Environment and Growth

This paper examines the implications of the mutual causality between environmental quality and economic growth. While economic growth deteriorates the environment through increasing amounts of pollution, the deteriorated environment in turn the possibility of further economic growth. In a less developed country, this link, which we call limits to emerges as the poverty-environment trap, which explains the persistent international inequality both in terms of income and environment. This link also threatens the sustainability of the world's economic growth, particularly when the emission of greenhouse gases raises the risk of natural disasters. Stronger environmental policies are required to overcome this link. While there is a trade-off between the environment and growth in the short run, we show that an appropriate policy can improve both in the long run.

Quantitative Aspects of the Economic Growth of Nations: VIII. Distribution of Income by Size

This study examines the relationship between agricultural greenhouse gas (GHG) emissions, economic growth (EG), and financial development (FD) within the framework of the environmental Kuznets curve (EKC) hypothesis in Organisation for Economic Co-operation and Development (OECD) countries. Using data from 2000 to 2020, the panel data analysis evaluates variables including EG, FD, foreign direct investment (FDI), agricultural energy consumption (EC), population (POP), agricultural land (LAND), and environmental policy stringency (EPS). Long-run elasticity estimates obtained using bias-adjusted ordinary least squares (BA-OLS) demonstrate an inverted U-shaped relationship between EG, FD, and GHG emissions. A panel Fisher test reveals causal patterns among the variables. The findings indicate that EG and FD initially increased GHG emissions by boosting investments in the agricultural sector but emissions declined once a certain income or development level was reached, supporting the EKC hypothesis. Stricter environmental policies were found to be effective in reducing emissions. Population growth was also found to reduce emissions by enhancing agricultural productivity, and the expansion of LAND increased emissions. One of the important findings of the study is that the interactions between environmental policies, EG, and FD can reduce GHG emissions significantly. The study emphasizes the need to adopt sustainable EG strategies, tightening environmental policies, and promoting sustainable agricultural technologies in OECD countries. Sharing agricultural sustainability and low-carbon development strategies through knowledge and technology transfer among OECD countries is recommended to combat global climate change effectively. In conclusion, coordinated efforts by OECD countries are required in order to enhance low-carbon agricultural development. © 2025 Society of Chemical Industry.

Publisher Summary This chapter discusses the financial development and economic growth in underdeveloped countries. An observed characteristic of the process of economic development over time, in a market-oriented economy using the price mechanism to allocate resources, is an increase in the number and variety of financial institutions and a substantial rise in the proportion not only of money but also of the total of all financial assets relative to GNP and to tangible wealth. Typical statements indicate that the financial system somehow accommodates—or, to the extent that it malfunctions, it restricts—growth of real per capita output. Such an approach places emphasis on the demand side for financial services; as the economy grows it generates additional and new demands for these services, which bring about a supply response in the growth of the financial system. In this view, the lack of financial institutions in underdeveloped countries is simply an indication of the lack of demand for their services.

Energy generation from carbon fuels produces a major portion of the greenhouse gases that envelop the planet and trap the sun’s heat. Fossil fuels, including coal, oil, and gas, account for approximately 75% of global greenhouse gas emissions and almost 90% of carbon dioxide emissions. Therefore, there is an urgent need to finance cleaner, efficient, low-cost, sustainable, and energy-reliable alternative fuels. Therefore, we investigated the effect of oil prices, ecological footprint, banking sector development, and economic growth on energy consumption in South Africa. We employed the newly developed bootstrap autoregressive distributed lag (ARDL) model to the link between explanatory antecedents and explained facets in the short and long term. The outcome of our study witnessed the positive and significant effect of economic growth and ecological footprint on energy consumption in the short and long run, in the case of South Africa. This suggests that a drastic boost in South African economic growth and environmental quality results in the increased use of energy. However, ARDL outcomes affirm that industrial structure has effects positively and significantly in the short run only. Moreover, oil price shocks have a negative and significant link with energy use in the short and long run, suggesting that in the case of South Africa, increased oil prices reduce the use of energy. Based on the evidence obtained from the results of our study, we proposed several policy suggestions and recommendations to the government authorities, policymakers, environmentalists, and other stakeholders in order to develop an energy strategy in line with sustainable economic growth and the environment.

The pursuit of high and sustained economic growth is one of the major concerns of States, especially those in the process of developing their economic development. Thus, in the pursuit of economic growth, several studies have often been conducted on a number of macroeconomic policies for the determination of sources of growth. The objective of this paper is to evaluate the impact of exports on the growth of the Togolese economy. As a result of the empirical evaluation, the findings show a positive and significant impact of exports on the Togolese economic growth in the short and long run. In the short run, the change in the exports per capita growth rate as well as the public expenditure per capita growth rate has positive and significant coefficients at the 5% threshold. In the long run, the coefficients of the exports per capita growth rate, of the public expenditure per capita growth rate are positive and significant at the 5% also. On the other hand, in order to determine the impact of economic growth on exports, the results show a positive and significant impact of exports on the Togolese economic growth in the short and long run. Thus, in the short run, changes in the GDP per capita growth rate, the capital per capita growth rate, the effect of devaluation and the shared of credit granted to the private sector have positive and significant coefficients at the threshold by 5% and in the long run, the coefficients of the GDP per capita growth rate, the capital per capita growth rate, the effect of devaluation are positive and significant. Key words: Exports, economic growth.

A study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions. The authors find that these differences are due to sample variations, specificational choices, and the different time periods examined. The data indicate that there is no consistent, statistically significant connection between military spending and economic growth. Augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent. 2 tables.

Vietnam has achieved impressive economic growth principally supported by foreign direct investment (FDI) in the last three decades. However, environmental deterioration is observed. No studies have ever been conducted to examine the link between economic growth and environmental degradation, focusing on the important role of the FDI, in Vietnam in both short run and long run. Using the ARDL and the threshold regression techniques for 35 years from 1986, Vietnam’s “Doi Moi” (economic renovation), the U-shaped relationship between economic growth and the environmental quality is found in the long run and at the upper threshold of economic growth. FDI in the long run and at the upper threshold of economic growth also leads to further deterioration of the environmental quality. Also, consumption of fossil fuel energy deteriorates the environment in the long run, and at any level of economic growth. These findings simply mean that Vietnam has to adopt a new growth model with the focus on the quality FDI projects and clean energy sources to achieve the dual objectives: (i) sustained economic growth and (ii) improved environmental quality.

Fueled by economic growth, among other factors, environmental degradation is one of the most serious challenges facing humanity in the twenty‐first century. Although extensive research has been conducted on the relationship between economic growth and environmental quality, the findings are inconclusive. This study investigated the relationship between economic growth and environmental quality in Ethiopia from 1981 to 2016 using non‐linear autoregressive distributive lag and two‐step least squares models. First, the study finds that the relationship between economic growth and environmental quality is asymmetric. Second, economic growth negatively affects environmental quality. Third, the positive environmental effect of a negative shock on economic growth is stronger than that of a positive shock. Fourth, energy consumption and population growth negatively affect environmental quality, whereas the effects of renewable energy consumption, natural resources, trade openness and human capital are positive. Fifth, an inverted N‐shaped relationship exists between economic growth and environmental quality, where GDP per capita greater than $686.770 contributes to environmental quality. Therefore, high and sustainable economic growth, renewable energy consumption, population control, resource conservation, trade openness and human capital accumulation are required to improve the environmental quality of Ethiopia. The limitation of this study is that it examines the direct impact of economic growth on environmental quality. It would be better to examine the potential indirect impact of economic growth via variables, such as institutional quality and human capital.

The purpose of this paper is to establish the main channels of fiscal policy impact on economic growth and to identify problems or missing aspects in the analysis. The paper summarizes the impact of fiscal policy on economic growth in the long-run and short-run on the basis of extensive (82 sources) literature analysis. The paper analyzes the results of theoretical and empirical studies. The paper pays attention to the comparison of empirical results for poor and rich countries, as the optimal fiscal policy may differ significantly from country to country. On the theoretical side, the paper mainly focuses on endogenous growth models, but also touches on overlapping generations and Solow models. Special attention is paid to the estimation of fiscal multipliers. Through a broad view, the paper touches upon the main instruments of fiscal policy and their impact on economic growth both in the short run and in the long run. The author's contribution is in overview of a wide body of literature on fiscal policy, which helps to identify the main problems in analyzing the impact of fiscal policy. Fiscal policy can have short- and long-term effects on economic growth through changing the incentives of economic agents, through reducing transaction costs between them, and through influencing expectations. However, the main body of empirical literature examines the impact of fiscal policy on economic growth in developed countries. This poses a challenge for fiscal policy in developing countries, as recommendations derived from the experience of developed countries are often suboptimal for developing countries. The article also points out the significant problems associated with empirical analysis of the performance of fiscal policy even in developed countries.

Complementarities between Exports and Human Capital in Economic Growth: Evidence from the Semi‐industrialized Countries

Environmental Quality in Indonesia faces major challenges due to the worsening phenomenon of environmental degradation, driven by rapid population growth, uncontrolled urbanization, and intense economic expansion. Air quality in many regions is declining along with increasing industrial activities, energy consumption, and excessive use of natural resources. This study analyzes the impact of Islamic Financial Development (IFD), economic growth (GDP), poverty rate (POV), and population (POP) on environmental quality, with a focus on air quality. By adopting the Panel Vector Error Correction Model (PVECM) method. Panel data from 34 provinces in Indonesia was comprehensively analyzed to understand short- and long-term dynamics. The results show that IFD contributes positively to environmental quality in the long term through the financing of sustainable projects, while GDP exerts negative pressure in the short term but turns positive in the long term in regions with strong environmental policies. Poverty reductions significantly improve environmental quality in the long term, while population growth consistently puts negative pressure on air quality. This study emphasizes the importance of effective environmental policies and investments in green technologies that are not only focused on urban centers, but also applied evenly throughout the country to ensure the sustainability of environmental quality throughout Indonesia.

This research has purpose to analyze (i) the influence of oil prices, profitability and banks deposit on Islamic banks growth. (ii) the influence of Islamic banks growth on economic growth. The data for this study were collected from secondary data of the 105 Islamic banks from 24 countries. This research was conducted with the period of 10 years from 2007 to 2016, therefore this method using panel data regression. The result of panel data regression with fixed effect model consisted of the variable of oil prices, profitability, bank deposit have a significant positive effect on Islamic banks growth. The other results of panel data regression with fixed effect model consisted of the variable of islamic banks growth have a significant positive effect on economic growth. The results of this study consistent with the results of previous research. This means that the high growth of Islamic banking can increase a country’s economic growth. This study gives results that can be used as reinforcement from previous studies. This research is the first research that study on the effect of the Islamic banking growth while affecting economic growth in thr World. Therefore, government intervention is needed to maintain the stability of Islamic banking and good international relations are needed to keep oil price stable.

Notwithstanding the lesser contribution to global warming, sub-Saharan Africa (SSA) remained one of the most vulnerable to climate change due to low economic development, high dependence on natural resources for agricultural production and low technological advancement. There is also limited information on the nexus between economic growth and greenhouse gas emissions (GHG) in the region. Therefore, this study applied the Environmental Kuznets hypothesis to test the relationship between economic growth and GHG emissions in SSA and also test the effect of global GHG emission on economic growth of SSA. Using an aggregated panel data for the period of 1970 to 2012, a Vector Autoregressive and an Ordinary Least Square regression were estimated. From the result, although the relationship between economic growth and environmental quality was established in the short run, there are no clear turning points for the greenhouse gasses. Generally, there is a monotonic decreasing relationship between economic growth and environmental quality in the long-run. Interestingly, this study showed that global GHG emission levels have a long-run effect on the economic growth of SSA. We concluded that to ensure that economic growth leads to an improvement in environmental quality, there must be a global effort to introduce innovations and technologies that can lead to increase production with little GHG emissions. The study recommended that, SSA should consider carbon tax policies other than stringent GHG emission reduction initiatives or climate stabilization policies that would negatively affect production in the region. Keywords: Economic growth, Environmental Kuznets curve, Greenhouse gas, Sub-Saharan Africa, Vector autoregressive

PurposeSeveral studies have examined the effect of formal economy (usually proxy by economic growth) on environmental quality; however, the symmetric and asymmetric impact of the informal economy on environmental quality has not been examined in Nigeria. Therefore, this study aims to explore the short- and long-run (a)symmetric effect of formal and informal economies and financial development on Nigeria’s environmental quality between 1984 and 2017.Design/methodology/approachThe study uses ecological footprint to measure environmental quality. An increase in ecological footprint suggests a fall in environmental quality. Informal economy is calculated as a percentage of GDP using the currency demand approach. Autoregressive distributed lag (ARDL), nonlinear ARDL cointegration framework and vector error correction granger causality are used as estimation techniques.FindingsThe study’s outcomes establish the existence of asymmetric structure in the link between economic activities and the environment both in the short and long run. The asymmetric results reveal that positive and negative changes in the formal economy increase the ecological footprint in both periods. Hence, activities in the formal economy reduce environmental quality. On the other hand, positive and negative changes in the informal economy only positively influence the ecological footprint in the long run. In contrast, it negatively impacts the ecological footprint in the short run. This suggests that activities in the informal economy worsen the long-run environmental quality. Financial development has a positive influence on the ecological footprint, thus degrading the environmental quality. Furthermore, in the short run, a unidirectional relationship from the formal economy to the ecological footprint, while a bidirectional causality exists between informal and formal economies. Meanwhile, a unidirectional causality from the (in)formal economies and financial development to the ecological footprint was found in the long run.Practical implicationsThe outcome of this study shows that both informal and formal economies contribute to ecological footprint; therefore, mainstreaming the informal economy into the formal economy will further increase the problem of environmental degradation and worsen environmental quality.Originality/valueThe study investigates the symmetric and asymmetric effect of formal and informal economies on environmental quality in Nigeria, which is largely missing in the empirical literature.