Economic Development, Globalization, Political Risk and CO2 Emission: The Case of Vietnam

Khan M.A., Abdul D., Wang W., Tanveer A., Faheem M., Hassan T.

There has been an increase in the number of discussions concerning carbon neutrality in order to address the problem of climate change and the damage to the environment. Therefore, nature warns societies to limit emissions and live eco-friendly due to rising temperatures and abrupt climate change. The regional comprehensive economic cooperation (RCEP), the world’s foremost trading union, represents nearly one-third of the global economy and population and accounts for 30% of global trade and gross domestic product. This study observed the RECP economies from 1990 to 2021 to determine the connection between income inequality, risk components, renewable energy (RE), information communication, and technology (ICT) on environmental sustainability. However, limited research has investigated the association between such factors and ecology. To fill this gap, our research makes a unique contribution by exploring four specific econometric models to examine composite risk, financial risk, economic risk, political risk, and income inequality. The empirical study includes cross-sectional dependence, slope heterogeneity, augmented panel unit root test, Westerlund cointegration, second-generation cross-section augmented autoregressive distributed lags, and panel causality test. In addition, the augmented mean group estimation is used as a robustness check. The short-run findings demonstrate that an increase of 1% in income inequality and the utilization of RE significantly decrease (0.1786%) and (0.2024%) CO2 emissions. In the long run, the income inequality coefficient (− 0.4316) and the utilization of RE coefficient (− 0.9085) states that increasing income inequality and the utilization of RE by 1% reduces CO2 emissions in the environment by (0.4316%) and (0.9085%). Moreover, the risk components and ICT positively affect CO2 emissions and deteriorate environmental quality. The study concludes that in RECP economies, governments and regulators should prioritize preserving stable income inequality and incentivizing businesses to use renewable energy sources. These nations require stringent environmental regulations, governmental stability, robust institutions, and effective law enforcement to reduce CO2 emissions and achieve carbon neutrality.

Kartal M.T., Kılıç Depren S., Ayhan F., Ulussever T.

The study analyzes the effects of nuclear energy and political stability (PS) on environmental degradation. For this aim, the study uses carbon dioxide (CO2) emissions as the environmental degradation indicator, considers nuclear energy consumption (NEC) and political risk index (PRI) as explanatory variables, uses data between 1991/Q1 and 2021/Q4, and investigates eight highly politically stable countries in this way. Also, the study performs novel quantile-on-quantile regression and Granger causality-in-quantiles models as the fundamental models and applies the quantile regression model for robustness. The results reveal that (i) NEC has a mainly curbing effect on CO2 emissions at higher levels of NEC and is beneficial for Finland, Switzerland, Canada, Netherlands, and United Kingdom; (ii) PS has a generally decreasing effect on CO2 emissions at higher levels of PS and is effective in Finland, Canada, and Germany; (iii) NEC and PS have a causal mainly effects on CO2 emissions in the countries; (iv) the robustness of the results is verified through alternative approach. Overall, there are dependencies from NEC and PS to CO2 emissions and the effects of both NEC and PS on CO2 emissions vary across countries and quantiles. Hence, the results highlight the heterogeneous effects of NEC and PS on CO2 emissions and underline the significance of quantile and country-based analyses for better empirical examination. Various policy caveats are discussed based on the fact that Finland and Canada can benefit from both NEC and PS in decreasing CO2 emissions, whereas Sweden and the USA cannot, and the remaining countries have mixed results.

Gurbuz E.C.

During its economic globalization, China ranked first in the world regarding air pollution since 2005. China's massive carbon dioxide emission that causes global warming, directly or indirectly, can be stimulated by its economic globalization process, which needs to be observed. Hence, this article aims to observe the direct and indirect impacts among foreign direct investment (FDI) inward, energy usage, carbon dioxide emissions, economic globalization, the share of the industry sector in GDP, and economic growth from the exact starting point of globalization, in other words opening the gate of China (1979) to the intensive trade war between China and the USA, that began to change international policies (2013) of China. The vector error correction model (VECM) and the Granger causality tests are performed to obtain the causality directions and impacts among the variables. The empirical results reveal emerging FDI-led economic growth and the existence of cultivating air pollution owing to energy use, FDI inward (polluting-FDI), and economic globalization in China. Regarding the output of Granger causality tests, direct unidirectional causality from energy use to air pollution and indirect unidirectional causality from energy use to economic growth through inward FDI are observed. This study proposes crucial policies to encourage cleaner production and energy-saving technologies that reduce air pollution of China and stimulate China's economic growth during globalization.

Cao L., Jin D., Gu M., Wang C.

Within the context of sustainability, an integral focus of ongoing research is centred on cultivating economic expansion that prioritizes environmental friendliness and reduces resource dependence. This approach is commonly referred to as green economic growth. Hence, the present study strives to explore the heterogeneous effects of regional trade and economic integration, natural resource reliance, and political risk while also examining how regional integration index combined with natural resource factors influences the green growth trajectory of selected south Asian countries. The cross-sectional dependence and slope heterogeneity of the countries have been examined. Stationarity properties are checked before proceeding to the long-run relationship and empirical estimation procedure. Method of Moments Quantile Regression is employed to understand the variables' asymmetric association. The outcomes revealed the positive influence of regional integration on green growth, while political risk and natural resources pose a negative impact. It can be observed that the negative consequences of natural resources are neutralized with higher trade and financial integration. Lastly, the causality test is used to investigate the causal association between the variables. The outcomes imply that Asian countries emphasize shaping natural resource extraction policies and stabilizing their political situation to get the maximum benefit from green growth.

Kartal M.T., Kirikkaleli D., Kılıç Depren S.

Anwar A., Barut A., Pala F., Kilinc-Ata N., Kaya E., Lien D.T.

Environmental degradation is one of the most significant issues that developing nations confront and needs to be resolved right away in order for them to achieve sustainable development. Government policies are crucial in this situation since emerging nations frequently struggle with the issue of policy ambiguity, which can result in environmental deterioration. In this context, this study investigates how policy uncertainty affects environmental degradation in the five fragile emerging economies known as the Fragile Five—Brazil, India, Indonesia, South Africa, and Turkey. Using data from 1996 to 2019, we estimate a Panel Quantile Regression analysis. The empirical findings indicate that economic policy uncertainty and technology innovation increases the environmental degradation whereas environmental degradation is slowed down by financial development and renewable energy consumption. Empirical evidence also confirms the presence of EKC hypothesis in fragile economies. Based on the findings, we suggest both a policy and an environmental framework for achieving sustainable development in fragile economies.

Ulussever T., Kartal M.T., Kılıç Depren S.

This research investigates the effects of income, total energy consumption (TEC), energy price index (EPI), crude oil price (COP), political risk index (PRI), and geopolitical risk (GPR) on environmental degradation. In this context, the study includes five Gulf Cooperation Council (GCC) countries, which are mainly oil-rich and have high fossil fuel energy consumption with increasing environmental degradation; considers monthly data from 2000/1 to 2021/12, and deploys novel quantile-based methods. The outcomes demonstrate that (i) an increase in income, TEC, and EPI stimulates environmental degradation in all GCC countries; (ii) PRI, COP, and GPR have mixed effects on environmental degradation; (iii) a causal effect from the regressors to CO2 emissions exists in all quantiles except for some middle (0.45–0.55) and higher quantiles (0.95); (iv) the power of effect and causal effect vary according to quantiles and countries; (v) the consistency of the results is validated based on robust model. The findings reveal that an increase in income, TEC, and EPI is generally harmful to the environment in the GCC countries; but, PRI, COP, and GPR have mixed effects. The results of novel quantile-based methods underline the significance of political stability and geopolitical risk effect as non-economic and non-energy factors on environment degradation by demonstrating quantile-based varying effects of the regressors on the environment in GCC countries. Accordingly, various policies, such as focusing on increasing political stability, benefitting from geopolitical risk as leverage, and enabling the transition to clean energy, are discussed.

Awosusi A.A., Akadiri S.S., Olanrewaju V.O., Rjoub H., Ozdeser H., Ojekemi O.

Apart from business considerations stemming from the marketplace, businesses, individuals, and the economy at large, political decisions also play a role on environmental quality. Governments make a series of policies that impact private businesses, sectors, the environment, and the economy at large. In this paper, we test the asymmetric role of political risk on CO2 emissions, while controlling for renewable energy, non-renewable energy, and real income: policy toward environmental sustainability objectives in the context of Turkey. To realize the motive of this study, we capture the asymmetric effect of the regressors by adopting the nonlinear autoregressive distributed lag method (NARDL). This research adds to the environmental literature in terms of methodological and empirical. Methodologically, the study shows that a nonlinear relationship exists among the variables, and it has a significant impact on environmental sustainability targets. The outcome of the NARDL indicates that the increasing political risk, non-renewable energy, and economic growth follow a trajectory trend on carbon emissions, which is unsustainable in Turkey, but renewable energy is sustainable. Moreover, decreasing real income and non-renewable energy decreases carbon emissions. This research also deployed the frequency domain test to capture the causal association of the concerned variables and the outcome indicates political risk, renewable energy, non-renewable energy use, and real income are predictors of CO2 in Turkey. From this result, policies geared toward promoting a sustainable environment were formulated.

Awosusi A.A., Ozdeser H., Ojekemi O.S., Adeshola I., Ramzan M.

Vietnam’s goal of achieving a certain level of decarbonisation by 2030 is difficult despite its awareness of the threat posed by climate change. However, the country is endowed with natural resources and the increasing dependence on the global economy coupled with greater investment in alternative energy sources are some of the factors responsible for economic expansion in recent years. Hence, the question arises “what are the environmental impacts of economic globalisation, economic growth, natural resources, and renewable energy in Vietnam?”, which constitutes a major policy problem. In this study, a time series dataset stretching from 1984 to 2019 is employed to scrutinise the impact of economic globalisation, economic growth, natural resources, and renewable energy on Vietnam’s CO2 emissions. This goal is achieved by employing the ARDL bounds testing procedure, dynamic ARDL, and spectral Granger-causality test. Moreover, the outcomes from the dynamic ARDL showed that economic globalisation and economic growth lead to environmental deterioration, whereas it is mitigated by renewable energy. Lastly, the outcomes from the spectral Granger-causality test indicate that a feedback causality association exists between CO2 emissions and the regressors, namely economic globalisation, renewable energy, and economic growth, while no causality connection exists between CO2 emissions and natural resources. Hence, we suggest that actions for reducing emissions should involve the implementation of energy-efficient techniques and renewable technologies within the energy value chain.

Udeagha M.C., Ngepah N.

Kılıç Depren S., Kartal M.T., Kirikkaleli D., Depren Ö.

The study researches the long-run and asymmetric effect of political stability (PS) on environmental quality. In this respect, this study focuses on Iceland because it is a politically stable country; investigates the effect of the political risk index (PRI) considering also trade openness (TRA), primary energy consumption (EC), and economic growth (GDP) on carbon dioxide (CO2) emissions; includes data from 1995/Q1 to 2019/Q4; and performs a non-linear autoregressive distributed lag model (NARDL) as the main model. Also, a fully modified ordinary least squares (FMOLS) is performed for robustness. The outcomes show that (i) positive and negative changes in the PS have a significant effect on CO2 emissions, whereas negative shocks are much stronger; (ii) positive shocks in the TRA have a decreasing effect; (iii) positive shocks in the EC have an increasing effect, whereas negative shocks have a decreasing effect on CO2 emissions; (iv) positive and negative shocks in the GDP have significantly increasing effect; (v) negative shocks in the EC and GDP are much powerful than positive shocks; (vi) the results of FMOLS validate the robustness of the NARDL outcomes. Thus, the findings confirm the contributing role of the PS in sustaining environmental quality in Iceland, which should be considered by policymakers, to achieve the carbon-neutrality aim of the country.

Mehmood U.

This research work estimates the impacts of political risk towards carbon emissions while incorporating the role of technological innovations, financial development, economic growth, and trade, in panel data of Pakistan, India, Bangladesh, and Sri Lanka. In doing so, the yearly data of 1984–2017 is analyzed by adopting an advanced econometric method of the cross-sectional autoregressive distributed lag (CS-ARDL) approach. The Westerlund co-integration test confirms the strong association among the variables, and the results of CS-ARDL show that innovations, economic growth, and trade are not environmentally friendly in South Asian countries. Furthermore, financial development and a stable political environment are important to achieve carbon neutrality in developing South Asian countries. This work diverts the attention of policymakers in making a stable political environment. This will improve the environmental quality and save these countries from future drastic climatic variability.

Ayhan F., Kartal M.T., Kılıç Depren S., Depren Ö.

This study deals with the asymmetric effect of economic policy uncertainty and political stability on carbon dioxide (CO2) emissions considering also energy consumption and economic growth. In this context, the study investigates G-7 countries, which make up an important part of the world economy. Also, the study uses yearly data between 1997 and 2021 as the most available intersection data for all countries included. Besides, this study applies a novel nonlinear approach as quantile-on-quantile regression (QQR) as the base model, and quantile regression (QR) is used for robustness. The empirical results present that (i) economic policy uncertainty has a decreasing effect on CO2 emissions in Italy, Japan, and the United States of America (USA), whereas it has a mixed effect in Canada, France, Germany, and the United Kingdom (UK); (ii) political stability also has a mixed effect on CO2 emissions; (iii) energy consumption has an accelerating effect on CO2 emissions while the power of effect changes at quantiles; (iv) economic growth has generally an increasing effect on CO2 emissions, whereas it has a decreasing effect at lower quantiles in Japan, at middle quantiles in France and Germany, and at higher quantiles in Italy; and (v) the QR results support the robustness of QQR findings. Thus, the empirical results highlight that G-7 countries should consider the asymmetric and quantile-based varying effects of the economic policy uncertainty, political stability, and economic growth to reach their carbon neutrality targets.

Adebayo T.S., Akadiri S.S., Uhunamure S.E., Altuntaş M., Shale K.

The study evaluates the effect of political risk on CO2 emission in the top 10 most politically stable economies (Australia, Canada, Germany, Finland, Denmark, Norway, Netherlands, New Zealand, Sweden, and Switzerland) from 1991/Q1 and 2019/Q4. To the investigators' understanding, this is the first empirical analysis that inspects the effect of political risk on CO2 emissions in the top 10 most politically stable economies. Therefore, the current paper fills a gap in the existing literature. Innovative quantile-on-quantile regression and quantile causality approaches are applied to explore this nexus. The quantile-on-quantile regression results reveal that in the majority of the quantiles, political risk enhances environmental quality for the case of Norway, Sweden, Canada, and Switzerland. Moreover, political risk degrades the quality of the environment in Australia, Germany, and Denmark, while the outcomes were mixed for the rest. Since political stability has encouraged international corporations to invest. As a result, guaranteeing political stability will attract more foreign investment, pressuring the governments of these countries to treat the climate catastrophe more urgently. Moreover, reforms should be aimed at sustaining existing environmental policies related to the green economy, while local and international firms should vigorously pursue investments in renewable energy sources and energy-saving-efficient technologies.

Kartal M.T., Kılıç Depren S., Kirikkaleli D.

The study deals with the effect of political stability on environmental degradation in the long run for the United Kingdom (UK). For this aim, the political stability effect on production-based carbon dioxide (CO2) emissions is examined by considering trade openness, renewable energy, and economic growth and using quarterly data between 1995/Q1 and 2018/Q4. Nonlinear autoregressive distributed lag (NARDL), which allows the researcher to measure the asymmetric impact of explanatory indicators positively or negatively, is performed as the empirical approach. Also, Breitung & Candelon (BC) frequency domain causality test is applied to measure the causality effect of explanatory variables on CO2 emissions. The results reveal that (i) political stability has a statistically significant effect on production-based CO2 emissions and positive shocks have a higher power than negative shocks; (ii) economic growth has an increasing effect, whereas renewable energy has a decreasing effect on production-based CO2 emissions; and (iii) there is frequency domain causality from political risk, economic growth, renewable energy consumption, and trade openness to production-based CO2 emissions. Hence, empirical results highlight the asymmetric effect of political stability on environmental degradation in the long run for UK. Thus, UK policymakers should consider political stability in policy development and implementation process for limiting CO2 emissions in the long run.