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Commodity windfalls, political regimes, and environmental quality

Olayinka Oyekola, Lotanna Emediegwu and Jubril Olayinka Animashaun
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Lotanna Emediegwu: Department of Economics, Policy and International Business, Manchester Metropolitan University
Jubril Olayinka Animashaun: Department of Economics, University of Manchester

No 2306, Discussion Papers from University of Exeter, Department of Economics

Abstract: There are considerable differences in greenhouse gas emissions across countries, with little consensus on the extent to which political regimes affect environmental outcomes. This paper shows that the incentives that resource endowments and prices generate are key to understanding the influence of political regimes on emission outcomes. We analyze the relationship between commodity windfalls and CO2 emissions in a model of stratified political regimes, identifying the limits of democracies for environmental quality. To study the impact of international commodity prices on CO2 emissions, we use a panel of 179 countries covering the period 1970 to 2018. We then explore democracies and autocracies as channels for the heterogeneous effects of commodity windfalls on environmental quality. Our panel fixed effects estimation strategies account for the rich dynamics of contemporaneous emissions. Our baseline results show that commodity windfalls increase CO2 emissions in the long run. Similarly, countries with above threshold scores by measures of democratic institutions, such as executive recruitment, executive constraints, and political competition, have a significantly higher levels of CO2 emissions than those with lower scores. These results are robust to several sensitivity checks.

Keywords: commodity windfalls; democracy; environmental quality; carbon emissions (search for similar items in EconPapers)
JEL-codes: H11 H87 O13 Q33 Q56 (search for similar items in EconPapers)
Date: 2023-04-17
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-pol and nep-res
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