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Fiscal Subsidies and Environmental Sustainability: What does the Cross-country Empirical Estimates Suggest?

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  • Debashis Chakraborty
  • Sacchidananda Mukherjee

Abstract

A number of developed as well as developing countries provide subsidies to domestic players, leading to overproduction and over-exploitation of natural resources, which pose a serious threat to environmental sustainability. The analysis in this article attempts to understand the role of government budgetary subsidies on the overall environmental performance index through panel data model estimation for a set of 74 countries over an 11-year period (2000–2010). The empirical findings confirm the theoretical prediction that subsidies lead to environmental degradation, which is of particular concern for developing countries.

Suggested Citation

  • Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Fiscal Subsidies and Environmental Sustainability: What does the Cross-country Empirical Estimates Suggest?," Foreign Trade Review, , vol. 48(3), pages 383-397, August.
    • Handle: RePEc:sae:fortra:v:48:y:2013:i:3:p:383-397
    DOI: 10.1177/0015732513496619
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    1. Debashis Chakraborty & Sacchidananda Mukherjee, 2013. "Do Foreign Trade and Investment Lead to Higher CO2 Emissions? Evidence from Cross-Country Empirical Estimates," Review of Market Integration, India Development Foundation, vol. 5(3), pages 329-361, December.

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    More about this item

    Keywords

    Budgetary subsidy; environmental performance index; environmental sustainability; human development; urbanization; government policy; environmental Kuznets curve;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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