method of Moments. Regulation quality modulates CO2 emissions to exert a net negative effect on inclusive development. Institutional governance (consisting of corruption-control and the rule of law) modulates CO2 emissions to also exert a net negative effect on inclusive human development. Fortunately, the corresponding interactive effects are positive, which indicates that good governance needs to be enhanced to achieve positive net effects. A policy threshold of institutional governance at which institutional governance completely dampens the unfavourable effect of CO2 emissions on inclusive human development is established. Other policy implications are discussed.

The mitigating effect of governance quality on the finance‐renewable energy‐growth nexus: Some international evidence

“…Hence, we construct three sub‐indexes and a global governance quality index by applying the PCA method on six institutional variables. Following recent studies by Asongu and Nnanna (2019) and Asongu and Odhiambo (2019), the governance quality ( GOV ) is examined through an index of political governance, PGOV (political stability and absence of violence/terrorism [ PSTA ] and voice and accountability [ FRE ]), an index of institutional governance, IGOV (control of corruption [ COR ] and the rule of law [ LAW ]) and an index of economic governance, EGOV (government effectiveness [ GEF ] and regulatory quality [ REG ]). We also derive the global index of governance quality ( GOV ) from these six variables via the PCA method.…”

“…Based on recent studies (Asongu & Odhiambo, 2019; Asongu & Nnanna, 2019; Kassi et al, 2020), we selected six variables of governance quality from the Worldwide Governance Indicators (WGI, 2018), namely, the political stability and absence of violence/terrorism ( PSTA ), voice and accountability ( FRE ), control of corruption ( COR ), the rule of law ( LAW ), government effectiveness ( GEF ), and the regulatory quality ( REG ). Following earlier studies and using the database from the World Development Indicators (WDI, 2018), we included several control variables, including consumer price index (Benczú et al, 2018; Gazdar & Cherif, 2015; Law & Singh, 2014), the official exchange rate (Kojid, Asid, Lily, Mulok, & Loganathan, 2012; Razzaque, Bidisha, & Khondker, 2017; Selimi & Selimi, 2017), and gross fixed capital formation (Kyophilavong et al, 2016; Musamali et al, 2014; Rahman & Velayutham, 2020).…”

“…PCA is a factor analysis technique that reduces a large dataset of highly correlated variables (initial variables) into a minimum of components (small dataset or new variables) encompassing most of the original variables' information. Several studies employed this technique because of its advantages and convenient use in analysing correlated, complex, and multidimensional variables (Appiah‐Otoo & Song, 2020; Asongu & Odhiambo, 2019; Asongu & Nnanna, 2019; Kassi et al, 2017; Kassi et al, 2020). The PCA method annihilates multicollinearity due to correlated explanatory variables representing the same concept in multivariate models.…”

Does Environmental Sustainability Mediate the Effect of Institutional Quality on Inclusive Development in Sub-Sahara Africa

“…Using a GMM estimation technique in 25 SSA countries over the period 1996 to 2010, Abid, (2016) found that democracy, government effectiveness, political stability, and control of corruption reduces CO2 emissions and on the other hand, rule of law and regulatory quality increases CO2 emissions. Asongu and Odhiambo (2020) investigated the importance of government quality in moderating the prevalence of environmental degradation on inclusive human development in 44 sub-Saharan African countries over the period 2000 to 2012. Based on a GMM they found that, Regulation quality, rule of law and corruption control modulates CO2 emissions to exert a net negative effect on inclusive human development.…”

“…Moreover, it was also found that, the direct and negative effects of environmental degradation on health may be decreased by the indirect and positive effects through institutions quality and macroeconomic variables. Based on the research work of Asongu and Odhiambo (2020) on a panel of 44 sub-Saharan African countries from 2000 to 2012 regulation quality modulates carbon dioxide emissions to exercise a net negative effect on inclusive development. Institutional governance (corruption control and the rule of law) modulates CO2 emissions to also exert a net negative effect on inclusive human development.…”