Abstract
Sustainable development has received significant attention due to rapidly rising environmental issues, and finding solutions to these issues caused by various indicators are the subject of research nowadays. To this end, the increasing globalization and institutional quality to address environmental challenges have become hot subject and need better attention. Accordingly, this study enhances the literature by examining the role of political stability, the rule of law, control of corruption, and globalization on the environment for 14 Middle Eastern and North African (MENA) countries between 1996 & 2018, applying cross-sectional augmented autoregressive distributed lags (CS-ARDL) approach. The short and long-run estimates obtained from CS-ARDL confirm that globalization, the rule of law, political stability, and corruption control significantly reduce carbon emissions (CO2e). Contrarily, energy production, financial development, and economic growth have significant positive effects, suggesting they raise CO2e. The study also estimates a robustness analysis with the Driscoll-Kraay estimator, confirming results on signs and magnitude identical to those with CS-ARDL. These results drive the MENA countries to adhere to environmental standards to reduce CO2e strictly. Environmental-friendly industrial techniques should be employed, mainly while producing. The governments of these countries should facilitate the governance process through the globalization of environmental products to ensure long-term environmental sustainability.
Graphical Abstract
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
Notes
Visit http://globalization.kof.ethz.ch for further details.
Abbreviations
- CADF :
-
Cross-Sectionally Augmented Dickey-Fuller
- CCE :
-
Common Correlated Effect
- CD :
-
Cross-sectional Dependence
- CIPS :
-
Cross-sectionally Augmented Im, Pesaran and Shin
- CO 2 e :
-
Carbon dioxide emissions
- CS-ARDL :
-
Cross-sectionally augmented ARDL
- DK :
-
Driscoll-Kraay
- DH :
-
Dumitrescu-Hurlin
- EKC :
-
Environmental Kuznets Curve
- FDI :
-
Foreign Direct Investment
- GDP :
-
Gross Domestic Product
- HNC :
-
Homogeneous Non-Causal Relationship
- IPS :
-
Im, Pesaran and Shin
- MENA :
-
Middle East and North Africa
- SH :
-
Slop Homogeneity
- SSA :
-
Sub-Saharan Africa
- WDI :
-
World development indicators
- WGI :
-
World Governance Indicators
References
Abid M (2016) Impact of economic, financial, and institutional factors on CO2 emissions: Evidence from Sub-Saharan Africa economies. Util Policy 41:85–94. https://doi.org/10.1016/j.jup.2016.06.009
Abid M (2017) Does economic, financial and institutional developments matter for environmental quality? A comparative analysis of EU and MEA countries. J Environ Manage 188:183–194. https://doi.org/10.1016/j.jenvman.2016.12.007
Aisen A, Veiga FJ (2013) How does political instability affect economic growth? Eur J Polit Econ 29:151–167. https://doi.org/10.1016/j.ejpoleco.2012.11.001
Alharthi M, Dogan E, Taskin D (2021) Analysis of CO2 emissions and energy consumption by sources in MENA countries: evidence from quantile regressions. Environ Sci Pollut Res 28:38901–38908. https://doi.org/10.1007/s11356-021-13356-0
Al-Mulali U, Ozturk I, Lean HH (2015) The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe. Nat Hazards 79:621–644. https://doi.org/10.1007/s11069-015-1865-9
Altıntaş H, Kassouri Y (2020) Is the environmental Kuznets Curve in Europe related to the per-capita ecological footprint or CO2 emissions? Ecol Indic 113:106187. https://doi.org/10.1016/j.ecolind.2020.106187
Arminen H, Menegaki AN (2019) Corruption, climate and the energy-environment-growth nexus. Energy Econ 80:621–634. https://doi.org/10.1016/J.ENECO.2019.02.009
Babiker MH, Fehaid MA (2012) Climate change policy in the MENA region: prospects, challenges and the implication of market instruments. Edward Elgar Publishing
Banerjee A, Carrion-i-Silvestre JL (2017) Testing for Panel Cointegration Using Common Correlated Effects Estimators. J Time Ser Anal 38:610–636. https://doi.org/10.1111/JTSA.12234
Bhowmik R, Rahut DB, Syed QR (2022) Investigating the Impact of Climate Change Mitigation Technology on the Transport Sector CO2 Emissions: Evidence From Panel Quantile Regression. Front Environ Sci 10:1–12. https://doi.org/10.3389/fenvs.2022.916356
Charfeddine L, Kahia M (2019) Impact of renewable energy consumption and financial development on CO2 emissions and economic growth in the MENA region: A panel vector autoregressive (PVAR) analysis. Renew Energy 139:198–213. https://doi.org/10.1016/j.renene.2019.01.010
Chen H, Hao Y, Li J, Song X (2018) The impact of environmental regulation, shadow economy, and corruption on environmental quality: Theory and empirical evidence from China. J Clean Prod 195:200–214. https://doi.org/10.1016/j.jclepro.2018.05.206
Chudik A, Pesaran MH (2015) Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. J Econ 188:393–420. https://doi.org/10.1016/j.jeconom.2015.03.007
Chudik A, Mohaddes K, Pesaran MH, Raissi M (2017) Is there a debt-threshold effect on output growth? Rev Econ Stat 99:135–150. https://doi.org/10.1162/REST_a_00593
Cole MA (2007) Corruption, income and the environment: An empirical analysis. Ecol Econ 62:637–647. https://doi.org/10.1016/j.ecolecon.2006.08.003
Damania R, Fredriksson PG, List JA (2003) Trade liberalization, corruption, and environmental policy formation: Theory and evidence. J Environ Econ Manage 46:490–512. https://doi.org/10.1016/S0095-0696(03)00025-1
Dasgupta S, Laplante B, Wang H, Wheeler D (2002) Confronting the environmental Kuznets curve. J Econ Perspect 16:147–168
Destek MA, Sarkodie SA (2019) Investigation of environmental Kuznets curve for ecological footprint: The role of energy and financial development. Sci Total Environ 650:2483–2489. https://doi.org/10.1016/j.scitotenv.2018.10.017
Ding Q, Khattak SI, Ahmad M (2021) Towards sustainable production and consumption: Assessing the impact of energy productivity and eco-innovation on consumption-based carbon dioxide emissions (CCO2) in G-7 nations. Sustain Prod Consum 27:254–268. https://doi.org/10.1016/j.spc.2020.11.004
Dogan E, Ozturk I (2017) The influence of renewable and non-renewable energy consumption and real income on CO2 emissions in the USA: evidence from structural break tests. Environ Sci Pollut Res 24:10846–10854. https://doi.org/10.1007/s11356-017-8786-y
Dogan E, Seker F (2016) The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries. Renew Sustain Energy Rev 60:1074–1085
Dogan E, Seker F, Bulbul S (2017) Investigating the impacts of energy consumption, real GDP, tourism and trade on CO2 emissions by accounting for cross-sectional dependence: A panel study of OECD countries. Curr Issues Tour 20:1701–1719. https://doi.org/10.1080/13683500.2015.1119103
Dong K, Sun R, Jiang H, Zeng X (2018) CO2 emissions, economic growth, and the environmental Kuznets curve in China: What roles can nuclear energy and renewable energy play? J Clean Prod 196:51–63. https://doi.org/10.1016/j.jclepro.2018.05.271
Dreher A (2006) Does globalization affect growth? Evidence from a new index of globalization. Appl Econ 38:1091–1110. https://doi.org/10.1080/00036840500392078
Driscoll JC, Kraay AC (1998) Consistent covariance matrix estimation with spatially dependent panel data. Rev Econ Stat 80:549–559. https://doi.org/10.1162/003465398557825
Dumitrescu E-II, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29:1450–1460
Emas R (2013) The concept of sustainable development: definition and defining principles
Farooq S, Ozturk I, Majeed MT, Akram R (2022) Globalization and CO2 emissions in the presence of EKC: A global panel data analysis. Gondwana Res 106:367–378. https://doi.org/10.1016/j.gr.2022.02.002
Farouq IS, Umar Sambo N, Ahmad AU et al (2021) Does financial globalization uncertainty affect CO2 emissions? Empirical evidence from some selected SSA countries. Quant Financ Econ 5:247–263. https://doi.org/10.3934/qfe.2021011
Galinato GI, Galinato SP (2012) The effects of corruption control, political stability and economic growth on deforestation-induced carbon dioxide emissions. Environ Dev Econ 17:67–90. https://doi.org/10.1017/S1355770X11000222
Gao Y, Gao X, Zhang X (2017) The 2 °C global temperature target and the evolution of the long-term goal of addressing climate change—from the united nations framework convention on climate change to the paris agreement. Engineering 3:272–278. https://doi.org/10.1016/J.ENG.2017.01.022
Goel RK, Herrala R, Mazhar U (2013) Institutional quality and environmental pollution: MENA countries versus the rest of the world. Econ Syst 37:508–521. https://doi.org/10.1016/J.ECOSYS.2013.04.002
Greaker M (2003) Strategic environmental policy; eco-dumping or a green strategy? J Environ Econ Manage 45:692–707. https://doi.org/10.1016/S0095-0696(02)00053-0
Greenidge K, McIntyre M, Yun H (2016) Structural Reform and Growth: What Really Matters? Evidence from the Caribbean
Grossman G, Krueger A (1991) Environmental Impacts of a North American Free trade agreement. Natl Bur Econ Reshttps://doi.org/10.3386/w3914
Grossman GM, Krueger AB (1995) Economic Growth and the Environment. Q J Econ 110:353–377. https://doi.org/10.2307/2118443
Gygli S, Haelg F, Potrafke N, Sturm JE (2019) The KOF Globalisation Index – revisited. Rev Int Organ 14:543–574. https://doi.org/10.1007/s11558-019-09344-2
Haseeb A, Xia E, Danish, et al (2018) Financial development, globalization, and CO2 emission in the presence of EKC: evidence from BRICS countries. Environ Sci Pollut Res 25:31283–31296. https://doi.org/10.1007/s11356-018-3034-7
Hashem Pesaran M, Yamagata T (2008) Testing slope homogeneity in large panels. J Econom 142:50–93. https://doi.org/10.1016/j.jeconom.2007.05.010
Hussain J (2022) Zhou K (2022) Globalization, industrialization, and urbanization in Belt and Road Initiative countries: implications for environmental sustainability and energy demand. Environ Sci Pollut Res 1:1–19. https://doi.org/10.1007/S11356-022-21520-3
Hussain M, Dogan E (2021) The role of institutional quality and environment-related technologies in environmental degradation for BRICS. J Clean Prod 304:127059. https://doi.org/10.1016/j.jclepro.2021.127059
Hussain J, Khan A, Zhou K (2020) The impact of natural resource depletion on energy use and CO 2 emission in Belt & Road Initiative countries : a cross-country analysis. Energy 199:117409. https://doi.org/10.1016/j.energy.2020.117409
Im KS, Pesaran MH, Shin Y (2003) Testing for unit roots in heterogeneous panels. J Econom 115:53–74. https://doi.org/10.1016/S0304-4076(03)00092-7
Inglesi-Lotz R, Dogan E (2018) The role of renewable versus non-renewable energy to the level of CO2 emissions a panel analysis of sub- Saharan Africa’s Βig 10 electricity generators. Renew Energy 123:36–43. https://doi.org/10.1016/j.renene.2018.02.041
IPCC (2022) AR6 synthesis report: climate change 2022 — IPCC. In: AR6 synthesis report: climate change 2022 — IPCC
Joo YJ, Kim CS, Yoo SH (2015) Energy consumption, Co2 emission, and economic growth: Evidence from Chile. Int J Green Energy 12:543–550. https://doi.org/10.1080/15435075.2013.834822
Jung J (2020) Institutional quality, FDI, and productivity: A theoretical analysis. Sustain 12:7057. https://doi.org/10.3390/su12177057
Kao C (1999) Spurious regression and residual-based tests for cointegration in panel data. J Econom 90:1–44. https://doi.org/10.1016/S0304-4076(98)00023-2
Kaufmann D, Kraay A, Mastruzzi M (2009) Governance matters VII: aggregate and individual governance indicators 1996-2007. In: Non-state actors as standard setters, pp 146–188
Khan MM, Zaman K, Irfan D et al (2016) Triangular relationship among energy consumption, air pollution and water resources in Pakistan. J Clean Prod 112:1375–1385. https://doi.org/10.1016/j.jclepro.2015.01.094
Khan A, Chenggang Y, Bano S, Hussain J (2020a) The empirical relationship between environmental degradation, economic growth, and social well-being in Belt and Road Initiative countries. Environ Sci Pollut Res 27:30800–30814. https://doi.org/10.1007/s11356-020-09058-8
Khan A, Muhammad F, Chenggang Y, et al (2020b) The impression of technological innovations and natural resources in energy-growth-environment nexus: a new look into BRICS economies. Sci Total Environ 727:. https://doi.org/10.1016/j.scitotenv.2020.138265
Khan A, Chenggang Y, Hussain J, Kui Z (2021) Impact of technological innovation, financial development and foreign direct investment on renewable energy, non-renewable energy and the environment in Belt & Road Initiative countries. Renew Energy.https://doi.org/10.1016/j.renene.2021.02.075
Koçak E, Ulucak ZŞ (2019) The effect of energy R&D expenditures on CO 2 emission reduction: estimation of the STIRPAT model for OECD countries. Environ Sci Pollut Res 26:14328–14338. https://doi.org/10.1007/s11356-019-04712-2
Kuznets S (1955) Economic growth and income inequality. Am Econ Rev XLV. https://doi.org/10.1257/aer.91.1.i
Kuznets S (2009) The American Economic Review. Am Econ Rev 99:1–6. https://doi.org/10.1257/aer.99.1.i
Larraín BF, Tavares J (2004) Does foreign direct investment decrease corruption? Cuad Econ-Lat Am J Econ 41:217–230. https://doi.org/10.4067/S0717-68212004012300003
Lau LS, Choong CK, Eng YK (2014) Carbon dioxide emission, institutional quality, and economic growth: Empirical evidence in Malaysia. Renew Energy 68:276–281. https://doi.org/10.1016/j.renene.2014.02.013
Le HP, Ozturk I (2020) The impacts of globalization, financial development, government expenditures, and institutional quality on CO2 emissions in the presence of environmental Kuznets curve. Environ Sci Pollut Res 27:22680–22697. https://doi.org/10.1007/s11356-020-08812-2
Muhammad S, Long X (2021) Rule of law and CO2 emissions: A comparative analysis across 65 belt and road initiative(BRI) countries. J Clean Prod 279:123539. https://doi.org/10.1016/j.jclepro.2020.123539
Murshed M, Rashid S, Ulucak R et al (2022) Mitigating energy production-based carbon dioxide emissions in Argentina: the roles of renewable energy and economic globalization. Environ Sci Pollut Res 29:16939–16958. https://doi.org/10.1007/s11356-021-16867-y
Nasir MA, Duc Huynh TL, Xuan Tram HT (2019) Role of financial development, economic growth & foreign direct investment in driving climate change: A case of emerging ASEAN. J Environ Manage 242:131–141. https://doi.org/10.1016/j.jenvman.2019.03.112
Obobisa ES, Chen H, Mensah IA (2022) The impact of green technological innovation and institutional quality on CO2 emissions in African countries. Technol Forecast Soc Change 180:. https://doi.org/10.1016/j.techfore.2022.121670
Panayotou T (1997) Demystifying the environmental Kuznets curve: Turning a black box into a policy tool. Environ Dev Econ 2:465–484. https://doi.org/10.1017/S1355770X97000259
Pedroni P (2004) Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econom Theory 20:597–625. https://doi.org/10.1017/S0266466604203073
Pesaran MH (2006) Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74:967–1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x
Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econom 22:265–312. https://doi.org/10.1002/jae.951
Pesaran MH (2015) Testing Weak Cross-Sectional Dependence in Large Panels. Econom Rev 34:1089–1117. https://doi.org/10.1080/07474938.2014.956623
Pesaran MH (2020) General diagnostic tests for cross-sectional dependence in panels. Empir Econ 60:13–50. https://doi.org/10.1007/s00181-020-01875-7
Purcel AA (2019) Does political stability hinder pollution? Evidence from developing states. Econ Res Guard 9:75–98
Rafindadi AA, Yusof Z, Zaman K et al (2014) The relationship between air pollution, fossil fuel energy consumption, and water resources in the panel of selected Asia-Pacific countries. Environ Sci Pollut Res 21:11395–11400. https://doi.org/10.1007/s11356-014-3095-1
Rahman MM (2020) Environmental degradation: The role of electricity consumption, economic growth and globalisation. J Environ Manage 253:109742. https://doi.org/10.1016/J.JENVMAN.2019.109742
Salman M, Long X, Dauda L, Mensah CN (2019) The impact of institutional quality on economic growth and carbon emissions: Evidence from Indonesia, South Korea and Thailand. J Clean Prod 241:118331. https://doi.org/10.1016/J.JCLEPRO.2019.118331
Sarkodie SA, Adams S (2018) Renewable energy, nuclear energy, and environmental pollution: Accounting for political institutional quality in South Africa. Sci Total Environ 643:1590–1601. https://doi.org/10.1016/j.scitotenv.2018.06.320
Sayan S (2009) Economic performance in the Middle East and North Africa: Institutions, corruption and reform. Routledge
Sekali J, Bouzahzah M (2019) Financial development and environmental quality empirical evidence for Morocco. Int J Energy Econ Policy 9:67–74. https://doi.org/10.32479/ijeep.7266
Seker F, Ertugrul HM, Cetin M (2015) The impact of foreign direct investment on environmental quality: A bounds testing and causality analysis for Turkey. Renew Sustain Energy Rev 52:347–356. https://doi.org/10.1016/j.rser.2015.07.118
Shahbaz M, Ozturk I, Afza T, Ali A (2013) Revisiting the environmental Kuznets curve in a global economy. Renew Sustain Energy Rev 25:494–502
Shahbaz M, Mallick H, Mahalik MK, Loganathan N (2015) Does globalization impede environmental quality in India? Ecol Indic 52:379–393. https://doi.org/10.1016/J.ECOLIND.2014.12.025
Shahbaz M, Solarin SA, Ozturk I (2016) Environmental Kuznets Curve hypothesis and the role of globalization in selected African countries. Ecol Indic 67:623–636. https://doi.org/10.1016/J.ECOLIND.2016.03.024
Shahbaz M, Shahzad SJH, Mahalik MK (2018) Is Globalization Detrimental to CO2 Emissions in Japan? New Threshold Analysis. Environ Model Assess 23:557–568. https://doi.org/10.1007/s10666-017-9584-0
Sheng Yin X, Hussain J (2021) The implication of technological innovation and tourism development on FDI-growth-environment nexus in Association of Southeast Asian countries: a simultaneity modeling analysis. Energy Sources, Part B Econ Plan Policy 16:878–902. https://doi.org/10.1080/15567249.2021.1971801
Skorpen Wikan V (2015) What is ‘Neoliberalism’, and how does it relate to globalization? E-International Relations 1–9
Slesman L, Baharumshah AZ, Ra’ees W, (2015) Institutional infrastructure and economic growth in member countries of the Organization of Islamic Cooperation (OIC). Econ Model 51:214–226. https://doi.org/10.1016/J.ECONMOD.2015.08.008
Uzar U (2020) Political economy of renewable energy: Does institutional quality make a difference in renewable energy consumption? Renew Energy 155:591–603. https://doi.org/10.1016/j.renene.2020.03.172
Wang L, Vo XV, Shahbaz M, Ak A (2020) Globalization and carbon emissions: Is there any role of agriculture value-added, financial development, and natural resource rent in the aftermath of COP21? J Environ Manage 268:. https://doi.org/10.1016/J.JENVMAN.2020.110712
Wawrzyniak D, Doryń W (2020) Does the quality of institutions modify the economic growth-carbon dioxide emissions nexus? Evidence from a group of emerging and developing countries. Econ Res Istraz 33:124–144. https://doi.org/10.1080/1331677X.2019.1708770
WDI (1992) World development report 1992. Development and the environment
WDI (2020) World Development Indicators. In: DataBank - World Dev. Indic. https://datatopics.worldbank.org/world-developmentindicators/. Accessed 4 Jan 2022
Welsch H (2004) Corruption, growth, and the environment: A cross-country analysis. Environ Dev Econ 9:663–693. https://doi.org/10.1017/S1355770X04001500
Wen J, Ali W, Hussain J et al (2022) Dynamics between green innovation and environmental quality: new insights into South Asian economies. Econ Polit 39:543–565. https://doi.org/10.1007/s40888-021-00248-2
Westerlund J (2005) New simple tests for panel cointegration. Econom Rev 24:297–316. https://doi.org/10.1080/07474930500243019
Westerlund J, Edgerton DL (2008) A simple test for cointegration in dependent panels with structural breaks. Oxf Bull Econ Stat 70:665–704. https://doi.org/10.1111/j.1468-0084.2008.00513.x
Yameogo CEW, Omojolaibi JA, Dauda ROS (2021) Economic globalisation, institutions and environmental quality in Sub-Saharan Africa. Res Glob 3:100035
Yin Y, Xiong X, Hussain J (2021) The role of physical and human capital in FDI-pollution-growth nexus in countries with different income groups: A simultaneity modeling analysis. Environ Impact Assess Rev 91:106664. https://doi.org/10.1016/j.eiar.2021.106664
You W, Lv Z (2018) Spillover effects of economic globalization on CO2 emissions: A spatial panel approach. Energy Econ 73:248–257. https://doi.org/10.1016/j.eneco.2018.05.016
Zhang C, Zhou X (2016) Does foreign direct investment lead to lower CO2 emissions? Evidence from a regional analysis in China. Renew Sustain Energy Rev 58:943–951
Zhang D, Ozturk I, Ullah S (2022) Institutional factors-environmental quality nexus in BRICS: a strategic pillar of governmental performance. Econ Res Istraz 35:5777–5789. https://doi.org/10.1080/1331677X.2022.2037446
Author information
Authors and Affiliations
Contributions
Deng XU: conceptualization, methodology, formal analysis, software, writing- original draft preparation, and investigation. Jamal Hussain: data Curation, investigation, visualization, writing- reviewing and editing.
Corresponding author
Ethics declarations
Ethical approval
Not applicable.
Consent to participate
Not applicable.
Consent to publish
Not applicable.
Competing interests
The authors declare that they do not compete for financial or non-financial interests.
Additional information
Responsible Editor: Eyup Dogan
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Highlights
• We examine the factors of CO2 emissions of MENA countries from 1996-2018.
• We applied advanced panel data approaches.
• Results suggested that rule of law decreases carbon emissions.
• Energy production and financial development increases carbon emissions.
• Globalization is found helpful in controlling carbon emissions.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Xu, D., Hussain, J. Globalization, institutions, and environmental quality in Middle East and North African countries. Environ Sci Pollut Res 30, 68951–68968 (2023). https://doi.org/10.1007/s11356-023-27348-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-023-27348-9