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Impact of institutional quality on environment and energy consumption: evidence from developing world

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Abstract

This study aimed to examine the role of institutional quality on environment and energy consumption for 66 developing countries by using data from 1991 to 2017. Different environmental indicators such as CO2 emissions, CH4 emissions, forest area, organic water pollutants, and energy consumption. The paper constructs institutional quality index by covering three main aspects: political stability, administrative capacity, and democratic accountability. System generalized method of moments results reveal that institutional quality has a positive impact on most of the environmental indicators such as CO2 emissions, CH4 emissions, and forest area. Institutional quality was having a positive impact on energy consumption based on oil and fossil fuel resources. Furthermore, it results in a signal that economic globalization has not increased environmental quality over time in developing countries.

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Fig. 1

Source: Author’s own calculation

Fig. 2

Source: The figure is based on authors own estimation. We normalized the values and given ranges between 0 upto 10. Here 0 implies a low level of institutional quality and 10 implies a high level of institutional quality

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Notes

  1. Name list of the countries is given in Table 3 in Appendix 1.

  2. Each variable explanation is given in Table 4 in Appendix 1.

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Acknowledgements

We would like to thank editor, Prof. Luc Hens, and two anonymous referees for valuable suggestions and helpful comments which have significantly enhanced the quality of the paper. All remaining errors and omissions are our own.

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Authors and Affiliations

  1. University of Lahore, Sargodha Campus, Lahore, Pakistan

    Muhammad Azam

  2. Center for Economics, Finance and Management Studies, Hunan University, Changsha, Hunan, China

    Liu Liu

  3. School of Business, Hunan University of Science and Technology, Xiangtan, Hunan, China

    Najid Ahmad

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  1. Muhammad Azam
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  2. Liu Liu
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  3. Najid Ahmad
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Correspondence to Najid Ahmad.

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Appendices

Appendix 1

See Tables 3 and 4.

Table 3 List of developing countries
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Table 4 Data source and definition
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Appendix 2: Durbin Wu Hausman test for endogeneity

See Tables 5, 6, 7, 8 and 9.

Table 5 CO2 emissions (kg per 2010 US$ of GDP)
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Table 6 Energy consumption (kg of oil equivalent per capita)
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Table 7 Forest area (sq. km)
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Table 8 Organic water pollutant (kg per day per worker)
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Table 9 Methane emissions
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Appendix 3: Breusch-Pagan/Cook-Weisberg test for heteroskedasticity

See Tables 10, 11, 12, 13 and 14.

Table 10 CO2 emissions (kg per 2010 US$ of GDP)
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Table 11 Energy consumption (kg of oil equivalent per capita)
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Table 12 Forest area (sq. km)
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Table 13 Organic water pollutant (kg per day per worker)
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Table 14 Methane emissions (% change from 1990)
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Appendix 4: Hausman test for fixed versus random effects

See Tables 15, 16, 17, 18 and 19.

Table 15 CO2 per capita specification
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Table 16 EC (kg of oil equivalent per capita) specification
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Table 17 Forest area (sq. km) Specification
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Table 18 Organic water pollutant (BOD) emissions (kg per day per worker) Specification
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Table 19 Methane emissions (% change from 1990) Specification
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Appendix 5: Results of fixed versus random effects estimation

See Tables 20, 21, 22, 23 and 24.

Table 20 CO2 per capita specification
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Table 21 EC (kg of oil equivalent per capita) specification
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Table 22 Forest area (sq. km) specification
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Table 23 Organic water pollutant (OWP) emissions (kg per day per worker) specification
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Table 24 Methane emissions (% change from 1990) Specification
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Azam, M., Liu, L. & Ahmad, N. Impact of institutional quality on environment and energy consumption: evidence from developing world. Environ Dev Sustain 23, 1646–1667 (2021). https://doi.org/10.1007/s10668-020-00644-x

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