Factors Affecting Environmental Degradation: An Application of Dynamic Panel Model on Multi-Country Analysis

Abstract

The purpose of this research is to find the interactive role of different factors effecting Environmental Degradation in cross countries. We used panel data from 2001 to 2020 and select countries with top 25 ranking in CO2 emission from Global Carbon Atlas. We applied the Dynamic Panel Data (DPD) model and Generalized Methods of Moments (GMM) model. We collect the secondary data for our variables from the World Development Indicator (WDI), International Monetary Fund (IMF), Worldwide Governance Indicators (WGI), KOF Globalization Index and Global Carbon Atlas. The data analysis technique was a DPD model which is done by the Stata. CO2 Emission, KOF Globalization Index, Renewable Energy Consumption (% of total final Energy Consumption), Energy Intensity level of primary energy (MJ/$2017 PPP GDP), Control of Corruption (Estimates), Domestic Credit to Private Sector (% of GDP), Foreign Direct Investment, Net Inflows and Net Outflows (% Of GDP), GDP Growth (Annual %), Inflation GDP Deflator (Annual %) and Total Population, are used as proxies for Environmental Degradation, Globalization, Energy Consumption, Energy Efficiency, Institutional Quality, Financial Development, Foreign Direct Investment, GDP, Inflation and Population. In our research, we find that Globalization, Energy Efficiency, Financial Development and FDI Inflows has a direct relation with Environmental Degradation; and Energy Consumption, Institutional Quality and FDI Outflows has inverse relation with Environmental Degradation.