Environmental protection expenditure, digital government, and EU membership: Cross-country panel evidence

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Type of the article: Research Article

Abstract
Environmental protection accounts for a small share of public budgets, which makes its determinants a practical policy question. Digital administration is expected to improve public resource allocation, and environmental protection is an information-intensive function where that expectation should be visible. This study measures the association between digital government development and the share of public expenditure allocated to environmental protection, compares it with the other nine budget functions, and describes Latvia, Ukraine, and Armenia as illustrations of divergent expenditure trajectories under broadly comparable digital government development. The analysis covers 592 country-year observations for 68 economies, including 13 post-Soviet economies, over 2004 to 2024, combining the United Nations E-Government Development Index with IMF Government Finance Statistics in a two-way fixed effects design with wild cluster bootstrap inference. Digital government development is not associated with the environmental share (β = –0.002, p = 0.997), and environmental protection records the smallest standardized effect among the ten functions, indistinguishable from zero, compared with 0.451 for social protection. European Union membership is associated with a higher environmental share (β = 0.331, p = 0.004), although the estimate is identified from four changes of membership status. A stronger association inside the post-Soviet subsample does not survive a specification that allows every coefficient to differ by group. The study therefore finds no evidence that higher digital government development alone is systematically associated with a larger environmental share of public budgets.

Acknowledgments
The contribution of Liudmyla Zakharkina to this study was carried out within the framework of the research project “GovTech for Ukraine: A Digital, Secure, Transparent, and Equitable State in Times of War and Post-War Reconstruction” (state registration No. 0126U000544), funded by the Ministry of Education and Science of Ukraine.

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    • Figure 1. Standardized effect of the E-Government Development Index across COFOG divisions
    • Figure 2. E-government development and environmental protection expenditure in Latvia, Ukraine, and Armenia
    • Figure 3. Distribution of within-country correlations between the index and environmental protection expenditure
    • Table 1. Variables, definitions, and sources
    • Table 2. Descriptive statistics, estimation sample
    • Table 3. Digital government and environmental protection expenditure, two-way fixed effects
    • Table 4. Digital government across the ten COFOG divisions
    • Table 5. Three focus economies
    • Table 6. Robustness checks, global sample
    • Table A1. Economies in the estimation sample
    • Table B1. Pairwise correlations, estimation sample
    • Conceptualization
      Nora Ayvazyan, Liudmyla Zakharkina, Alina Danileviča, Alina Brychko, Deniss Djakons, Valentina Djakona, Olga Niemi
    • Data curation
      Nora Ayvazyan, Alina Brychko, Deniss Djakons, Valentina Djakona
    • Formal Analysis
      Nora Ayvazyan, Liudmyla Zakharkina, Alina Brychko, Deniss Djakons
    • Investigation
      Nora Ayvazyan, Alina Danileviča, Alina Brychko, Deniss Djakons, Olga Niemi
    • Resources
      Nora Ayvazyan, Alina Danileviča, Deniss Djakons, Valentina Djakona
    • Visualization
      Nora Ayvazyan, Alina Brychko, Deniss Djakons, Valentina Djakona, Olga Niemi
    • Writing – original draft
      Nora Ayvazyan, Liudmyla Zakharkina, Alina Danileviča, Alina Brychko, Deniss Djakons, Valentina Djakona, Olga Niemi
    • Methodology
      Liudmyla Zakharkina, Alina Danileviča, Alina Brychko, Valentina Djakona, Olga Niemi
    • Project administration
      Liudmyla Zakharkina
    • Supervision
      Liudmyla Zakharkina
    • Validation
      Liudmyla Zakharkina, Alina Danileviča, Alina Brychko, Valentina Djakona
    • Writing – review & editing
      Liudmyla Zakharkina, Valentina Djakona, Olga Niemi
    • Software
      Alina Danileviča, Deniss Djakons, Olga Niemi