Climate change, governance, and economic growth in Asia: a panel cointegration analysis

Figures & data

Table 1. Summary of literature.

Author	Year	Period	Region/Country	Main variables	Method	Findings	Sign
Kaufmann and Kraay (2002)	2002	2000–2001	175 countries	GI and EG	OLS and IV	GI↑EG↑	Positive
Adams and Mengistu (2008)	2008	1991–2002	82 developing countries	GI and EG	Least squares dummy variable (LSDV)	GI↑EG↑	Positive
Zugrave et al.	2008	1995–2003	Central and Eastern European countries	EG and CO2	2SLS, 3SLS	EG↑CO2↑	Positive
Huynh and Jacho-Chavez (2009)	2009	1996–2006	125 countries	GI and EG	OLS, fixed effect, random effect	GI↑EG↑	Positive
Bernauer and Koubi (2009)	2009	1971–1996	107 cities in 42 countries	GI and SO2	Fixed effect, radom effect	GI↑SO2↑	Positive
Tamazian and Rao (2010)	2010	1993–2004	24 transition economies	GI and CO2	Random effect, GMM	GI↑CO2↓	Negative
Gani (2012)	2012	1998–2007	99 Developing Countries	GI and CO2	Regression	GI↑CO2↓	Negative
Halkos and Tzeremes (2013)	2013	1996–2010	G-20 Countries	GI and CO2	Non-parametric regressions	GI↑CO2↑	Positive
Shahbaz et al. (2013)	2013	1965–2008	South Africa	EG and CO2	ARDL bounds test	EG↑CO2↑	Positive
Emara and Jhonsa	2014	2009	197 countries	GI and EG	OLS, 2SLS	GI↑EG↑	Positive
Lahouij	2017	2002–2014	78 countries	GI and EG	Fixed effect, random effect	GI↑EG↑	Positive
Danish et al. (2019)	2019	1996–2017	BRICS countries	GI and CO2	Pooled mean group (PMG) estimator	GI↑CO2↓	Negative
Adzawla et al. (2019)	2019	1970–2012	Sub-Saharan Africa (SSA)	EG and CO2	VAR, OLS	EG↑CO2↓	Negative
Liu et al. (2020)	2020	1996–2017	China, India, Japan Russia, and the USA	EG, GI and CO2	FMOLS & DOLS	EG↑CO2↑,GI↑CO2↓	Positive/Negative
Destek et al. (2020)	2020	1800s–2010	G-7 countries	EG and CO2	Time-varying cointegration and bootstrap-rolling window estimation	EG↑CO2↓	Negative
Abbasi et al. (2021)	2021	1972–2018	Pakistan	CO2 and EG	ARDL, frequency domain causality test	CO2↑EG↑	Positive
Fawaz et al. (2021)	2021	1996–2018	111 high and low-income developing countries	GI and EG	Fixed effect	GI↑EG↑	Positive

Table 2. Variable description.

S. No.	Variables	Definition	Source
1	Climate Change	Proxy by CO2 emissions as metric tons per capita at the country level	https://www.bp.com(BP Statistical Review of World Energy)
2	Governance	A composite governance index of 06 widely known governance indicators of Liu et al. (2020)	WDI
3	Economic growth	log transformation of GDP as a proxy of economic growth	WDI

Table 3. Principal component analysis.

Component	Eigenvalue	%Variance	Cum. Variance	KMO test	Bartlett’s test of sphericity
PC1	4.734	0.789	0.789	0.887	Chi-square =4541.277 p-Value =0.000
PC2	0.681	0.113	0.902
PC3	0.382	0.064	0.966
PC4	0.122	0.02	0.986
PC5	0.047	0.008	0.994
PC6	0.035	0.006	1.000

Table 4. Summary statistics and correlation matrix.

Panel A: Descriptive statistics and mean comparison
Variables	Full sample			Developed countries			Developing countries			Shapiro Wilk test of normality	Wilcoxon Rank test
	Mean	Median	St.Dev	Mean	Median	St.Dev	Mean	Median	St.Dev	z-Stat (p-value)	z-Stat (p-value)
EG	0.039	0.044	0.059	0.025	0.028	0.069	0.044	0.051	0.054	10.348 (0.000)	6.295(0.000)
CO2	0.11	0.027	0.386	0.331	0.122	0.711	0.033	0.018	0.039	13.597 (0.000)	−10.131(0.000)
GI	1.002	−0.108	2.176	2.514	2.519	1.453	−0.883	−0.923	1.629	4.699 (0.000)	−15.3(0.000)
Panel B: Correlation matrix and variance inflation factor (VIF)
	EG	GI	CO2	VIF
EG	1
GI	−0.118	1		1.05
CO2	0.354	0.225	1	1.05
Mean VIF				1.05

Table 5. Panel unit root test.

Variables	Levin, Lin and Chu Test			Im, Pesaran and Shin W-test			ADF-Fisher test			PP-Fisher test
	Level	1st Diff	Decision	Level	1st Diff	Decision	Level	1st Diff	Decision	Level	1st Diff	Decision
EG	−0.096	−15.792***	I (1)	2.764	−7.102***	I (1)	105.798	262.22***	I (1)	109.214	269.134***	I (1)
CO2	−1.186	−7.837***	I (1)	3.707	−8.431***	I (1)	71.096	127.229***	I (1)	46.149	155.248***	I (1)
GI	1.352	−19.388***	I (1)	−1.13	−10.307***	I (1)	123.96	300.494***	I (1)	128.945	290.181**	I (1)

Note: ***, **represents p < 0.01 and p < 0.05.

Table 6. Panel cointegrations.

Pedroni cointegration tests						Kao cointegration test
Within-dimension			Between-dimension
	Test	p-Value		Test	p-Value		Test	p-Value	Decision
Model-1 EG← CO2, GI
V	3.763	0.000	Rho	2.251	0.987	ADF	−2.348	0.009	Cointegrated
Rho	−2.413	0.008	PP	−9.956	0.000
PP	−11.2	0.000	ADF	−5.6	0.000
ADF	−4.553	0.000
Model-2 CO2← EG, GI
V	−502.88	1.000	Rho	4.668	1.000	ADF	2.535	0.005	Cointegrated
Rho	0.702	0.758	PP	−6.701	0.000
PP	−7.653	0.000	ADF	−2.14	0.016
ADF	−1.755	0.039

Table 7. Long run relationship.

Dependent variables	Independent variables	FMOLS			DOLS
		Coefficient	Std. Error	t-State	Coefficient	Std. Error	t-State
Model 1: EG	CO2	0.277	0.042	6.634***	0.035	0.011	3.114***
	GI	−0.012	0.004	−2.67***	−0.007	0.002	−3.554***
Model 2: CO2	EG	1.436	0.411	3.495***	1.119	0.382	2.929***
	GI	0.055	0.013	4.238***	0.045	0.011	4.058***

Note: ***represents significance at a 1% level.

Table 8. Panel causality test.

Dependent Variables	Causation (independent variables)			Long-run (t-statistics)	Direction
	Short-run (F-statistics)
	ΔEG	ΔGI	ΔC02
ΔEG	–	4.142**	3.624**	−0.662***	GI→EG, CO2→EG
ΔCO2	0.011	2.097	–	−0.007**	No causality

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