The Regulatory Quality and ESG Model at World Level

Abstract

In this article, we analyse the determinants of Regulatory Quality-RQ for 193 countries in the period 2011-2020. We use a database from ESG-Environment Social Governance of the World Bank. We apply OLS, Panel Data with Fixed Effects and Panel Data with Random Effects. We found that the variables that have the most positive impact on RQ, among others, are “GHG Net Emission”, “Mean Drought Index”, and “Heat Index”. We also found that the variables that have the most negative impact on RQ are among others “Renewable Energy Consumption”, “Voice and Accountability” and “Rule of Law”. Furthermore, we have applied the k-Means algorithm optimized with the Elbow Method and we find the presence of five clusters. In adjunct, we confront eight machine learning algorithms to predict the value of RQ and we found that the best predictor is Polynomial Regression. The predictive level of RQ for the analysed countries is expected to diminish of -1,29%. In the end, we present a network analysis with the Euclidean distance and we found the presence of a structure of seven networks using augmented data. JEL Classification: D7, D70, D72, D73, D78.

The Role of GDP Growth in the ESG Approach at World Level

“…emissions tend to grow with the value of GDPG especially for African and Asian countries. However, the theoretical positive connection between the G [4], [5], [6], [7], [8], [9] and S component of the ESG model and the GDPG appears more plausible. Furthermore, the ESG model has also an impact on entrepreneurship [10] and R&D at country level [11].…”

The Role of Political Stability in the Context of ESG Models at World Level

“…Finally, the violence in France for protests the raising the retirement age promoted by President Macron. These facts show the difficulty of controlling political violence also in the western world and ask the question of the effectiveness of western political and institutional systems [5], [6], [7]. Democracy is therefore unable to eliminate political violence, as evident from western societies.…”

The Role of Political Stability in the Context of ESG Models at World Level

“…In fact, recent political events have highlighted a difficulty of the western institutions to avoid the manifestation of political violence and terrorism. Especially in the USA, events that have highlighted political and racial violence occurred, also throwing discredit on the entire US democratic system [4]. Such phenomena occurred in Brazil in the passage of deliveries between Bolsonaro and Lula which seemed to be inspired to the analogue between Trump and Biden.…”