Nexus between Income Inequality-Institutional Quality and Environmental Degradation: Evidence from Developing South Asian and ASEAN Countries

This study examines the impact of institutional quality and income inequality on environmental degradation for the selected South Asian and ASEAN countries for the time span 1985-2022. To meet this objective, ecological footprint is used as a dependent variable to measure environmental degradation and independent variables include corruption, GDP per capita, GDP per capita square, trade openness, GINI coefficient and energy use. After checking the cross-sectional dependency, the second-generation unit root test is applied and results reveal a mixed order of integration, which enables us to use the panel ARDL approach. The Panel ARDL technique is used to find out the long run and short run relationship among the variables. It is expected that there will be estimated positive impacts of corruption, GINI coefficient, trade openness, energy use, and GDP per capita on ecological footprint. The study will also confirm the existence of the EKC hypothesis in South Asian and ASEAN countries. It is expected that institutional quality and income inequality will help to reduce environmental degradation. The better the quality of institutions, better the policies made by institutes to control income inequality and reduce environmental degradation. This study examines the impact of institutional quality and income inequality on environmental degradation for the selected South Asian and ASEAN countries for the time span 1985-2022. To meet this objective, ecological footprint is used as a dependent variable to measure environmental degradation and independent variables include corruption, GDP per capita, GDP per capita square, trade openness, GINI coefficient and energy use. After checking the cross-sectional dependency, the second-generation unit root test is applied and results reveal a mixed order of integration, which enables us to use the panel ARDL approach. The Panel ARDL technique is used to find out the long run and short run relationship among the variables. It is expected that there will be estimated positive impacts of corruption, GINI coefficient, trade openness, energy use, and GDP per capita on ecological footprint. The study will also confirm the existence of the EKC hypothesis in South Asian and ASEAN countries. It is expected that institutional quality and income inequality will help to reduce environmental degradation. The better the quality of institutions, better the policies made by institutes to control income inequality and reduce environmental degradation.