Relationship of sustainable economic development and environmental performance via moderating effect of governance in developing and developed countries
Economic outcomes and expectations may differ between developing and developed countries, primarily due to different stages of economic development. Nonetheless, governments of developing and developed countries alike are focusing on sustainable economic development (SED) to ensure self-sufficien...
Saved in:
| Main Author: | |
|---|---|
| Format: | Thesis |
| Language: | English |
| Published: |
2022
|
| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/105510/1/SPE%202022%2022%20UPM%20IR.pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Economic outcomes and expectations may differ between developing and developed
countries, primarily due to different stages of economic development. Nonetheless,
governments of developing and developed countries alike are focusing on sustainable
economic development (SED) to ensure self-sufficiency in food, total employment, and
financial stability without relying on foreign aid. To achieve these objectives,
governments continue to exploit natural resources via unsustainable industrialisation,
causing deforestation and air and water pollution, which ultimately destroys the natural
ecosystem. Unfortunately, the general perception is that environmental conservation will
not bring any commercial benefits. Instead, conservation relies on the government’s or
institution’s budget to maintain the order of ecology and in return minimise
environmental impacts.
Though some empirical studies argue that corporate environmental efforts bring in good
revenue through tourism spending, environmentally friendly industries, green-label
industries, and environment-conscious investments, both developing and developed
countries continue to emphasise economic development rather than environmental
performance. Therefore, this study aimed to investigate the relationship of sustainable
economic development (SED) and environmental performance (EP) via moderating
effect of country governance (CG) in developing and developed countries. The
underpinning theories adopted in this study were the Environmental Kuznets Curve
(EKC), Ecological Modernisation Theory (EMT), Neoliberal Environmental
Governance (NEG), and Great Moderation (GM).
Past studies on the nexus between SED, EP, and CG have focused on the company or
institution level. This study, in contrast, addressed the country level in terms of
developing and developed countries. Data on SED was obtained from the World Bank and International Monetary Fund (IMF) database, which included Gross Domestic
Product (GDP), Foreign Direct Investment (FDI), Net Capital Account (NCA), and
Central Government Debt ratio to GDP (DEBT). EP was represented by the
Environmental Performance Index (EPI), the data of which was developed by Yale
University and Columbia University. CG was represented by Worldwide Governance
Indicators (WGIs), whereby the data was produced by the Natural Resource Governance
Institute (NRGI) and World Bank Institute. All data was obtained from an even number
of years from 2006 to 2018. This study also took into consideration the control variables
of primary school enrolment (SCH) and country population (POP), which may
potentially influence the outcome of this study. A panel regression analysis based on the
fixed effect model was performed to examine the nexus of SED, EP, and CG.
Overall, the findings contribute to the economic literature by demonstrating the impact
of the SED on EP in developing and developed countries. This study also confirms the
effectiveness of CG for EP by preventing environmental degradation and enhancing
environmental conservation. This study further proves the effectiveness of CG in
moderating the link between SED and EP for optimised performance. The outcomes of
this study provide a new perspective and recommend relevant strategies for improving
the usage of a country's resources to achieve balanced performance among SED, EP, and
CG. The findings further contribute to governments, institutions, and agencies as inputs
to improve CG policies. Potential investors or fund managers can also use the findings
as a guideline for making sound investment decisions. Finally, the study serves as a
reference for academicians by providing informative knowledge and filling the gap in
the existing economics and environmental literature. |
|---|