Nexus of Human Development and Environmental Quality in Low-Income and Developing Countries: Do Renewable Energy and Good Governance Matter?

Abstract

The relationship between human development and environmental quality has been explored in this study by examining the human-development status and carbon (CO2)-emissions levels of 60 countries from the low, lower-middle, and upper-middle income categories. The roles of renewable energy and some economic and institutional factors such as GDP, the rule of law, regulatory quality, and corruption control have also been investigated to ascertain their impacts on the relationship. The empirical investigations apply the generalized method of moments (GMM), fixed effects (FE), and random effects (RE) methods, and the long-run associations among the variables are investigated by applying the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) techniques. The robust findings support the trade-off relationship between human development and environmental quality in the selected low-income and developing countries. With evidence of an environmental Kuznets’s relationship between economic growth and environmental quality, these findings reveal that the measures pursued to improve human-development status have a contributory impact on CO2 emissions in the selected countries. However, an increased demand for renewable energy, effective enforcement of the rule of law, and improved control over corruption have a mitigating effect on CO2 emissions. The result has also highlighted the policy issues instrumental to increased emissions levels in these countries. Consequently, it is recommended to formulate policies for resolving disparities within the various dimensions of human development while also making deliberate investments in the socio-economic aspects of human development to ensure both sustainable human development and environmental quality.