







































American Interdisciplinary Journal of Business and Economics  

ISSN: 2837-1909| Impact Factor: 6.72 

Volume. 10, Number 2; April-June, 2023;  

Published By: Scientific and Academic Development Institute (SADI)   

8933 Willis Ave Los Angeles, California  

https://sadipub.com/Journals/index.php/aijbe | editorial@sadipub.com 

 

     

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INVESTIGATING THE ROLE OF STATE CAPACITY IN PROMOTING  

TECHNOLOGICAL INNOVATION AND ENVIRONMENTAL  

SUSTAINABILITY IN ASEAN STATES  
  
  
  

Kadir Aden  
University of Djibouti  

 
Abstract: This study examines the relationship between state capacity, technological innovation, and 

environmental sustainability in two ASEAN member states, Vietnam and Singapore, from 2000 to 2020. The 

study focuses on the impact of impartial administration, rule of law, and technological innovation on achieving 

environmental sustainability. The Autoregressive Distributed Lag model and Granger causality analysis were 

used to analyze the existence and causal effect between the variables. The results indicate a negative 

association between impartial administration, technological innovation, and environmental sustainability in 

the long run. However, the Granger causality analysis demonstrates a causality effect running from impartial 

administration and technological innovation to environmental sustainability for Singapore. The study 

highlights the importance of state capacity in promoting innovation in both the public and private sectors to 

achieve environmental sustainability.  

 
Keywords: state capacity, technological innovation, environmental sustainability, impartial administration, 

rule of law, ASEAN member states, Autoregressive Distributed Lag model, Granger causality analysis.  

  

Introduction  

State capacity is one of the key factors that can influence technological innovation and environmental 

sustainability. This study examines the relationship between state capacity, technological innovation, and 

environmental sustainability in two ASEAN member states, Vietnam and Singapore. The study focuses on 

examining the impact of impartial administration, rule of law, and technological innovation on achieving 

environmental sustainability. The study uses the Autoregressive Distributed Lag model and Granger causality 

analysis to examine the existence and causal effect between the variables.  

The study reveals a negative association between impartial administration, technological innovation, and 

environmental sustainability in the long run. This indicates that impartial administration and the rule of law 

are crucial for achieving environmental sustainability. However, the Granger causality analysis demonstrates 

a causality effect running from impartial administration to environmental sustainability and between 

technological innovation to environmental sustainability for Singapore. Therefore, Singapore's state capacity, 

including impartial administration and technological innovation, has a positive effect on achieving 

environmental sustainability.  

The study concludes by highlighting the importance of state capacity in fostering innovation in both the public 

and private spheres for achieving environmental sustainability. The findings have significant policy 

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implications that can inform the design of interventions aimed at promoting green technology and 

environmental sustainability.  

Review of literatures   

The role of the state in achieving a healthier sustainable environment is becoming obsolete if not dwindling. 

And by this, alternative actors, including citizens have emerged as potential stakeholders. Albeit, this 

shrinking of states’ capacity in addressing environmental issues, the government still maintains its sparkle by 

interfering in the sustainability agenda either directly or through indirect processes, and, depending on this 

particular practice, it could either assist in improving the environment or deteriorate what was an already 

fragile ecosystem. Similarly, it is important to note that sustainability covers a larger scope, and the fact of an 

absence specific delineation mechanism provides academicians to implement the latter concept in different 

environmental fields, from energy, C02 emissions, and waste management, to public health.  2.1. State 

Capacity and Environmental Sustainability   

Several authors accentuate the negative impact of administrative biases when civil servants stray away from 

impartiality. Welsch (2004) and Cole et al. (2006), stress the relationship between the lack of impartiality and 

environmental pollution. Their study reveals how, poor impartiality reduces the efficiency of environmental 

policies, then, retroactively affects quality deliverance. In fact, better regulatory quality upgrades 

sustainability within the state, however, ironically, stringent environmental regulation aimed at improving 

sustainability would hamper the state’s economy by further introducing shadow economics. Chen et al. (2018) 

demonstrate how stricter control of environmental regulations would reduce pollution and ameliorate 

ecological qualities but at the expense of providing opportunities for shadow economy activities to expand. 

Elgin and Mazhar (2013), build a double-sector model between the official economy and the shadow 

economy, they discover that depending on how severe environmental regulations were implemented, certain 

shadow economy sectors may eventually end up becoming a major cause of environmental pollution leakage, 

as a result, impeding state’s sustainability effort. More formally, this excessive execution of eco-friendly 

policies, without practical reappraisal of its aftermath effect would certainly increment the scale of the shadow 

economy. Certainly, without repercussion motives, these authors are genuinely warning of the negative effect 

of greater propensity toward sustainability policies when the collective posterior impact hasn’t been fully 

taken into consideration.   

In a similar scenario, Kuehn (2015) argues that due to the high economic and political stakes involved in many 

controversies, accusations of bias in administrative sustainability judgments are becoming more frequent 

recently, and, indeed, appear to be growing. To exemplify this, parties in environmental proceedings allege 

ethical violations, discrimination in forms of favoritism, prejudging of outcomes, complaining of irregular 

prosecutorial and judicial functions, and illegal political influence, particularly, in legal cases that require 

higher impartiality and integrity by the competent organs. Interestingly such as scenario transpires in every 

corner of the globe from high-profile oil conglomerates to C02 emission effect on locals’ well-being. Only 

recently, opponents of a 1,700mile Keystone XL oil pipeline have alleged that the environmental 

decisionmaking process has been sullied by State Department cronyism of the pipeline's construction 

company, further reinforcing the blatant bias and favoritism among civil servants. see (Rosenthal and Frosch, 

2011).   

While the point (Kuehn, 2015) should be treated as a particular case, Romano et al. (2021), also applies the 

lack of impartiality and ineffectiveness in Italy by considering waste management performance as a point of 

illuminating the state’s maladministration. The outcome of the causality framework demonstrates that urban 

disposal production per capita is higher in municipalities with relatively high amounts of corruption and poor 

governance. Reasonably, the following outcome is justified by the author as the presence of possible, biased 

activities, while simultaneously pursuing personal interest at the expanse of the conferred mission to them by 



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abusing their titles which are mostly defined by their professional positions, thus. Ironically, providing 

irrational immunity. The significance of the link between waste management and unlawful actions and the 

absence of impartiality has also been emphasized by (Gumisiriza and  Kugonza, 2020; Cesi et al., 2019; 

Agovino et al., 2018), according to their theory, Corrupt businesses entities, local governments, and oversight 

agencies frequently collaborate in the context of environmental violations to create illicit networks that 

jeopardize effective waste disposal and the flow of sustainable management.  For instance, these networks, 

have a significant impact on contractors and subcontracts who handles garbage collection, transportation, and 

disposal, by exerting substantial control, thus carrying out their well-orchestrated extortion activities, in turn 

undermining the public health. Generally, ineffective waste disposal produces health problem D'Alisa et al. 

(2010) reveals how organized crime is a key contributor to environmental offenses, including the disposal of 

dangerous waste. therefore, contributing to health issues including asthma, respiratory issues, tumors, and 

circulatory system abnormalities, notwithstanding, perpetrators continue to pursue their sustainable 

degradation, given, the low attention provided to environmental infractions.    

Highlighting how ineffective state capacity affects sustainability (Fredriksson and Svensson, 2003), explores 

the effect of government stability and absence of corruption on environmental policies by collecting data from 

60 countries. They conclude that the degree of corruption may have been what determines the association 

between political risk and the strictness of environmental regulations. In particular, political stability has a 

detrimental influence on the effectiveness of environmental legislation when the amount of corruption is low; 

yet, once the level of corruption is at its peak, political stability has a favorable influence on environmental 

legislation. Additionally, corruption can reduce the effectiveness of environmental regulation, but the impact 

will vanish with greater political stability.    

Chen et al. (2019) and Pang et al. (2019), analyze a way of achieving sustainable development by reducing 

air pollution. Based on their conclusion; Car exhaust is one of the major sources of air pollution in China, 

because of the country's ongoing urbanization and rising living standards, which has led to an increase in the 

number of families; owning to several fuel-powered vehicles. The authors suggest that pushing electric 

vehicles over gasoline-powered ones will assist in tackling the problem of urban air pollution. On the other 

hand, some scholars support maximizing the involvement of the government in the environment by enhancing 

environmental protection legislation, boosting environmental rules, and tightening environmental inspection 

procedures in order to reduce air pollution (Song et al., 2020).   

An interesting case about ecological issues can be linked to the famous case of (Oposa Minors Case, 1993).  

According to the Philippines Chief Justice, the petitioners filed a lawsuit on behalf of future generations. 

According to the court’s reasoning, intergenerational standing is helpful when environmental harm is 

longlasting and worsens with time, posing a greater hazard to coming generations than to the current. 

However, in order for the rights of coming generations to be really convincing, they must be completely 

incorporated into constitutional and international human rights law. Following this verdict, several countries 

have already set agendas of integrating future-generation values into constitutional environmental rights, see 

(Commonwealth, Robinson Tp, 1993). Another German case has rejected to consider condemning a c02 

emission industry. according to the plaintiff’s argument, the c02 emitted by these industries was infringing his 

fundamental rights. After finding unsubstantiated human rights violations, the court decided to discard the 

plaintiff’s appeal, however, the court shifted its verdict to proportionality scope, in which, excessive 

consumption of C02 from the current generation would cause future sustainability damages for the upcoming 

generation, while simultaneously leaving little quantities of C02 emission to experience (Winter, 2022).   

Muhammad and Long (2021) highlight the critical role of institutional components like political stability, 

anticorruption measures, and the rule of law in reducing carbon emissions and enhancing environmental 

quality. Further providing support for Muhammad’s institutional variation, Salman et al. (2019), contends that 



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the strength of a nation has a significant impact on how well the Paris Agreement and other environmental 

pollution-related regulations are implemented. On the other hand, industries wouldn't think twice about 

breaking pollution control regulations to maximize profit if there are defects and weak institutions. Welsch 

(2004) and Aden (2022), also argue that robust institutions have the potential to reduce pollution not only at 

the national level but also at an international level through a mechanism based on a spatial institutional 

spillover effect. On the other hand, ineffective institutions, which are viewed as the primary cause of the 

lowincome trap, are the main barriers to further reaching sustainable societies and adopting sophisticated 

energy structures generated by greener technologies (Salman et al., 2019).   

Geller et al. (2006) also look at how 123 different countries' levels of governance affected the quality of their 

environments. The findings demonstrate that effective policies, judiciary fairness, and accountability 

favorably impact water quality. On the other hand, judiciary fairness, and bureaucratic efficiency have a 

positive effect on air quality. However, the six governance indices are adversely affected by forests, and there 

is no indication that governance indicators have an influence on biodiversity.   

2.2 Sustainability and Innovation   

An institution must purchase or create a new product, service, or platform that requires technical innovation 

in order to attain Sustainability; yet, specific characteristics of procurement authorities affect such activities. 

Although, public strategies that are innovative and sustainable can be implemented at several levels. And 

when deeply ingrained and widely accepted these groundbreaking technological tools, achieving 

sustainability through an innovation-driven agenda becomes further plausible, while, simultaneously, 

producing potential benefits for society (Nijboer et al., 2017). Hence, embracing these smart technological 

innovation policies by governments has a crucial role in fostering the adoption of environmental technologies 

by business entities, thus boosting sustainability levels and indirectly contributing to the major social problem 

of climate change through the business-government collaboration mechanism. Therefore, in order for 

economies to achieve a decarbonized and controllable development path that is compatible with 

competitiveness goals; technological innovation may be crucial, in the context of implementing and 

disseminating greener manufacturing technology, and lesser dependence on C02 emission.   

Khan et al. (2020b) employ a fully modified ordinary least square (FMOLS) model, a dynamic ordinary least 

square (DOLS), a generalized least square (GLS), and chronical cointegration regression (CCR) method to 

show the relationship between innovation, and private and public partnership energy investment. The results 

yield that technological innovation (TIN) infuses higher energy consumption generated through renewables. 

The findings also underline the important role of reducing c02 emissions when the state embraces 

technological tools, subsequently contradicting the general belief of the negative effect of technological 

advancement on the environment. Additionally, the favorable effect of TIN on cleaner production is revealed 

by (Alvarez-Herranz et al., 2017), the empirical results indicate that spending on technological innovation 

lowers Carbon footprints and enhances the climate's overall health. The authors also point out that while the 

impact of innovation and technological expenditure varies among nations, these tools might be leveraged to 

reach salient sustainability.   

Sun et al. (2008) examine the connection between greenhouse gas emissions (GHG) and patent technologies. 

The researchers conclude that technological progress considerably lowers CO2 emissions. Additionally, their 

comparative research indicates that, in contrast to other geographical regions, Eastern counties are more 

effective at implementing innovations and eco-friendly technology. This pivotal finding might suggest, 

perhaps, comparing the development status between the North and the East; developed nations had already at 

their peak of progress, although their mission of achieving sustainability could be easier but still growing 

nations possess the upper hand in transforming their economy to better match sustainability goals, with less, 

inconvenience vis-à-vis the northern. In a similar case, the effects of advancements in technologies, 



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environmental laws, and urbanization on ecological performance were investigated using the generalized 

method of moments GMM technique by (Yasmeen et al., 2020), The findings show that the eastern area had 

the greatest ranking in terms of ecological effectiveness, preceded by the middle and western regions, 

correspondingly. On a national scale, the urbanization index has a detrimental effect on ecological 

effectiveness. While the results in the western and middle areas are inconsequential as they are favorably 

significant in the eastern region.   

Zhou et al. (2018) reveal that technological progress in green fields might encourage an increase in anticipated 

production. Therefore, developing green technologies is a crucial approach for China to increase its ecological 

efficiency. Nevertheless, these authors contend; at the current time, China’s eco-friendly technological 

innovations are somehow lacking and indeed at some point need to be addressed. Furthermore, China’s 

technological evolution exhibits a "U"-shaped environment Kuznets curve. Indicating, that advanced 

technology before 2010, somewhat decreased ecological efficiency. In a similar context, Shahbaz et al. (2016) 

reveal that technological innovation may lower carbon emissions and assist in addressing the difficulties 

associated with environmental sustainability by coping with unexpected climate damages while at the same 

time playing a major key in the betterment of environmental quality. Another ground-breaking study 

conducted by Bouzguenda et al (2019), aimed to explore the role of communications and technology on 

enhancing engagement among citizens toward sustainable cities. The author’s main purpose is to investigate 

in deep the incorporation of digital citizen participation in sustainable smart cities, the result suggests that 

emphasizing Information and Communications Technology (ICT) will direct to better social sustainability and 

produce human-based interconnection than a robotic administrated platform which in most cases interferes at 

delivering acceptable feedbacks. Adebayo and Kirikkaleli (2021), also analyze the effect of renewable energy, 

globalization and technological innovation in Japan’s environmental sustainability. The wavelet statical tools 

show an increase in the level of C02 emission when technological innovation has been embraced, further 

creating discrepancy between the positive impact and the negative scope when technological tools deployed 

in climate mitigation context.  Methods   

In this study, environmental sustainability (our dependent variable) is proxied by adjusted net savings, 

excluding particulate emission damage, adopting the famous work of (Ganda, 2020), whereas, technological 

innovation is adopted by (Rafique et al., 2020). Moreover, A period of twenty years was selected starting from 

2000 to 2020. The period could have been extended, however, to avoid biases in a format of missing data the 

study contends to carry on within this interval period. Furthermore, the study is built by collecting several 

variables interlinked with the country’s governments and civil servants. The collected variables are taken from 

the world bank development except for impartial administration which was taken from the global state of 

democracy indices. More formally, we are anticipating that greater states’ characteristics improve, to some 

extent, the level of sustainability, thus, establishing a positive compromise between the host country and the 

quality of the environment. All the variables and their assessments including their respective sources can be 

seen in Table 1.  

Table 1.Variables Summary   

Variables   Description   Sources   
 

Adjusted net savings, excluding particulate emission damage Adopted as 

environmental sustainability  (ENS)   World Bank   

 



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Impartial Administration (IMP)   

The government and the public administration 

more generally should implement official public 

policies in an impartial manner. Scaled to range 

from 0 (lowest score) to 1 (highest score).   

The  Global  State  

Democracy   

Indices   

of  

Regulatory Quality (RQ)   

Perception of state to formulate sound policies.  

Ranging from -2.5 to 2.5   
World Bank Governance   

 

Rule of law (RL)   

Quality of law enforcement, trust toward agents for  

their rule abiding. Ranging from -2.5 to 2.5   
World Bank Governance  

 

 

Government effectiveness (GE)   

Quality of public and civil services and the  
credibility of commitment to their formulated World Bank Governance  

policies.   

 

Total Patent application (TIVN)   Adopted as a proxy for technological innovation   World bank    

   

3.1. Econometric model   

To explore factors enhancing environmental sustainability within Singaporean and Vietnamese territories the 

following model is proposed:   

   

  lnESN = 𝛽1 + 𝛽1IMP + 𝛽2RL + 𝛽3RQ + 𝛽4GE + 𝛽5lnTNVN + 𝜖𝑡  (1)   

lnENS  →     higher impartiality among public officials improves environmental quality   

 > 0 IMP →  Greater emphasis on rule of law introduces higher sustainability at the national level  lnENS →  

Embracing favorable policies toward the environment produces salient sustainable  

  > 0 RL  →   frameworks   

lnENS  
→   An effective bureaucratic system leads to environmental improvement by turning to  

 > 0 RQ lnENS  alternative substantial measures, that in turn, promote sustainability.   

 > 0 GE Technological innovation infuses higher sustainability by reducing the level of C02 emissions 
lnENS 

 

First, the following techniques have been applied to the collected data in order to obtain the  > 0  desired estimates. 

Accordingly, the unit root test was performed on the dataset (Variables) to lnTINV examine the stationarity series.   

      

   𝑦𝑡 = 𝜃𝑦𝑡−1 + 𝜀𝑡   

                                                 

      (2) where εt is the error term.   

   

Assumingly, it is likely certain variables could be stationary at level or becomes stationary at the first 

difference if such as stationarity explosion can’t be detected, hence the termination of the model is most 

probable or perhaps seeking other adequate alternatives. In doing so, we used the Dickey-fuller test to 

investigate the variables (Dickey and Fuller, 1979), i.e.  

∆lnENSt = 𝛼 + βTIME + γlnENSt−1 + δ∆lnENSt−1 + ⋯ + δP−1∆lnENSt−P + εt   (3)   

∆IMPt = α + βTIME + γIMPt−1 + δ∆IMPt−1 + ⋯ + δP−1∆IMPt−P + εt   

∆RLt = α + βTIME + γRLt−1 + δ∆RLt−1 + ⋯ + δP−1∆RLt−P + εt   

∆RQt = α + βTIME + γRQt−1 + δ∆RQt−1 + ⋯ + δP−1∆RQt−P + εt   



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∆GEt = α + βTIME + γGEt−1 + δ∆GEt−1 + ⋯ + δP−1∆GEt−P + εt   

∆lnTIVNt = α + βTIME + γlnTIVNt−1 + δ∆lnTIVNt−1 + ⋯ + δP−1∆lnTIVNt−P + εt where ‘α’ is 

the constant, ‘β’ can be interpreted as the time trend coefficient, and ‘p’ displays  the lag 

process.  

Adopting the approach proposed by (Pesaran et al., 2001) for our ARDL model, in which their theories was 

based on employing different lag operators within the ARDL model to avoid simultaneity issue, while 

simultaneously carrying on with a mixed unit root intermingled variables l (0) I(1). 𝑃 𝐼 𝐿  

(4) In(ENS)𝑡 = 𝛽0 + ∑ 𝜙1𝑖 Δ In(ENS)𝑡−𝑖 + ∑ 𝛽1𝑖 Δ (IMP)𝑡−𝑖 + ∑ 𝛽2𝑖 Δ (RL)𝑡−𝑖  

  𝑖=1  𝑖=1  𝑖=1  

  𝑄  𝐺  𝑇  

+ ∑ 𝛽3𝑖 Δ (RQ)𝑡−𝑖 + ∑ 𝛽4𝑖 Δ (GE)𝑡−𝑖 + ∑ 𝛽5𝑖 Δ In(TIVN)𝑡−𝑖 + 𝜀𝑡   

  𝑖=1  𝑖=1  𝑖=1  

Where β _0 is the constant, β_1 to β_5 are the coefficients of variables. Δ shows the first difference, and ε is 

the white noise.  After the short-run verification, the long-run cointegration was verified using Wald 

Fstatistics. The test assumes a null hypothesis denotes non-integration. Accordingly, by looking at the F 

statistics we can conclude if the model is worth for a long-run estimation. in this agenda, we only kept 

assuming the existence of long-run relations between the variables hence proceeding with an error correction.   

  𝑃  𝐼  𝐿  𝑄  

(5) In(ENS)𝑡 = 𝛽0 + ∑ 𝜙1𝑖 Δ In(ENS)𝑡−𝑖 + ∑ 𝛽1𝑖 Δ (IMP)𝑡−𝑖 + ∑ 𝛽2𝑖 Δ (RL)𝑡−𝑖 + ∑ 𝛽3𝑖 Δ (RQ)𝑡−𝑖  

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

  𝐺  𝑇  

+ ∑ 𝛽4𝑖 Δ (GE)𝑡−𝑖 + ∑ 𝛽5𝑖 Δ In(TIVN)𝑡−𝑖 + 𝜆𝐸𝐶𝑇𝑡−1 + 𝜀𝑡    𝑖=1 

 𝑖=1 where the ℷ ECT is the error correction term.   

The granger causality was lastly performed to examine the existence of causal effect between the candidate 

factors. Hence, the F-test and the P value were used to assess if the factors are significantly affecting each 

other. Nevertheless, this depends on the causality direction, whether it is a one-way causality, a bidirectional 

relation, or a neutral relationship in spite of the strong association. Therefore, we take into account the 

following effect-relationship:  

  2  2  2  2  2  2  

ENS𝑡 = 𝑐1 + ∑ 𝛽1 ENS 𝑡−𝑖 + ∑ 𝛽2 IMP 𝑡−𝑖 + ∑ 𝛽3 RL 𝑡−𝑖 + ∑ 𝛽4 RQ 𝑡−𝑖 + ∑ 𝛽5 GE𝑡−𝑖 + ∑ 𝛽6 TIVN 𝑡−𝑖 

+ 𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

  2  2  2  2  2  2  

IMPt = 𝑐1 + ∑ 𝛽1 IMP 𝑡−𝑖 + ∑ 𝛽2 ENS 𝑡−𝑖 + ∑ 𝛽3 RL 𝑡−𝑖 + ∑ 𝛽4 RQ 𝑡−𝑖 + ∑ 𝛽5 GE𝑡−𝑖 + ∑ 𝛽6 TIVN 𝑡−𝑖 

+ 𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

  2  2  2  2  2  2  

RLt = 𝑐1 + ∑ 𝛽1 RL 𝑡−𝑖 + ∑𝛽2 IMP 𝑡−𝑖 + ∑ 𝛽3 ENS 𝑡−𝑖 + ∑ 𝛽4 RQ 𝑡−𝑖 + ∑ 𝛽5 GE𝑡−𝑖 + ∑ 𝛽6 TIVN 𝑡−𝑖 + 

𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

  2  2  2  2  2  2  (6)   

RQt = 𝑐1 + ∑ 𝛽1 RQ 𝑡−𝑖 + ∑ 𝛽2 RL 𝑡−𝑖 + ∑ 𝛽3 IMP 𝑡−𝑖 + ∑ 𝛽4 ENS 𝑡−𝑖 + ∑ 𝛽5 GE𝑡−𝑖 + ∑ 𝛽6 TIVN 𝑡−𝑖 + 

𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  



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  2  2  2  2  2  2  

GEt = 𝑐1 + ∑ 𝛽1 GE 𝑡−𝑖 + ∑ 𝛽2 RQ 𝑡−𝑖 + ∑ 𝛽3 RL 𝑡−𝑖 + ∑ 𝛽4 IMP 𝑡−𝑖 + ∑ 𝛽5 ENS𝑡−𝑖 + ∑ 𝛽6 TIVN 𝑡−𝑖 + 

𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

  2  2  2  2  2  2  

TIVNt = 𝑐1 + ∑ 𝛽1 TIVN 𝑡−𝑖 + ∑ 𝛽2 GE 𝑡−𝑖 + ∑ 𝛽3 RQ 𝑡−𝑖 + ∑ 𝛽4 RL 𝑡−𝑖 + ∑ 𝛽5 IMP𝑡−𝑖 + ∑𝛽6 ENS 𝑡−𝑖 

+ 𝜀   

  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  𝑖=1  

Results   

The Augmented Dickey-Fuller test (ADF) is used for this study, it is worth noting that ADF determines the 

presence of stochastic stationery in the dataset and it is the most renowned Unit root test used by most studies 

(Morshed & Hossain, 2022; Pula & Elshani, 2018; Wen & Dai, 2020). Interestingly, Vietnam has a mixture 

of stationary series at level I(0) and at 1st level; I (1). The Rule of law (RL), regulatory quality (RQ), 

Technological innovation (TIVN) and environmental sustainability (ENS) are stationary at level.  Meanwhile, 

Impartial administration (IMP)and Government effectiveness (GE) became stationary at 1st level, Table no.  

2. On the other hand, Singapore’s variables are stationary at the first difference, although bureaucratic 

effectiveness (GE), technological innovation, and regulatory quality (RQ) are stationary at level. Overall, 

these combinations of series provide strong convincing arguments for the parameters to proceed with an 

ARDL approach.  

The correlation matrix tables display a positive association between environmental quality, rule of law, 

regulatory quality, and government effectiveness within the socialist Vietnamese context with a value of 0.52, 

0.72, and 0.077, respectively Table no. 3 On the other hand, impartial administration and innovation displays 

a negative sign. Comparing this correlation with Singapore, effective bureaucratic systems appear to have the 

strongest association with environmental quality, whereas the aforementioned factor seems to be the lowest 

for Vietnam. The outcome of this result transpires that regimes attributive characteristics seldom play a key 

role in enhancing environmental quality, owing to the fact of both regimes’ non-democratic standing point.   

Table 3. Correlation results   

   
Vietnam           

ENS   IMP   RL   RQ   GE   TIVN   

The result also indicates a unique cointegration among the selected variables. accordingly, environmental 

sustainability is normalized and the remained variables can be treated as a long-run forcing for the explanation 

of environmental quality. It can be seen from the F-statistics table no 4, all the variables are cointegrated and 

fail under the upper bound. likewise, we estimate the model’s diagnostic. The diagnostic results can be found 

in table no 5.   

   
         

  Table 4. Bound test estimates   
   Singapore   

  ENS   IMP RL      

    

RQ  

    

GE      TIVN     

TIVN    - 0.7915   
    0.7904   

- 0.4627     - 0.7352     - 0.0171     1     



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 RQ  

 -

0.5274  1  
 GE   

 0.1267    

         

      
RL   1       

Source - Author’s Calculations                 

    

 Vietnam        Singapore     

 Test statistics   Value       Test statistics   Value   

 F statistics   5.867 is        F statistics   6.678   

 Significance level (Critical)     

   

     

 Significance   I (0) Bound   I (1) Bound   I (0) Bound   I (1) Bound   

 10   2.26   3.35   2.26   3.35   

Source-Author’s Calculations        

Further, we estimated the diagnostic of the model, all the residual shows no autocorrelation, and they are 

regularly distributed. Moreover, the model projects no issues of heteroskedasticity, while the outcome of the 

Ramsey test demonstrates that the current model does not have any misspecification errors, hence, the ARDL 

bounds test produces unbiased and consistent estimates. Finally, the stability of the parameters was tested, as 

a result, it can be drawn from the CUSUM and CUSUMQ graphs that all the statistics are in the critical 

bounds, meaning the coefficients of the model are stable, observe table no. 5 and figure 2,3.  

Table 5. Diagnostic estimates of both models   

   Test   

(pvalue)   

Results    

Vietnam   Durbin-Watson d-statistic   3.3504   No autocorrelation    

Jarque-Bera test   0.5343   Estimated  residuals 

normal   

are  

  White's test   0.3918  The model is Homoskedastic   

  
   Breusch-Pagan / Cook-Weisberg   0.8244     

 Ramsey RESET Test   0.6123   The  model  has  no  

misspecification   

   

ENS     1            

IMP     - 
 

0.5411 
   

1 

    

      

  

  

RL    0.5271   

  

0.0159     1 

    

      

                 

RQ     0.322    0.4014     0.0201     1       

GE     0.6936     0.1241     0.0081     0.4776     1     

TIVN     0.1977     0.4739     -  0.3212    0.7918     0.5792     1 

    

ENS    

IMP    

0.7274   0.3868   
0.0776       0.2037       0.1619       1       

1       
-   0.2186       1       
0.1825       -   0.4879       



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Breusch-Godfrey Serial 

LM Test:   

Correlation 0.2097   No serial correlation exits   

      

Test   

   

(pvalue)   

   

Results   

Singapore   Durbin-Watson d-statistic   3.3594   No autocorrelation   

Jarque-Bera test   0.7318   Estimated  residuals 

 are normal   

  White's test   0.3799  The model is Homoskedastic   

  
 Breusch-Pagan / Cook-Weisberg   0.9896     

Ramsey RESET Test   

Breusch-Godfrey Serial Correlation LM Test:   

0.1182   The  model  has  no  

misspecification   

   

0.8816   No serial correlation exits   

Source-Author’s Calculations       

   

   
     Figure 1. Cusum and Cusum Square for Vietnam   

   

 
       

Figure 2. Cusum and Cusum Square for Singapore  

The ARDL estimation for both countries can be seen in Table no. 6, Table no. 7, The shortrun and long run 

estimations appear to differ for both countries, for instance, impartial administration (IMP) at the national 

level shows a positive association in the short-run for both countries, 0.076 p < 0.01 and 0.012 p < 0.05 

respectively. Nevertheless, this perfectly corresponding association lasts only in the short run for Vietnam. 

This sudden transformation could have been expected, considering Vietnam’s late economic openness and 

other social aspects of life restrictions (Compared with Singapore, Vietnam adopted a state market-oriented, 

only, recently, which explains the country’s rapid development and further attraction of foreign markets). In 



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addition, further administration (Private or Public) interferences in the public environment could undermine 

the mutual partnership between the administration and the government. Alternatively, a different explanation 

could be provided from an ineffective facet, in which, administrative bodies’ engagement toward a more 

sustainable environment has been impeded, perhaps, by external factors (corruption, unfavorable 

environmental policies, lack of collective participation, favoring economic profits over environmental issues), 

and reasonably, the latter seems more plausible.    

Noticeably, an effective bureaucratic system increases environmental quality in the short run for both countries 

0.076 p < 0.01, 0.007 p < 0.05. Which translates; an increase of 1% in effectiveness among public officials 

boosts sustainability at 95% in the Vietnamese context, meanwhile it increases by 53% for Singapore. These 

findings are supported by the long-run estimates 0.250 p < 0.1 for Singapore, although a negative elasticity 

can be discerned for Vietnam -0.17 p < 0.01 (Observe both countries coefficient). Recalling, Vietnam’s 

emphasis on strong restrictions toward fundamental rights and macroeconomic factors, which in the worst 

case, embodied as an ineffective government, in the sense of failing to produce a collective engagement 

toward the environment. Compared with Vietnam, all the variables are significant for Singapore.  Table 6. 

ARDL estimates for Vietnam; Dependent variable Environmental sustainability   

    VIETNAM       

    Optimal lags: (2,2,2,2,1,2)       

    Short run relationship       

   Coef.   Std.Err.   t   P>t   [95%Conf.  Interval]   

∆(IMP) t   7.44753   2.214104  3.31   0.076*   -2.078991  16.97405   

∆(IMP) t-1   

  
-0.0013352   

   3.71   0.066*   -2.091765  28.27225   

∆(RL)t-1   0.0828228  -0.02   0.989   -0.357693  0.3550227   



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∆(RQ) t   -0.02  ∆(RQ) t-1   

 
           

Long Run Estimates    

 
* p<0.01, ** p<0.05, ***p<0.1   

Note that in the ARDL lags, the first lag (2) is for the dependent variable (ENS)   

Source: Author’s findings   

  
Additionally, the long-run estimation reveals several prominent findings, according to Sin-  

gapore’s results; as technological innovation, and greater favorable regulation refined, the quality of the 

national environment improves alongside those variables. On the other side, if the rule of law (RL) improves 

(Vietnam) public values improves simultaneously Table no. 6, then, the tendency of creating a sustainable 

environment led by governmental efforts based on a greater adherence to the rule of law will increase public 

officials’ credibility of value creation, on the other hand, a deteriorating rule of law (notice the negative value 

for Singapore) Table no. 7; affects both the environment and citizens, by bearing the responsibility of a 

fractured system. Another explanation might be, perhaps, stricter protection of the environment through 

national laws would reduce foreign companies’ attraction, subsequently, affect the host country’s foreign 

direct inflows (FDI), therefore tighter laws could impede Singapore’s environmental sustainability in the long 

run, through an unprecedented macroeconomic dimension. Similarly, the positive threshold of achieving 

greater sustainability in the national territory, led by governmental incentives is uncommon in the Vietnamese 

context according to its negative (-0.17) value.   

                         Table 7. ARDL estimates for Singapore, Dependent variable Environmental sustainability    

∆ ln(INVIN)T    - 0.1690391     0.2196779     -   0.77     0.522       

∆  ln(INVIN) t - 1     -     0.6895188   0.3234377   
      

-   2.13     0.167         -     2.081159   0.7021211   
    

              

Ecm  (−  1)    - 4.991728       1.811627   -   2.76     0.110   - 12.78653     2.803073     

  

0.989     

0.2490529     0.1211267       2.06   0.176     - 0.2721131       0.7702189   



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  Singapore       

 

  

 

 
           

 
* p<0.01, ** p<0.05, ***p<0.1   

Note that in the ARDL lags, the first lag (2) is for the dependent variable (ENS)   

Source: Author’s findings   

  
Similarly, technological innovation (TIVN) displays a negative value for Vietnam (-0.060), therefore, a 

decrease in innovation, indeed, impacts negatively environmental quality, Table no. 6.   

This can be explained in a more formal way, considering the fact of Vietnam’s growing economy in 

comparison with Singapore, hence, according to this process of a so-called economic boom period, we, 

therefore, assume, because of the country’s still technological immaturity and its slow advancement process 

toward higher innovative measures, will, in turn, have a long-run negative relationship, unless, Vietnam 

attained a threshold where the county matches sustainability agenda with their innovative measures.   

Within the granger causality estimates Table no. 8, we aimed to explore if indeed either of the selected factors 

considerably affects each other. Table 8 shows a bidirectional causality between impartial administration and 

  Optimal lags: (2,2,2,2,2,2)      

  Short run relationship       

  Coef.    Std.Err.  
  t  [ 95 % Conf.    Interval]    

  

Ecm  (−  1)    -   1.775159   . 0342853     - 51.78     0.012     - 2.210795     - 

1.339524     

Long Run Estimates     

  



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a sustainable environment. Thus, in order to reach a sustainable environment, taking into account 

administration impartiality by eradicating administrative biases within the environmental context is perhaps 

a prerequisite step. Meanwhile, Singapore fails to project such as effect. Explaining the country’s already low 

corruption among public officials, interestingly the following noteworthy effect can be perceived in developed 

and advanced societies in which factors such as state’s characteristics becomes unworthy as time elapses, 

particularly, in providing an explanation for the socio-economic or environmental issues.    

One reason for such a case, is probably the country in question has already reached a certain threshold of 

development, subsequently, scarcely, contributing to the overall aimed sector. On the other hand, the effect of 

regulatory quality on enhancing environmental performance transcends the singular impact and produces 

twoway causality for Singapore Table no. 8, where the formulation of friendlier environmental policies 

spillovers the states for higher environmental improvement, meanwhile the bidirectional effect of 

environmental sustainability on governmental regulatory can be viewed for Vietnam, implying the promotion 

of sustainable environment generates long-standing sustainability by implementing favorable roots in 

legislators formulation, but only this is possible if the state has achieved certain environmental performance. 

Similarly, both effective bureaucratic systems and technological innovation affect the environment in the 

Singaporean context. Putting the spotlight on the necessary requirement of reevaluating the government’s 

efficiency in addressing environmental issues, while allocating innovative incentives toward the national 

environment would facilitate their sustainability mission.   

   

   

                             Table 8. Granger Causality estimates for both Vietnam and Singapore   

  
   

Vietnam Granger causality test   

Variables  Effect  Variables  F-statistics  P value  decision   

IMP   →   ENS   6.178   0.036  Bidirectional   

  

ENS   →  IMP   7.984   0.018   causality   

RL   →   ENS   6.248   0.040   Unidirectional  

ENS   →   RL   0.471   0.799   Non-causality  

RQ   →   ENS   2.856   0.244   Non-causality  

ENS   →   RQ   8.996   0.004   Unidirectional  

GE   →   ENS   9.096   0.003   Unidirectional  

ENS   →   GE   2.093   0.351   Non-causality  

TIVN   →   ENS   0.205   0.871   Non-causality  

ENS   →   TIVN   9.135   0.001   Unidirectional  

    

Singapore 

Gra  

   

nger 

Causali  ty test   

  



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Variables   effect  Variables  F-statistics  P value  decision   

IMP   →   ENS   3.272   0.195   Non-causality  

ENS   →   IMP   2.288   0.318   Non-causality  

RL   →   ENS   4.901   0.051   Unidirectional  

ENS   →   RL   3.544   0.132   Non-causality  

  RQ   →   ENS   7.919   0.007  Bidirectional   

  
ENS   →   RQ   9.105   0.001  causality   

GE   →   ENS   7.211   0.010   Unidirectional  

ENS   →   GE   2.936   0.233   Non-causality   

TIVN   →   ENS   9.180   0.000   Unidirectional  

ENS   →   TIVN   1.935   0.388   Non-causality   

Source-Author’s findings         

2. Discussion and Summary   

The current paper explores the relationship between state capacity variables and environmental sustainability 

in the Singaporean and the Vietnamese context. In doing so, we employ an ARDL approach to catch the 

longrun & short-run association. The finding shows a positive association between impartial administration 

and environmental sustainability for both countries, nevertheless, this considerable impartiality among public 

& private administrations remains at this rate only in the short run for Vietnam, whereas starting to shift to 

insignificance in the long run. Many interpretations and conclusions can be drawn from this point. First, this 

estimation can be explained by the state’s level of corruption, in which, Vietnam has a certain fair share of 

corruption in public institutions (According to the international transparency index, Vietnam scores 32%); 

yet, corruption might not have a direct effect on sustainability, although such an effect can impede civil 

servants’ abilities to deliver the appropriate measures that could have addressed environmental issues.  Second 

from a legal spectrum; courts-for-example, are similarly, affiliated to the administra- tion’s scope, and have a 

decent portion of opinion on the environment. Albeit their independent standing ground, courts, especially 

tribunals dealing with environmental issues have become too political. Refereeing to the famous argument of 

(Breyer, 2021) in which, jurists are not different from politicians and their allegedly impartial judicial belief 

is a mere disguise of their higher political affiliation, which, transpires, as time elapses, alongside their verdicts 

in a more form of a conservative or liberal conviction. The accuracy of this reasoning lies on the ground, for 

instance a person's condition is more likely to affect the subjective choice, particularly, when administrative 

workers perceive available details of the interested person, hence, this undefined social status interferes in 

their professional judgments, as a result, reinforcing their unspoken biases. Furthermore, claimed economic 

victims through environmental deterioration, are typically identifiable individuals who lose their employment 

in the process, and, this human predisposition has prejudiced public policy and environmental law rather than 

appearing as ecological and environmental perseveration regulations.    

However, in a country such as Vietnam, the case of matching public administration impartiality with 

environmental agenda in terms of establishing a compromise between two variables might take longer. In 

other words, the long-run relationship would not be able to manifest in a presence of high corruption and poor 

impartiality (Fredriksson and Svensson, 2003). Although the situation, is justifiable when looking at the state’s 

income position, compared with Singapore, Vietnam is a middle-income country and this could have driven 



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the aforementioned poor performance (Treisman, 2000). Interestingly, the granger causality validates our 

assumption of a future effect of impartial administration in further directing to a more sustainable 

environment. Therefore, it is possible to raise the degree of voluntary adherence to environmental legislation 

by improving the perception of justice in the rulemaking process.   

Furthermore, both rules of law and regulatory quality improve environmental performance, and the granger 

causality provides further validation for our results. The following results are in line with (Khan et al., 2020a; 

Ali et al., 2019). Certainly, favorable regulations toward the environment counter negative impacts that are 

coming from the economy which further stimulates higher environmental deterioration. Although, greater 

emphasis on stricter regulation might retroactively harm the pace of economic growth unless a certain 

threshold of economic strength has been achieved, in which the government is able to coincide environmental 

agendas with macroeconomic factors. On one side, further tightening environmental legislation such as 

imposing high C02 taxation, and emphasizing only renewable energy consummation, would reduce potential 

investors and FDI inflows, such a scenario is possible for Singapore.   

Additionally, it is thought that nations that support the rule of law and embraces positive sustainable 

regulations will incentivize their citizens to create groups with a shared objective of addressing environmental 

sustainability. This is likely for Singapore, but as a rapidly developing country, it would be hard for Vietnam 

to reach an impressive environmental performance, while maintaining its economic flows, assumingly, later, 

after reaching a satisfactory economic development it might eventually become difficult for the state to 

formulate healthier environmental measures, due to the plausibility of an already ecological depletion.    

The variable government effectiveness brings to light the famous assumption that a nation's institutional 

factors greatly influence its economic performance, and nations with higher-quality institutions are better able 

to control environmental damage. Singapore shows a positive relationship both in the short run and the long 

run. Providing us, that, regardless, of the country’s regimes whether the country in question leans toward 

democracy or authoritarian, the effectiveness of bureaucratic is indeed an internal structure embodied within 

the heart of the civil servants, thus, transforming the general stereotypical trend that constitutes comparative 

study between democratic and non-democratic countries, as a mere, ineffective metric, when the case involves 

environmental protection. at the same time, the negative relationship that appears in the Vietnamese context 

can provide us with a larger explanation of an ineffective government albeit the country’s recent economic 

growth.   

On the other hand, investing in technological innovation displayed a negative interconnection with 

environmental sustainability in the long run. Many authors have shown that technological innovation could 

not transpire the general trend of sustainable development, through a mechanism led by technological progress 

(Adebayo, Kirikkaleli, 2021), unless the concept has been applied with a fundamental goal of sustainability 

attainment (Jaffe et al., 2005). On one side, the granger causality reveals a causality effect between 

technological innovation and sustainability, providing us with an alternative threshold of believing, that 

technological progress improves environmental sustainability, however, this is validated for the Singaporean 

context, whereas, a causality running for sustainability to the technological sector had been detected for 

Vietnam. This implies, that emphasizing on improving sustainability would have a direct effect on 

technological innovation, which, in turn, could stimulate the market to propose certain technological products 

in order to accommodate the high sustainability demand. Overall, technology and nature are interdependent 

within, whilst, technology is formed to provide means, equipment, and machinery for safeguarding the 

environment and conserving its resources from climatic changes and damage, in retrospect, the environment 

offers raw materials required to produce technology. Overall, matching administration bodies with 

environmental sustainability will offer higher opportunities for the ASEAN countries to achieve rapid 

sustainability. Although some Asian states would transit faster toward more environmentally sustainable 



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societies, others, due to their economic boom and immature technological innovation, the question of 

prioritizing the environment would be unlikely to be on the table. Finally, the current study has certain 

limitation; to begin with, we merely focused on two Association of Southeast Asian Nations (ASEAN) namely 

Singapore and Vietnam, therefore the generalization of this findings toward other ASEAN states should be 

avoided, with that in mind, upcoming researches could consider incorporating other countries within the 

regional framework in their studies. Additionally, it will also be an enrichment if future authors could compare 

Eastern Asian states with ASEAN countries, considering how some potential countries such as South Korea 

have been growing in the past thirty years at an unprecedented rate; in the context of adopting advanced 

technological innovation with sustainability deliverance, while competing with China, Japan and Singapore. 

It will also be interesting if future studies could examine sustainability from an infrastructure threshold. It is 

also worth noting, the current study only uses ARDL and granger test, therefore future scholars could employ 

a VAR model with impulse responses and variance decomposition and other models to further analyze future 

shock while providing robustness for future effect predictions.   

   

Funding: This research received no external funding.   

Data Availability Statement: Data availability is not tied to this article as all the data are available online 

and can be accessed through the mentioned sources in the study. Conflicts of Interest: The authors declare 

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