The impact of economic and political reforms on environmental performance in developing countries

Abstract

The humans of modern society are enjoying the luxuries and comforts today but future generations will be facing a more polluted environment and scarcity of natural resources. So the effects of global warming and climatic changes are a major policy concern nowadays around the world. The majority of the literature treats the Carbon Dioxide emissions as an indicator of environmental deterioration but this paper considers the environmental performance index as an indicator of environment. This paper addresses the role of institutional reforms for environmental performance that is hardly discussed in the earlier literature. It is argued that a novel approach of institutional reforms can provide some useful insights for environmental performance in developing countries. There is wide agreement that institutional quality is crucial for economic sustainability but rarely focused to explore the impacts of institutional reforms on environmental performance. The institutional reforms are generally divided into two categories; economic and political reforms. This paper investigated the impact of each category of institutional reforms for environmental performance by using panel data of 122 developing economies for a period of 1996–2020. Difference in differences technique is applied to determine the impact of each category of reforms on the environment. It is found that economic and political reforms significantly contribute to protecting the environment in developing countries, and it will be a good policy option to reform the economic and political institutions to preserve the environment in these countries along with sustainable development.

Institutional determinants of environmental performance

“…This applies in particular when appropriate regulations combined with legal certainty are in place (Esty & Porter, 2005). These results are confirmed by Zhao and Madni (2021) using panel regression. The results of Joshi and Beck (2018) who examine whether there is a connection with political (and economic) freedom, are unclear.…”

“…A few panel studies have been carried out in the literature (e. g. (De Soysa, 2022;Zhao & Madni, 2021)) which are able to use the information contained in the data simultaneously at the time series and cross-sectional level, but they can only be used without restrictions if the measurement of the variables included remains constant over time. This is not the case for some of the variables used here.…”

Factors affecting the green investment and assessing sustainable performance of firms in China

“…The time period of data collection was about three months (October-December 2022). The sample of 463 is sufficient for “structural equation modeling” (SEM) analysis, as it followed Nunnally’s [ 46 ] recommendation that “the sample size should be based on the number of items to be analyzed, with a case-to-item ratio of 10:1 being acceptable.” Additionally, 100–150 samples are required for “maximum likelihood estimation” [ 47 , 48 ] and Boomsma [ 49 ] suggests a sample of at least 200 for SEM.…”

Natural Resource Extraction, Ecosystem Services and Population Health: An Empirical Test of 170 Countries, 1990-2019

“…These data are often used to gauge planetary health based on the actual states of ecosystems versus policies supposed to achieve better states, like clean water and endangered species laws (Zhao and Madni, 2021). The availability of ecosystem services is loosely proxied by extent of available tree cover, wetlands, and grasslands, the three indicators de ning the "ecosystem services" issue category, -one of the EPI's 11 issue categories (see https://epi.yale.edu).…”

“…For a full picture of the 4 areas and weighting system of the indicators in all 11 categories. The EPI is widely used by governments and non-governmental organizations in formulating policy (Zhao and Madni, 2021).…”