Environmental Policy Effectiveness And Industrialization

Abstract

The thesis delved into the non-linear relationship between Environmental Policy Effectiveness (EPE) and industrialization in low- and middle-income countries. The study used a dataset of 104 countries in Asia, Latin America & the Caribbean and Sub-Saharan Africa spanning 19 years and uncovers a significant negative linear association between EPE and industrialization (except for Sub-Saharan Africa, where early positive impacts result from emerging environmental regulations) until an EPE threshold of 36.2 is reached. Beyond this threshold, countries experience positive influences from stringent environmental policies (with increases in EPE having a negative impact on industrialization in SSA), validating the Porter Hypothesis. Furthermore, the study establishes the pivotal role of regulatory quality, revealing its moderating effect on reducing the adverse consequences of EPE, particularly evident in Asia but constrained in Latin America & the Caribbean and Sub-Saharan Africa due to historical economic-biased policies within regulatory frameworks. The findings emphasize the need for tailored regional policies, institutional reforms prioritizing environmental quality, international collaboration for knowledge-sharing, and capacity-building to manage environmental challenges while fostering industrial growth.