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The pathway toward pollution mitigation: Does institutional quality make a difference?
Author(s) -
Ulucak Recep
Publication year - 2020
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.2597
Subject(s) - environmental quality , economics , sustainability , cointegration , kuznets curve , renewable energy , language change , greenhouse gas , porter hypothesis , natural resource economics , public economics , business , environmental economics , economic growth , environmental policy , political science , ecology , econometrics , biology , art , electrical engineering , literature , engineering , law
Institutions in a country ensure sustainability and play a significant role in economic development by encouraging best practices in governmental interventions. A strong and transparent institutional framework opposes corruption and improves the management of public finances, which may also yield desired outcomes for the environment and society. However, the role of institutions in environmental issues is still under‐investigated in the literature. This study aims to investigate the relationship between renewable energy consumption, institutional quality, economic performance, and carbon dioxide (CO 2 ) emissions in 18 Asia‐Pacific Economic Cooperation (APEC) countries for the period 1992–2015. To this end, robust panel data estimation techniques are employed. The study confirms that a cointegration relationship exists among study variables. Evidence from the empirical results reveals that institutions have beneficial environmental effects. Likewise, renewable energy reduces carbon emissions to mitigate climate change, but nonrenewable energy harms the environment. Institutional quality helps to form the environmental Kuznets curve hypothesis in APEC countries. Finally, causality analysis refers to the unidirectional causality running from institutional quality to CO 2 emissions. Results reveal that stronger institutional arrangements in APEC countries could be the solution for implementations of effective environmental regulation to combat rising environmental challenges without sacrificing higher economic growth.