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Political Institutions and Environmental Degradation

Contents:


 * 1) Introduction:
 * 2) Institutions:
 * 3) Formal Institutions
 * 4) Informal Institutions
 * 5) Political Institutions
 * 6) Environmental Degradation:
 * 7) Role of Political Institutions in Environmental Outcomes:
 * 8) Impacts of Foreign Direct Investment (FDI)
 * 9) References:

Introduction:

Political Institutions play a critical role in both causing and confronting environmental degradation. Institutions tend to be effective in accomplishing their respective aims if the following are present: efficient governance, corruption control measures, quality regulations, political stability, rule of law, and the freedom of speech. Such effectiveness or ineffectiveness of each environmental institution is reliant on its relative power and is reflected within local, national, and international policies and regulations. Institutional spheres interact with and influence the relationships between economic growth, energy consumption, and environmental quality. Therefore, such institutions must be held accountable for perpetuating systems which contribute to biodiversity loss, deforestation, as well as air and water pollution. Simultaneously, the same institutions are responsible for creating comprehensive, wide-scale solutions aimed at fostering sustainable behavior among state, market, and civil society.


 * 1) Institutions are multidimensional, complex, polycentric, and interdependent; formal and informal; range in specificity, encompassing but not limited to social, political, economic, regulatory, and environmental domains. Thus, we can understand the true effects of such environments only by simultaneously examining multiple institutions.


 * 1) Formal Institutions: As defined by American economist Douglass North, are structures of codified and explicit rules and standards that shape interaction among societal members; behavioral guidelines and expectations promoting order and stability.
 * 2) Informal Institutions: Systems of shared meanings and collective understandings that, while not codified into documented rules and standards, reflect a socially constructed reality that shapes cohesion and coordination among individuals in a society.
 * 3) Political Institutions: Both formal and informal - broadly range from autocratic institutions that concentrate power in the hands of a few individuals and discourage the involvement of other citizens, on one hand, to democratic institutions that distribute power among multiple individuals and encourage active participation by all citizens, on the other . Political institutions cover a spectrum of scopes, including municipal, state, national, and international organizations and forms of governance. Culture heavily influences which types of political institutions arise and succeed. For example, democratic political institutions may be less common in collectivist societies and more common in societies with a strong individualistic culture.


 * 1) Environmental Degradation: Deterioration process of the natural, biophysical environment resulting from the use and overuse of natural resources (air, soil, and water), as well as the improper disposal of materials and chemicals. Expanding economies, increasing urbanization, growing populations, increasing consumerism, and industrialization all impact the rate at which environmental degradation occurs. The quality and number of institutions interacting with the environment influence the sustainability or lack thereof of said natural resource use. Governance across all borders and scales is needed to collaboratively address accelerating environmental degradation via anthropogenic impact on global climate.
 * 2) Role of Political Institutions in Environmental Outcomes: Political Institutions inherently possess varied, and at times, concentrated amounts of power. Such power is yielded in a manner which impacts the collective, either positively or negatively. Strong political institutions are necessary in reducing pollution emissions by avoiding market failure by internalizing externalities, imposing taxes, and providing subsidies. In the absence of such, government policies aimed at mitigating pollution emissions render useless. Furthermore, a significant negative correlation exists between natural resource depletion and institutional and governance quality. This relationship indicates that strong institutions move with an improvement in environmental sustainability. Thus, political institutions play a vital role in determining environmental impact of economic variables.
 * 3) Impacts of Foreign Direct Investment (FDI): Foreign capital flows will naturally be directed towards areas where there are less restrictions, in order to maximize returns. However, it is the role of government and its allied institutions to ensure that the negative repercussions of FDI are contained within a regulated framework, so as not to cost the environment so much in an attempt to fix the economy . This further demonstrates the need for strong governance and quality political institutions to regulate the conduct of businesses financed through the FDI flows This is to mitigate the human and environmental impacts of increased degradation as a result of increased FDI inflows.

References:

Aytun, C., & Akin, C. (2016). Interaction of Institutions and Environmental Degradation. International Journal of Advanced Research, 4(12), 63–70. https://doi.org/10.21474/ijar01/2364

Bokpin, G. A. (2017). Foreign direct investment and environmental sustainability in Africa: The role of institutions and governance. Research in International Business and Finance, 39 (Part A), 239–247. https://doi-org.proxy.lib.ohio-state.edu/10.1016/j.ribaf.2016.07.038

DeSombre, E. R. (2017). Global Environmental Institutions (Global Institutions) (2nd ed.). Routledge. https://doi.org/10.4324/9781315672182

Holmes, R. M., Miller, T., Hitt, M. A., & Salmador, M. P. (2011). The Interrelationships Among Informal Institutions, Formal Institutions, and Inward Foreign Direct Investment. Journal of Management, 39(2), 531–566. https://doi.org/10.1177/0149206310393503

North, D. C. (1991). Institutions, Institutional Change and Economic Performance (Political Economy of Institutions and Decisions) (59262nd ed.). Cambridge University Press. https://www.google.com/books/edition/Institutions_Institutional_Change_and_Ec/oFnWbTqgNPYC?hl=en&gbpv=1

Wikipedia contributors. (2021, April 20). Environmental degradation. Wikipedia. https://en.wikipedia.org/wiki/Environmental_degradation

Wikipedia contributors. (2021, March 26). Institution. Wikipedia. https://en.wikipedia.org/wiki/Institution#Informal_institutions

Wikipedia contributors. (2021d, April 22). Sustainability. Wikipedia. https://en.wikipedia.org/wiki/Sustainability

Yasin, I., Ahmad, N., & Chaudhary, M. A. (2020). The impact of financial development, political institutions, and urbanization on environmental degradation: evidence from 59 less-developed economies. Environment, Development and Sustainability. https://doi.org/10.1007/s10668-020-00885-w