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

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  • Van Bon Nguyen

    (UFM Research Team, University of Finance - Marketing (UFM), Phu Nhuan District, Ho Chi Minh City, Vietnam)

Abstract

Global climate change due to increasing CO2 emissions threatens the development and survival of many countries, especially those on the coast. Intentional government spending by sectors can lower CO2 emissions to help these countries in sustainable development. Meanwhile, governance has some importance in enabling governments to achieve their economic development goals. Does governance affect the public spending - CO2 emissions nexus in developing economies? The paper seeks answers by employing the system GMM Arellano-Bond estimators to assess the impact of public spending, governance/institutional quality, and their interaction on CO2 emissions for a sample of 109 developing economies between 2002 and 2021. The results seem counter-intuitive that public spending reduces and governance increases CO2 emissions, while their interaction lowers them. Furthermore, private investment and economic growth promote CO2 emissions, while trade openness decreases them. The findings in this paper provide some policy lessons for governments of developing economies to protect environment.

Suggested Citation

  • Van Bon Nguyen, 2024. "Does governance contribute to the public spending - CO2 emissions nexus in developing economies? Policy lessons for sustainable development," Public Sector Economics, Institute of Public Finance, vol. 48(1), pages 79-101.
    • Handle: RePEc:ipf:psejou:v:48:y:2024:i:1:p:79-101
    DOI: 10.3326/pse.48.1.4
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    More about this item

    Keywords

    public spending; CO2 emissions; governance; developing economies;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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