Geopolitical Risk, Globalization and Environmental Degradation in South Africa: Evidence from Advanced Quantiles Approach

Abstract

Sustainable development involves the incorporation of socio-economic concerns and environmental protection into the economic decision-making process, in such a way that, any developmental effort would eventually be favorable to immediate and future generations. It is against this backdrop this study investigates the effects of geopolitical risk and globalization on environmental degradation in South Africa over the period 1985Q1-2018Q4. This study improves on existing studies and raises concerns on the potential twin-effect of geopolitical risk and globalization on the environment. We deviate from the existing studies that make use of the mean causality approaches that do not consider possible dependence in the conditional tail of the series distribution. To examine whether the causality exists among the series, we make use of the novel Troster (2018) Granger non-causality in condition quantiles, which captures the pattern of causality in various quantiles. Empirical results show that there is feedback causality nexus between geopolitical risk and CO2 emissions. In majority of the quantiles, feedback causality is also observed between globalization and CO2 emissions. We find a bidirectional Granger causality nexus between geopolitical risk and environmental degradation, and between globalization and environmental degradation. Globalization and geopolitical risk negatively influence environmental degradation. We conclude that environmental degradation is not driven by globalization and geopolitical risk in South Africa, among other policy suggestions.