Exploring the role of governance and institutional indicators in environmental degradation across global regions

Abstract

The United Nations Sustainable Development Goals (SDGs) essentially includes climate action that targets the protection and conservation of the natural environment and human lives. After establishing the existence and addressing the associated endogeneity problem, a two-step system-GMM was deployed to examine the influence of potential macroeconomic and socioeconomic factors alongside six categories of governance indicators and institutional quality on carbon dioxide (CO 2 ) emission across selected 183 countries, first in a single panel and then in sub-divided panels of five regions: Sub-Saharan Africa (SSA); Middle East and North Africa (MENA); Europe & Central Asia (ECA); East & South Asia and the Pacific (ESAP); and the America. Importantly, the investigation reveals that the governance indicators (i.e control of corruption, government effectiveness, political stability/terrorism, regulatory quality, rule of law, and voice and accountability) and institutional quality aggravate carbon emission in the overall panel while these influences vary across the region. Moreover, financial development and total natural resource are found to abate emission from CO 2 emission in the overall panel while value added from agricultural and industrial activities alongside trade openness, land area, information and communication technology (ICT), population, and income per capita are detrimental to environmental quality. On policy relevance, the results overwhelmingly point policymakers to the criticality of the aspects of governance, institution quality, and socioeconomic factors in driving environmental sustainability goals across respective regions and particularly in the comprising countries. • An examination of carbon emission across five global regions. • Environmental effects of macroeconomic and socioeconomic factors across 183 countries. • The governance and institutional quality aggravate carbon emission in varying degree. • Financial development and total natural resource abate emission from carbon emission. • Trade, ICT, population, agricultural and industrial activities, and income per capita hampers environment quality.