Doing Business and Increasing Emissions? An Exploratory Analysis of the Impact of Business Regulation on CO2 Emissions

Since 2005, the World Bank has released a data set titled Doing Business: Measuring Business Regulations. These data have become an important set of indicators of international business climate. However, the impacts of pro-business regulation on the environment have generally been overlooked. To help resolve this problem, I estimate a time-series cross-sectional Prais-Winsten regression model to test the relationship between business climate-represented by the World Bank's Doing Business data set-and carbon dioxide (CO2) emissions in developing nations over 10 years, from 2005 to 2014. The results show that there is a statistically significant and positive association between business climate and CO2 emissions in developing nations. This shows that pro-business regulations contribute to increasing CO2 emissions in developing nations, a major driver of global climate change. I suggest that these results are due to business climate encouraging environmental load displacement, which posits that developed nations are partially displacing their environmental impacts onto developing nations.