The impact of government expenditure on environmental degradation in MENA countries: an empirical investigation
by Nada Hazem; Nouran M. Taha; Israa A. El Husseiny
International Journal of Sustainable Economy (IJSE), Vol. 16, No. 1, 2024

Abstract: This paper examines the impact of government expenditure on environmental degradation using panel data for 14 MENA countries over the period 2000-2018. We estimate the total effect of government expenditure on CO₂ emissions by examining the different channels through which government spending may influence the environmental quality, namely the GDP per capita and the institutional quality. Our findings show that the marginal direct effect of government expenditure on CO₂ emissions is negative and significant. In contrary, the effect of government spending conditional on GDP per capita is found to be positive, offsetting a part of the negative direct effect. Moreover, the effect conditional on democracy level, which is a proxy for institutional quality, is found to be negative. This negative effect reinforces the initial direct effect. Hence, the total effect of government expenditure on CO₂ emissions is revealed to be negative. This indicates that government spending can contribute to the reduction of air pollution and the improvement of environmental quality.

Online publication date: Sat, 02-Dec-2023

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