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Regulation, governance and the role of the informal sector in influencing environmental quality?

Bali Swain, R., Kambhampati, U. and Karimu, A. (2020) Regulation, governance and the role of the informal sector in influencing environmental quality? Ecological Economics, 173. 106649. ISSN 0921-8009

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To link to this item DOI: 10.1016/j.ecolecon.2020.106649

Abstract/Summary

We investigate the effect of the informal sector and a range of governance indicators on both global and local pollutants for a panel of 58 countries during 1996-2011. The analysis employs a fixed effects-instrumental variable generalized method of moments approach. We find that the size of the informal sector has a significant impact on environmental quality, which is conditional on the level of economic development. For developing countries, the informal sector has a significant positive impact on local pollutants, whereas for the developed countries the informal sector has a significantly negative effect on global pollutants. The findings also reveal that the impact of governance depends on the type of governance measure, the level of economic development and type of pollutant. Control of corruption emerges as the single most important factor especially in the non-OECD countries in improving environmental quality. We argue that the efficacy of an environmental policy for a country with a large informal sector will be low if the policy measures do not address governance, size of the informal sector and environmental policy targets.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:89332
Publisher:Elsevier

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