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Review Papers | Environmental Science Studies | China | Volume 12 Issue 5, May 2023

Examining the Effect of Government Expenditure, Urbanization and Green Finance on Carbon Emission: New Insight from the Southern African Development Community

Abdirahman Yusuf Elmi

Abstract: The role of how southern African development communities (SADC countries) can substantially mitigate carbon dioxide emission (CO2) remains fathomless. In consideration of this, this research explored the correlation between government expenditure (GEXP), urbanization (URB), green finance (GFN), human capital (HC), economic growth (GDP), information and communication technology (ICT), natural resource rent (NRR), and carbon emission (CO2) using panel data from 1996 to 2020. In order to estimate the interaction between the variables, this work combined the augmented mean group (AMG) s, and common correlated effect means group estimator (CC - MG) model approaches. The result of this study reveals a positive and significant association between government expenditure, urbanization, economic growth, natural resource rent, and carbon emission. In contrast, human capital and information commutation technology extensively decrease carbon emissions, while green finance shows insignificantly positive in the SADC economies. Moreover, the outcome of the Granger causality test indicates that government expenditure and urbanization have a bidirectional association with CO2. On the other hand, government expenditure and urbanization also have a bidirectional relationship with green finance. The Granger causality test revealed a unidirectional causality between economic growth, green finance, human capital, information and communication technology, natural resource rent, and carbon emission. Finally, this research has implications for policymakers in the SADC countries.

Keywords: Carbon emission, Government Expenditure, Urbanization, Green Finance Natural Resources Rents

Edition: Volume 12 Issue 5, May 2023,

Pages: 128 - 138