The poverty-environment nexus in developing countries: Evidence from heterogeneous panel causality methods, robust to cross-sectional dependence
2022
Awad, Atif | Warsame, M Hersi
The impact of poverty on environmental quality, or the reverse impact, has already been addressed in many studies. In these earlier studies, CO2 emissions were frequently used to measure environmental quality, and inappropriate analysis methods were employed. Against this backdrop, the present study aimed to reinvestigate the relationship between poverty and the environment from a causality point of view, using a sample of 91 developing countries between 1990 and 2015. This study utilised the ecological footprint (EFP) to capture environmental quality instead of CO2 emissions. Second-generation tools were employed that addressed/mitigated heterogeneity and cross-sectional dependence when analysing the panel data. The results showed evidence of dependency between the cross-sections and the sample was found to be heterogenous. The heterogeneous panel causality analysis results showed that while a bidirectional causality relationship between poverty and the ecological footprint was discovered for the global panel and the African region, no causality was detected for the developing countries in the Asian and Latin American & Caribbean regions.
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