Impact of Economic and Environmental Dynamics on Human Development: An Analysis of HDI Classifications

Abstract

The whole world is facing the issue of altering climate and bad environmental quality due to the extreme increase in carbon emissions. Against the backdrop, this study plans to examine the effect of environmental degradation on human development, controlling for income inequality, education inequality, gender inequality, unemployment, GDPPC, institutional quality and urbanization in the context of very high, high, medium and low HDI economies during the time scope from 1996 to 2021. For measuring environmental impact, we use both ecological footprints and carbon dioxide emission (CO2) figures for these countries. Overall, the generalized method of moments analysis confirms the strong relationship among the study variables. GMM analysis confirms that environmental quality by surging the ecological footprints and carbon emission deteriorates human development of the selected nations. Similarly, disparities in the form of income, education and gender impose an adverse impact on human development as unemployment also has a contrary impact on human development. While GDP, institutional quality and urbanization are evidenced to ensure human welfare. Hence, considering these key outcomes, a set of relevant human welfare-related policies needs to be recommended in the context of selected countries.