Environmental Impact of the Shadow Economy, Globalisation, Trade and Market Size: Evidence Using Linear and Non-Linear Methods

Abstract

The achievement of the Sustainable Development Goals (SDG) related to the environment requires identifying new sources of environmental degradation. In this research, we examine the impact of the underground economy on polluting gas emissions. This relationship was estimated, including the role of globalization, trade, and market size. Using annual data from the World Bank and the International Monetary Fund, we found that, in the short term, the underground economy had a negative effect on global environmental pollution and a long-term negative impact. In the long term, the cointegration results indicate a long-term relationship between the series included in the investigation. The existence of a long-term relationship between the variables implies that as the underground economy increases, the emissions of polluting gases also change. In the long term, policymakers can use the black economy as an instrument to influence environmental pollution. Likewise, we found a threshold effect in the index of globalization, trade, and market size. The existence of a threshold effect implies that from a threshold, the impact of globalization, trade, and the size of the market on polluting emissions is more significant. Therefore, the environmental policy must consider these aspects to achieve greater effectiveness of regulation in favor of the environment. The results were stable, including the dependence of the cross-sections and the heterogeneity in the slope of the panel. Actions to mitigate polluting gas emissions should regulate informal and clandestine activities and take advantage of globalization and trade to improve the practices of companies and individuals.

Dataset Modelling of the Financial Risk Management of Social Entrepreneurship in Emerging Economies

“…Thirdly, in contrast to existing publications in the field of market economics (Graafland and Wells 2021;Shao et al 2021;Wut et al 2021), this article argues that despite the difference in goals (commercial/non-commercial) and funding factors, both commercial and social entrepreneurship face high financial risks and need financial risk management. This conclusion requires a revision of the existing approach to social entrepreneurship management in favour of greater attention to financial risk management.…”

“…According to the accumulated scientific knowledge in the sphere of market economies, given in the works (Graafland and Wells 2021;Shao et al 2021;Wut et al 2021), we also offer Hypothesis 3: Hypothesis 3 (H3). Despite its non-commercial nature, social entrepreneurship faces large financial risks and largely depends on their overcoming-that's why social entrepreneurship would demonstrate significant progress with minimal financial risks.…”

The Shadow Economy-Environmental Quality Nexus In OECD Countries: Empirical Evidence From Panel Quantile Regression

“…The latter highlights the environmental risks caused by the expansion of the informal sector where there is a lack of environmental regulation. While most empirical studies a rm the deregulation effect (Abid, 2015;Baloch et at., 2021;Biswas et al, 2012;Imamoglu, 2018;Mazhar and Elgin, 2013), others support the scale effect (Nkengfack et al, 2019;Shao et al, 2021). On the other hand, Öztunali (2014a, 2014b) and Yang et al (2021) nd an inverted U-shaped linkage between the two factors.…”

“…The estimation results indicate that a higher share of the black economy is associated with a lower level of both carbon dioxide and sulphur dioxide emissions, which ts the scale effect of informality. Similarly, based on a data set of 134 nations from 1980 to 2018, Shao et al (2021) suggest that the shadow economy may act as an instrument to manage environmental risks from production activities. The panel data threshold regressions and co-integration techniques indicate that the shadow economy demonstrates negative linkages with gas emissions in both the short run and the long run.…”

Effect of Agricultural Employment and Export Diversification Index on Environmental Pollution: Building the Agenda towards Sustainability

“…However, there are specific cases of countries where the behavior of EF is more dynamic, both in its growth and in its decrease [4]. In practice, EF is a more comprehensive indicator of the state of environmental deterioration, concerning polluting gas emissions [5,6]. Therefore, it is necessary to identify the factors that determine the behavior of EF in the short and long term, in light of the new econometric techniques available.…”