Does governance contribute to the public spending – CO₂ emissions nexus in developing economies? Policy lessons for sustainable development

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

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

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

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

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

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