Carbon emissions, inequalities and economic freedom: an empirical investigation in selected South Asian economies

Abstract

PurposeThe purpose of this study is to analyze and empirically test the impact of Economic Freedom [(EF) measured by size of the government] and inequality on environmental pollutants in addition to macroeconomic variables like per capita GDP, governance indicators, etc. along with existence of non-linear (Kuznets) postulation between economic growth and per capita emissions.Design/methodology/approachThe paper examines the select Asian nations' data attributes, first qualitatively using correlation data technique, followed by empirical testing using differenced Generalized Methods of Moments (GMM). Using the data of selected Asian countries for the period from 1981 to 2016, the authors have applied a dynamic panel technique.FindingsThe key findings that emerge from the study are as follows: first, there is weak evidence for the existence of the Kuznets curve based on the empirical results; second, the results indicate that increased EF (by lower government size) could enable to contain carbon emissions; third, there is a negative relationship between democracy and environmental quality (corroborating to the existing studies on carbon emissions); and fourth, there is a strong statistical evidence that increasing income inequality pairs with greater emissions in the middle range of Gini.Practical implicationsThe paper conforms to the universally held conviction that government interventions are essentially less productive and the desirability of a reduced size of the government in realizing sustainable green growth with equity.Social implicationsIn an era of liberalization and privatization, it is argued that the role of the government needs to be redefined if not necessarily truncated.Originality/valueThe current paper incorporates Gini (inequality measure) through its intercountry range dummies to study the differential effect of Gini on carbon emissions. Also, in some of the recent studies, distributional issues have surfaced explicitly in the discussion of income–climatic change relationship, but EF largely remains missing. The purpose of the current study is to investigate the same empirically.

The influence of renewable energy and economic freedom aspects on ecological sustainability in the G7 countries

“…The environmental implications of government size can vary greatly between economies (Lan et al, 2022). Recently, Jain and Kaur (2022) found that countries with more EF-compliant institutions and policies experience faster economic growth, greater investment rates, higher income levels, faster poverty reduction, and better air quality. In a comprehensive study, Adewuyi (2016) collected data from 40 of the world's most polluted countries from 1990 to 2015 to examine the effects of government spending on CO 2 emissions.…”

Economic Freedom, Education and CO2 Emissions: A Causality Analysis for EU Member States

“…In the related empirical literature, a few scholars have analyzed the interaction between government size and CO 2 emissions. In this context, Jain and Kaur [37] reveal that higher government size (or more market-oriented economies) decrease the CO 2 emissions in Asian economies, but Chen [24] discovers a positive effect of government size on CO 2 emissions in Brazil, China, India, and South Africa in the short and long term and a negative long-term effect of government size on CO 2 emissions in Russia. So, the empirical findings suggest that government size matters for CO 2 emissions for different countries, and our findings are mainly in line with the limited empirical findings.…”

“…On the other hand, Odugbesan et al [14] discovered a positive effect of economic freedom on carbon productivity for Turkey. Cheon et al [34], Adesina and Mwamba [35], Bjørnskov [36], Jain and Kaur [37], and Wood and Herzog [38] revealed a negative influence of economic freedom on CO 2 emissions for different country groups through panel regression analysis. In this context, our findings are in accord with the related empirical literature.…”

“…The limited empirical literature on the nexus between economic freedom and the environment has generally utilized the regression approach and found mixed findings. Odugbesan et al [14], Cheon et al [34], Adesina and Mwamba [35], Bjørnskov [36], and Jain and Kaur [37] discovered a negative influence of economic freedom indicators on CO 2 emissions, but Wood and Herzog [38], Rapsikevicius et al [39], Chen [24], and Alola et al [40] have revealed mixed findings on the influence of economic freedom indicators on CO 2 emissions.…”

“…Bjørnskov [36] investigated the influence of economic freedom on greenhouse gas emissions in 105 economies with five-year periods for the 1975-2015 period via a regression approach and uncovered that economic freedom decreased the greenhouse gas emissions, but slid the maximum point of the EKC curve to the left. On the other hand, Jain and Kaur [37] examined the effect of economic freedom indicators of government size and law and order on CO 2 emissions in Asian economies over the 1981-2016 period through a dynamic regression approach and pointed out that a higher government size index (or more market-oriented economies) and higher law and order decreased CO 2 emissions.…”