Impact of socio-economic factors on deforestation rate: cross country analysis

Global warming has paved the way to bringing countries of the world together to find a suitable solution for environment related problems. With rapid industrialisation, the countries of the world are facing problems of environmental degradation. One of them is the deforestation rate (DR). It is a matter of concern for all the countries of the world to protect their environment and become economically strong and grow. This paper is relevant as it considers the trade-off between DR (measure of environmental degradation) and various social and economic factors (measure of economic development) among countries. The findings show that the DR is not uniform amongst developed countries (DCs) and less developed countries (LDCs). Further it provides that per capita consumption of electricity (PCCE), per capita consumption of electricity square (PCCE²), average fresh water withdrawal, percentage of forest area and population growth are the factors affecting forest degradation across nations. The relationship between PCCE and the DR fails to prove the EKC hypothesis of inverted 'U' shape. With rapid industrialisation, developed countries transfer pollution intensive outputs industries to developing countries. Therefore, global environmental policy makers have to take collaborative measures to protect the environment in form of LDCs and DCs.