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Does governance contribute to the public spending – CO2 emissions nexus in developing economies? Policy lessons for sustainable development*
Van Bon Nguyen** 
Van Bon Nguyen
Affiliation: UFM Research Team, University of Finance - Marketing (UFM), Phu Nhuan District, Ho Chi Minh City, Vietnam
 0000-0002-6281-9893
Correspondence
nv.bon@ufm.edu.vn
Article | Year: 2024 | Pages: 79 - 101 | Volume: 48 | Issue: 1 Received: December 19, 2022 | Accepted: May 5, 2023 | Published online: March 1, 2024
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Variable
|
Definition
|
Type
|
Source
|
|
CO2 emissions
(CO2, tons)
|
CO2 emissions (metric tons per capita)
|
log
|
World Bank
|
|
Public spending
(EXP, %)
|
Total expenditure consists of total expense and the
net acquisition of nonfinancial assets
|
%
|
IMF
|
|
Private investment
(PIN, %)
|
Gross fixed capital formation (% GDP)
|
%
|
IMF
|
|
Economic growth
(GDP, USD)
|
GDP per capita (constant 2010 US$)
|
log
|
World Bank
|
|
Trade openness
(OPE, %)
|
The sum of exports and imports of goods and services
measured as a share of gross domestic product
|
%
|
World Bank
|
|
Regulatory Quality
(GO1)
|
Regulatory Quality captures perceptions of the
ability of the government to formulate and implement sound policies and
regulations that permit and promote private sector development.
|
level
|
World Bank
|
|
Rule of Law
(GO2)
|
Rule of Law captures perceptions of the extent to
which agents have confidence in and abide by the rules of society, and in
particular the quality of contract enforcement, property rights, the police,
and the courts, as well as the likelihood of crime and violence.
|
level
|
World Bank
|
|
Voice and Accountability
(GO3)
|
Voice and Accountability captures perceptions of the
extent to which a country's citizens are able to participate in selecting
their government, as well as freedom of expression, freedom of association,
and a free media.
|
level
|
World Bank
|
|
Control of Corruption
(GO4)
|
Control of Corruption captures perceptions of the
extent to which public power is exercised for private gain, including both
petty and grand forms of corruption, as well as "capture" of the
state by elites and private interests.
|
level
|
World Bank
|
|
Government Effectiveness
(GO5)
|
Government Effectiveness captures perceptions of the
quality of public services, the quality of the civil service and the degree
of its independence from political pressures, the quality of policy
formulation and implementation, and the credibility of the government's
commitment to such policies.
|
level
|
World Bank
|
|
Political Stability
(GO6)
|
Political Stability and Absence of
Violence/Terrorism measures perceptions of the likelihood of political
instability and/or politically-motivated violence, including terrorism.
|
level
|
World Bank
|
|
Variable
|
Obs
|
Mean
|
Std. Dev.
|
Min
|
Max
|
|
CO2
|
2,180
|
2.645
|
3.192
|
0.020
|
17.819
|
|
EXP
|
2,180
|
28.617
|
15.491
|
3.787
|
181.949
|
|
PIN
|
2,180
|
23.474
|
8.333
|
2.000
|
81.021
|
|
GDP
|
2,180
|
4,941.198
|
7,769.721
|
267.31
|
77,544.032
|
|
OPE
|
2,180
|
76.024
|
33.308
|
0.784
|
210.400
|
|
Variable
|
Obs
|
Mean
|
Std. Dev.
|
Min
|
Max
|
|
GO1
|
2,180
|
-0.525
|
0.604
|
-1.672
|
1.662
|
|
GO2
|
2,180
|
-0.450
|
0.610
|
-1.962
|
1.254
|
|
GO3
|
2,180
|
-0.425
|
0.813
|
-3.180
|
1.422
|
|
GO4
|
2,180
|
-0.409
|
0.665
|
-2.348
|
1.536
|
|
GO5
|
2,180
|
-0.517
|
0.610
|
-1.870
|
1.348
|
|
GO6
|
2,180
|
-0.430
|
0.778
|
-2.259
|
1.311
|
|
|
CO2
|
EXP
|
PIN
|
GDP
|
OPE
|
|
CO2
|
1
|
|
|
|
|
|
EXP
|
0.297***
|
1
|
|
|
|
|
PIN
|
0.145***
|
0.104***
|
1
|
|
|
|
GDP
|
0.865***
|
0.250***
|
0.079***
|
1
|
|
|
OPE
|
0.290***
|
0.312***
|
0.172***
|
0.221***
|
1
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
|
GO1
|
GO2
|
GO3
|
GO4
|
GO5
|
GO6
|
|
GO1
|
1
|
|
|
|
|
|
|
GO2
|
0.806***
|
1
|
|
|
|
|
|
GO3
|
0.599***
|
0.514***
|
1
|
|
|
|
|
GO4
|
0.732***
|
0.841***
|
0.451***
|
1
|
|
|
|
GO5
|
0.874***
|
0.858***
|
0.629***
|
0.810***
|
1
|
|
|
GO6
|
0.622***
|
0.568***
|
0.449***
|
0.665***
|
0.653***
|
1
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
Variables
|
Augmented Dickey-Fuller test
|
Phillips-Perron test
|
|
Prob > chi2
|
Prob > chi2
|
|
Without trend
|
With trend
|
Without trend
|
With trend
|
|
CO2
|
317.964***
|
283.801***
|
372.570***
|
295.218***
|
|
EXP
|
259.473**
|
278.028***
|
306.929***
|
370.393***
|
|
PIN
|
326.516***
|
254.230**
|
273.501***
|
176.643
|
|
GDP
|
308.696***
|
219.896
|
379.940***
|
201.929
|
|
OPE
|
322.259***
|
337.557***
|
281.902***
|
308.407***
|
|
GO1
|
268.640***
|
266.250***
|
385.181***
|
451.596***
|
|
GO2
|
376.661***
|
316.394***
|
429.727***
|
377.175***
|
|
GO3
|
341.992***
|
327.326***
|
450.591***
|
454.349
|
|
GO4
|
243.557
|
245.751*
|
353.052***
|
399.309***
|
|
GO5
|
321.891***
|
318.653***
|
332.987***
|
372.622***
|
|
GO6
|
285.816***
|
344.309***
|
347.170***
|
339.510***
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
Variables
|
GO1
|
GO2
|
GO3
|
GO4
|
GO5
|
GO6
|
|
CO2 emissions (-1)
|
0.981***
(0.002)
|
0.977***
(0.002)
|
0.980***
(0.002)
|
0.979***
(0.002)
|
0.980***
(0.002)
|
0.982***
(0.002)
|
|
Public spending
|
-0.070***
(0.011)
|
-0.054***
(0.012)
|
-0.083***
(0.014)
|
-0.054***
(0.012)
|
-0.065***
(0.012)
|
-0.095***
(0.016)
|
|
Governance
|
2.228***
(0.420)
|
2.509***
(0.469)
|
1.709***
(0.393)
|
2.181***
(0.405)
|
1.835***
(0.416)
|
1.388***
(0.362)
|
|
Private investment
|
0.384***
(0.044)
|
0.369***
(0.046)
|
0.360***
(0.050)
|
0.393***
(0.048)
|
0.330***
(0.045)
|
0.396***
(0.053)
|
|
Economic growth
|
0.0003
(0.001)
|
0.0000
(0.001)
|
0.0023
(0.001)
|
-0.0004
(0.001)
|
0.001
(0.001)
|
0.001
(0.001)
|
|
Trade openness
|
-0.042***
(0.012)
|
-0.039***
(0.012)
|
-0.054***
(0.015)
|
-0.046***
(0.012)
|
-0.045***
(0.013)
|
-0.049***
(0.015)
|
|
Instrument
|
41
|
41
|
37
|
38
|
40
|
36
|
|
Country/Observation
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
|
AR(2) test
|
0.964
|
0.980
|
0.960
|
0.966
|
0.969
|
0.963
|
|
Sargan test
|
0.190
|
0.355
|
0.159
|
0.183
|
0.229
|
0.205
|
|
Hansen test
|
0.156
|
0.126
|
0.106
|
0.108
|
0.111
|
0.125
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
Variables
|
GO1
|
GO2
|
GO3
|
GO4
|
GO5
|
GO6
|
|
CO2 emissions (-1)
|
0.977***
(0.002)
|
0.973***
(0.002)
|
0.977***
(0.002)
|
0.979***
(0.002)
|
0.977***
(0.002)
|
0.981***
(0.002)
|
|
Public spending
|
-0.138***
(0.027)
|
-0.175***
(0.035)
|
-0.107***
(0.022)
|
-0.186***
(0.031)
|
-0.132***
(0.028)
|
-0.112***
(0.021)
|
|
Governance
|
5.251***
(0.902)
|
6.499***
(1.033)
|
3.545***
(0.598)
|
5.234***
(0.861)
|
4.759***
(0.793)
|
3.041***
(0.658)
|
|
Pub. spend*Governance
|
-0.097***
(0.023)
|
-0.130***
(0.026)
|
-0.052***
(0.012)
|
-0.103***
(0.020)
|
-0.082***
(0.020)
|
-0.053***
(0.017)
|
|
Private investment
|
0.339***
(0.048)
|
0.357***
(0.049)
|
0.349***
(0.048)
|
0.393***
(0.044)
|
0.347***
(0.048)
|
0.396***
(0.052)
|
|
Economic growth
|
0.003**
(0.001)
|
0.004***
(0.001)
|
0.003**
(0.001)
|
0.003**
(0.001)
|
0.003**
(0.001)
|
0.001
(0.001)
|
|
Trade openness
|
-0.025***
(0.010)
|
-0.027***
(0.011)
|
-0.050***
(0.014)
|
-0.031***
(0.011)
|
-0.033***
(0.011)
|
-0.043***
(0.013)
|
|
Instrument
|
36
|
37
|
38
|
39
|
37
|
37
|
|
Country/Observation
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
|
AR(2) test
|
0.949
|
0.968
|
0.977
|
0.957
|
0.966
|
0.946
|
|
Sargan test
|
0.167
|
0.353
|
0.204
|
0.211
|
0.205
|
0.231
|
|
Hansen test
|
0.160
|
0.205
|
0.229
|
0.340
|
0.114
|
0.229
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
Variables
|
GO1
|
GO2
|
GO3
|
GO4
|
GO5
|
GO6
|
|
CO2 emissions (-1)
|
0.981***
(0.002)
|
0.977***
(0.002)
|
0.980***
(0.002)
|
0.979***
(0.002)
|
0.979***
(0.002)
|
0.983***
(0.002)
|
|
Public spending
|
-0.045*
(0.024)
|
-0.032
(0.022)
|
-0.054**
(0.024)
|
-0.038*
(0.022)
|
-0.050**
(0.021)
|
-0.071***
(0.025)
|
|
Governance
|
1.803***
(0.550)
|
2.533***
(0.556)
|
1.817***
(0.438)
|
2.327***
(0.526)
|
1.986***
(0.517)
|
1.277***
(0.457)
|
|
Private investment
|
0.309***
(0.076)
|
0.310***
(0.075)
|
0.284***
(0.097)
|
0.332***
(0.097)
|
0.280***
(0.076)
|
0.311***
(0.100)
|
|
Economic growth
|
0.0006
(0.002)
|
0.0009
(0.002)
|
0.004**
(0.002)
|
0.001
(0.001)
|
0.003
(0.002)
|
0.003
(0.002)
|
|
Trade openness
|
-0.038**
(0.018)
|
-0.043***
(0.017)
|
-0.067***
(0.020)
|
-0.051***
(0.018)
|
-0.051***
(0.016)
|
-0.057***
(0.018)
|
|
Instrument
|
41
|
41
|
37
|
38
|
40
|
36
|
|
Country/Observation
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
|
AR(2) test
|
0.952
|
0.983
|
0.961
|
0.957
|
0.964
|
0.961
|
|
Sargan test
|
0.190
|
0.355
|
0.159
|
0.183
|
0.229
|
0.205
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
|
Variables
|
GO1
|
GO2
|
GO3
|
GO4
|
GO5
|
GO6
|
|
CO2 emissions (-1)
|
0.979***
(0.002)
|
0.975***
(0.002)
|
0.978***
(0.002)
|
0.978***
(0.002)
|
0.978***
(0.002)
|
0.981***
(0.002)
|
|
Public spending
|
-0.084*
(0.047)
|
-0.142***
(0.049)
|
-0.085***
(0.028)
|
-0.153***
(0.049)
|
-0.093**
(0.040)
|
-0.084***
(0.027)
|
|
Governance
|
3.803***
(1.609)
|
6.104***
(1.514)
|
3.533***
(0.811)
|
5.330***
(1.277)
|
4.049***
(1.368)
|
2.770***
(0.842)
|
|
Pub. spend*Governance
|
-0.073*
(0.039)
|
-0.124***
(0.040)
|
-0.051***
(0.016)
|
-0.100***
(0.032)
|
-0.073***
(0.030)
|
-0.049***
(0.019)
|
|
Private investment
|
0.244***
(0.101)
|
0.282***
(0.091)
|
0.287***
(0.097)
|
0.342***
(0.097)
|
0.269***
(0.081)
|
0.315***
(0.100)
|
|
Economic growth
|
0.002
(0.002)
|
0.004*
(0.002)
|
0.005***
(0.002)
|
0.004**
(0.002)
|
0.002
(0.002)
|
0.003
(0.002)
|
|
Trade openness
|
-0.021
(0.019)
|
-0.032**
(0.016)
|
-0.064***
(0.0120)
|
-0.046***
(0.016)
|
-0.029
(0.018)
|
-0.054***
(0.017)
|
|
Instrument
|
36
|
37
|
38
|
39
|
37
|
37
|
|
Country/Observation
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
109/1635
|
|
AR(2) test
|
0.938
|
0.968
|
0.987
|
0.958
|
0.960
|
0.937
|
|
Sargan test
|
0.167
|
0.353
|
0.204
|
0.211
|
0.205
|
0.231
|
Note: *** denotes a 1% significance level, ** 5% significance level, and * 10% significance level. Source: Author’s calculation.
Table 1Dataset description DISPLAY Table
Table 2ADescriptive statistics DISPLAY Table
Table 2BDescriptive statistics (governance dimensions) DISPLAY Table
Table 3AThe matrix of correlation DISPLAY Table
Table 3BThe matrix of correlation (governance dimensions) DISPLAY Table
Table 4Fisher type unit root tests DISPLAY Table
Table 5Public spending, governance, and CO2 emissions: 2SGMM estimates, 2002-2021 (baseline regression) DISPLAY Table
Table 6Public spending, governance, and CO2 emissions: 2SGMM estimates, 2002-2021 (full model) DISPLAY Table
Table 7Public spending, governance, and CO2 emissions: 1SGMM estimates, 2002-2021 (baseline regression) DISPLAY Table
Table 8Public spending, governance, and CO2 emissions: 1SGMM estimates, 2002-2021 (full model) DISPLAY Table
** The author would like to thank to two anonymous reviewers for their valuable help in completing this article.
1 Azerbaijan, Zimbabwe, Armenia, Zambia, Argentina, Vietnam, Albania, Ukraine, Angola, Uruguay, Algeria, Uganda, Burkina Faso, Uzbekistan, Burundi, Turkmenistan, Brazil, Turkey, Bosnia & Herzegovina, Tajikistan, Botswana, Tanzania, Bhutan, Thailand, Bolivia, Timor-Leste, Benin, Togo, Belarus, Tonga, Belize, Tunisia, Bangladesh, Sudan, Cambodia, Saudi Arabia, Senegal, China, Serbia, Chile, Sierra Leone, Chad, South Africa, Cameroon, Sri Lanka, Colombia, Congo, Dem. Rep., Romania, Comoros, Russian Federation, Congo, Rep., Rwanda, Cote d'Ivoire, Philippines, Costa Rica, Poland, Croatia, Peru, Dominican Republic, Paraguay, Egypt, Arab Rep., Panama, Ecuador, Pakistan, El Salvador, Oman, Eswatini, North Macedonia, Equatorial Guinea, Nigeria, Gabon, Niger, Georgia, Nicaragua, Gambia, Nepal, Ghana, Namibia, Guinea, Myanmar, Guatemala, Mozambique, Guinea-Bissau, Morocco, Hungary, Montenegro, Honduras, Mongolia, Indonesia, Moldova, India, Mexico, Iraq, Mauritius, Iran, Mauritania, Jordan, Mali, Jamaica, Malaysia, Kazakhstan, Madagascar, Kiribati, Libya, Kenya, Lao PDR, Kyrgyz Republic, Lebanon, and Lesotho.
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March, 2024
I/2024
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