Nexus between environmental quality, institutional quality and trade openness through the channel of FDI: an application of common correlated effects estimation (CCEE), NARDL, and asymmetry causality

Abstract Changes in the economic structure and human lifestyle lead to environmental pollution, one of today's prime challenges. With this in mind, the main objectives of this study are to evaluate the impacts of economic complexity, natural resources, renewable energy consumption, and foreign direct investment on the ecological footprint in weak, medium, and high levels of institutional quality countries. This study is probably one of the first studies to examine the effect of the economic complexity on ecological footprint and classify countries based on their institutional quality levels. Furthermore, the interaction of economic complexity and natural resources is considered a new variable. For this purpose, the panel vector autoregressive model is used. The results revealed that economic complexity in all countries has a positive impact on ecological footprint, and also it has the greatest impact on ecological footprint among the considered variables. Conversely, the interaction of economic complexity and natural resources contributes to environmental quality. Notably, the impacts of study variables on ecological footprint are more robust in a medium level of institutional quality countries. According to the study's outcomes, the main recommendation is the R&D activities improvement to develop environmentally friendly technologies and clean energy infrastructure to improve environmental quality.

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Sectoral analysis of productivity in the developing and developed economies of Asia-Pacific

Indian Growth and Development Review ◽

10.1108/igdr-09-2018-0091 ◽

2019 ◽

Vol 13 (1) ◽

pp. 37-71

Author(s):

Pami Dua ◽

Niti Khandelwal Garg

Keyword(s):

Technological Progress ◽

Developing Economies ◽

Trade Openness ◽

Institutional Quality ◽

Asia Pacific ◽

Government Size ◽

Financial Openness ◽

Content Type ◽

Developed Economies ◽

The Impact

Purpose The study aims to empirically investigate the trends and determinants of labour productivity of the two broad sectors –industry and services – and their components, namely, manufacturing and market services sectors, in the case of major developing and developed economies of Asia-Pacific over the period 1980-2014 and make a comparison thereof. Design/methodology/approach The study uses econometric methodology of panel unit root tests, panel cointegration and group-mean full modified ordinary least squares (FMOLS). Findings The study finds that while capital deepening, government size, institutional quality, productivity of the other sector and financial openness affect productivity of all the sectors significantly, the impact of human capital and trade openness varies across sectors in the case of developing economies. Furthermore, the impact of technological progress becomes significant in the post-liberalization reforms period in the developing economies. The study further finds that capital deepening, human capital, government size, institutional quality, productivity of the other sector, government size and trade openness are significant determinants of productivity of all sectors of developed economies under consideration. However, the impact of technological progress is stronger for manufacturing sector than services and its components. Furthermore, while both equity and debt liabilities (as measures of financial openness) influence sectoral productivity of industry and manufacturing sectors positively and significantly in case of developed economies, only equity liabilities have a significant influence on the productivity of developing economies. This may indicate existence of more developed financial markets in the case of developed economies. Originality/value The study identifies important structural differences in determinants of productivity both across sectors and across developing and developed economies of Asia-Pacific.

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Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

Sustainability ◽

10.3390/su12187812 ◽

2020 ◽

Vol 12 (18) ◽

pp. 7812 ◽

Cited By ~ 2

Author(s):

Farhan Ahmed ◽

Shazia Kousar ◽

Amber Pervaiz ◽

José Pedro Ramos-Requena

Keyword(s):

Financial Development ◽

Environmental Degradation ◽

Environmental Sustainability ◽

Trade Openness ◽

Institutional Quality ◽

Bounds Testing ◽

Long Run ◽

Auto Regressive ◽

Negative Shock

The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial development, institutional quality, and environmental degradation. Third, the study examines the asymmetric relationship between financial development, institutional quality, and environmental sustainability. For this purpose, the study utilized the data of Pakistan from 1996 to 2018. The study applied Augmented Dickey–Fuller (ADF), Phillips Parron (PP) and Zivote, and Andrews unit root test to check the properties of stationarity of the data. This study applied the Auto Regressive Distributive Lags (ARDL) model to investigate symmetric relationships while the Non-Linear Auto Regressive Distributive Lag Model (NARDL) approach is utilized to investigate the asymmetric relationship among variables. ARDL bounds testing approach utilized to investigate long-run co-integration while short-run dynamics have been investigated by applying the error correction method (ECM). This study found the significant long-run symmetric and asymmetric association of institutional quality (IQ) and financial development (FD) with environmental degradation (ED) and environmental sustainability. However, IQ- has an insignificant association with environmental sustainability. Moreover, dynamic multiplier analysis indicates that positive shock to FD and IQ has a stronger impact on environmental degradation while a positive or negative shock to FD; both have a stronger impact on environmental sustainability. However, a positive or negative shock to IQ has a smaller impact on environmental sustainability. Moreover, the study also found a significant long-run symmetric association of trade openness with environmental degradation and environmental sustainability. This study suggests that the quality of institutions, financial development, and trade openness is necessary to enhance the quality of the environment.

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Analysis of Infrastructure Investment and Institutional Quality on Living Standards: A Case Study of Pakistan (1990-2013)

The Pakistan Development Review ◽

10.30541/v55i4i-iipp.315-329 ◽

2016 ◽

Vol 55 (4I-II) ◽

pp. 315-329

Author(s):

Ghamz-e-ali Siyal ◽

Sajjad Haider Khaqan ◽

Ahsen Mukhtiar ◽

Atta Ur Rehman .

Keyword(s):

Trend Analysis ◽

Granger Causality ◽

Empirical Analysis ◽

Trade Openness ◽

Unit Root Test ◽

Institutional Quality ◽

Jel Classification ◽

Living Standards ◽

Infrastructure Investment ◽

Var Analysis

In this study, the relationship of Infrastructure Investment and Institutional Quality (CIM) on Living Standards of people was analysed for Pakistan. This paper comprises of trend analysis of institutional quality for different periods of governments of Pakistan coupled with an empirical analysis of the model. The empirical estimates are comprised of unit root test, Johansen Cointegration, VAR analysis and Granger Causality tests for the sample of 1984– 2013. The trend analysis depicts fluctuations of Institutional Quality in different governments due to different political conditions of every period. The empirical analysis shows that there exists long standing relationship between the Institutional Quality, Infrastructure Investment and living standards of people. However, the VAR analysis shows that the coefficients of only Institutional Quality and Living Standards of People (previous year i.e. lag variables) resulted significance in affecting living standards of the people. The Granger causality result shows bidirectional and uni-directional relationships among variables. The results in our study indicate bi-directional relationships of Living Standards of People (GDPC) with Institutional Quality (CIM). Secondly, CIM and Infrastructure Investment (Developmental Expenditure) are having uni-directional relationship. Thirdly, Population and Institutional Quality (Contract Intensive Money) are having uni-directional relationship. Fourthly, GDPC and Infrastructure Investment carry a uni-directional relationship. JEL Classification: E02, F41, H53, O1, O4, P23. Keywords: Institutional Quality (Contract Intensive Money (CIM), Infrastructure Investment (Developmental Expenditure), Trade Openness, GDP per Capita, and Population.

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Why do the Chinese make direct investment in the Europe? Insights from disaggregated bilateral data

Economics and Business Letters ◽

10.17811/ebl.10.3.2021.274-283 ◽

2021 ◽

Vol 10 (3) ◽

pp. 274-283

Author(s):

Thong Trung Nguyen ◽

Xuan Vinh Vo

Keyword(s):

Economic Growth ◽

International Finance ◽

World Bank ◽

Direct Investment ◽

Economic Status ◽

Trade Openness ◽

Institutional Quality ◽

Policy Implications ◽

Economic Factors ◽

The International Monetary Fund

This study explores the economic factors of foreign direct investment (FDI) from China to Europe. By drawing data over 8 years and dataset from the International Monetary Fund (IMF) and World Bank (WB), we found that Chinese FDI outflows to Europe are driven by the recipient country's fundamentals (trade openness, resource, institutional quality, and economic growth). These findings confirm the current literature while asserting counterintuitive facts. One of many points is that China is less likely to seek out the investment channel in the large economic status. More importantly, this study differs from extant literature by using the disaggregated panel data of bilateral FDI and trade openness. Therefore, our results would draw policy implications in terms of international finance.

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Institutions Powers, financial development and environmental factors influence on Carbon emission: Evidence from a Global Perspective

10.21203/rs.3.rs-341557/v1 ◽

2021 ◽

Author(s):

hayat khan ◽

Liu weili ◽

itbar khan

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Renewable Energy ◽

Financial Development ◽

Environmental Quality ◽

Direct Investment ◽

Carbon Emission ◽

Generalized Method Of Moments ◽

Institutional Quality ◽

Global Perspective

Abstract This study explores the moderating power of institutional quality on carbon emission through renewable energy consumption, foreign direct investment, economic growth and financial development in the globe for the period of 2002 to 2019. By using two Step System Generalized Method of Moments, the results illustrate that renewable energy usage and foreign direct investment inflow enhance environmental quality while financial development and economic growth lowers environmental quality in the panel. The results shows that quality institutions in countries are still not yet adequate to defend the harmful impact of every environmental factor and protect environment however, the interaction term of institutional quality confirms the significant moderating effect of all explanatory variables on environmental quality in the panel. The findings also confirm the existence of Environmental Kuznets Curve and evidence the pollution halo hypothesis. The findings of this paper can be useful for policy makers whereas conducting stricter environmental regulation.

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Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

Journal of Sustainable Development ◽

10.5539/jsd.v9n4p11 ◽

2016 ◽

Vol 9 (4) ◽

pp. 11

Author(s):

John Mayanja Bbale ◽

John Bosco Nnyanzi

Keyword(s):

Financial Development ◽

Fixed Effects ◽

Trade Openness ◽

Institutional Quality ◽

The Other ◽

Sub Saharan Africa ◽

Capital Account ◽

Infrastructure Development ◽

Fdi Inflows ◽

The Impact

<p>The paper set out to investigate the nexus between institutional quality and inward FDI and how the presence of liberalization and financial development influence this linkage. We build on Dunning’s eclectic paradigm that focuses on locational advantages. A fixed effects approach is employed and the estimation results confirm the crucial role of institutional quality in attracting FDI inflows. However the impact varies with the particular group. In particular, apart from SADC, institutional quality seems to matter significantly in all the other groups especially in EAC and ECOWAS. Additional findings reveal a mixed impact regarding the presence of financial development and liberalization in the institution-FDI nexus: While Trade liberalization policies seem to be at the forefront in ECOWAS and SADC groups, it is credit depth and capital account openness that appear to matter most in EAC. We confirm the resilience of inward FDI during the global crisis and document a positive significant relationship between FDI inflows on the one hand and host market size and infrastructure development on the other. While a one-size-fits-all-policy should be discouraged due to the heterogeneous nature of SSA countries, overall, a comprehensive set of policies designed with caution to improve the institutional quality, the financial system, trade openness and capital account liberalization would be valuable for attracting FDI inflows to SSA.</p>

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Shadow economy, institutions and environmental pollution: insights from Africa

World Journal of Science Technology and Sustainable Development ◽

10.1108/wjstsd-12-2020-0105 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Cited By ~ 1

Author(s):

James Temitope Dada ◽

Folorunsho Monsur Ajide ◽

Akinwumi Sharimakin

Keyword(s):

Carbon Dioxide ◽

Nitrous Oxide ◽

Environmental Pollution ◽

Environmental Quality ◽

Methane Emission ◽

Shadow Economy ◽

Institutional Quality ◽

Content Type ◽

Per Capita

PurposeThis study investigates the effect of shadow economy on environmental pollution and the role of institutional quality in moderating the impact in African countries between 1991 and 2015.Design/methodology/approachThe study employs three pollutant variables namely: carbon dioxide emissions per capita, methane emission and nitrous oxide emission as robustness check. Also, battery of methodologies; ordinary least squares, fixed effects and system generalised method of moments are used to drive out the conclusions of this study.FindingsThe findings reveal that shadow economy and institutional quality contribute significantly to environmental pollution in Africa. Further, the interactive effect of shadow economy and institutional quality worsens environmental quality in the region. This reveals that weak institutional quality recorded in the region increases the level of shadow economy, thereby intensifying environmental pollution.Practical implicationsThe study concludes that weak institutional framework in the region reinforces shadow economy and environmental pollution. Hence, findings from this study can help policymakers in the region to better understand the role of institutional quality in reducing shadow economy and environmental pollution.Originality/valueThis study enriches one’s understanding on the role of institutional quality in the relationship between environmental quality and shadow economy in African context. It investigates the direct and indirect impact of institutions and shadow economy on environmental quality. The study also uses three different robust variables to measure environmental pollution (carbon dioxide (CO2) emissions per capita, methane emission and nitrous oxide emission) for sensitivity analysis.

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