The Governance-Growth Nexus and Its Environmental Implications in South Asia

Abstract

This research delves into the correlation between economic growth, governance quality, and CO2 emissions within a cohort of seven nations in South Asia: Between 1996 and 2020, Bangladesh, Bhutan, India, Iran, Nepal, Pakistan and Sri Lanka. Using dynamic panel data models and fixed effects, this research documents the role of per capita gross domestic product (GDP) and the capacity of governance to affect carbon dioxide (CO2) emissions. It finds a direct correlation to CO2 emissions and economic growth and hence associate increase GDP per capita to increase in environmental degradation. Yet, enhanced governance is shown to significantly lower CO2 emissions in countries like Bangladesh, India, Nepal and Pakistan, and contributes to increasing CO2 emissions in others. In addition, economic growth and governance quality interaction led to the finding that good governance can moderate the negative environmental effects of economic growth. The uncovering of these findings underscores the importance of governance in meeting environmental sustainability and economic growth objectives in South Asia. The findings provide important policy guidance on improving governance structures to deal more efficiently with the environmental problems facing the region.