Does political stability contribute to environmental sustainability? Evidence from the most politically stable economies

Tomiwa Sunday Adebayo; Seyi Saint Akadiri; Solomon Eghosa Uhunamure; Mehmet Altuntaş; Karabo Shale

doi:10.1016/j.heliyon.2022.e12479

Does political stability contribute to environmental sustainability? Evidence from the most politically stable economies

Heliyon. 2022 Dec 20;8(12):e12479. doi: 10.1016/j.heliyon.2022.e12479. eCollection 2022 Dec.

Authors

Tomiwa Sunday Adebayo¹, Seyi Saint Akadiri², Solomon Eghosa Uhunamure³, Mehmet Altuntaş⁴, Karabo Shale³

Affiliations

¹ Department of Business Administration, Faculty of Economics and Administrative Science, Cyprus International University, Nicosia, North Cyprus, Mersin 10- Turkey.
² Research Department, Central Bank of Nigeria, Abuja, Nigeria.
³ Faculty of Applied Sciences, Cape Peninsula University of Technology, South Africa.
⁴ Faculty of Economics, Administrative and Social Sciences, Department of Economics, Nisantasi University, Turkey.

Abstract

The study evaluates the effect of political risk on CO₂ emission in the top 10 most politically stable economies (Australia, Canada, Germany, Finland, Denmark, Norway, Netherlands, New Zealand, Sweden, and Switzerland) from 1991/Q1 and 2019/Q4. To the investigators' understanding, this is the first empirical analysis that inspects the effect of political risk on CO₂ emissions in the top 10 most politically stable economies. Therefore, the current paper fills a gap in the existing literature. Innovative quantile-on-quantile regression and quantile causality approaches are applied to explore this nexus. The quantile-on-quantile regression results reveal that in the majority of the quantiles, political risk enhances environmental quality for the case of Norway, Sweden, Canada, and Switzerland. Moreover, political risk degrades the quality of the environment in Australia, Germany, and Denmark, while the outcomes were mixed for the rest. Since political stability has encouraged international corporations to invest. As a result, guaranteeing political stability will attract more foreign investment, pressuring the governments of these countries to treat the climate catastrophe more urgently. Moreover, reforms should be aimed at sustaining existing environmental policies related to the green economy, while local and international firms should vigorously pursue investments in renewable energy sources and energy-saving-efficient technologies.

Keywords: Carbon emissions; Environmental sustainability; Political stability; Quantile-on-quantile regression.