Institutional quality and environmental sustainability nexus: Fresh evidence of most polluted countries in a CS–ARDL framework

Abstract

Institutional quality (IQ) would contribute to environmental sustainability and could be helping to verify the Environmental Kuznets curve in any economy. To test whether IQ is sufficient enough to control pollution in the most polluted economies, the present research investigates the effects of IQ on CO2 emissions controlling economic growth, globalization, and energy proxies in the models of the 33 most polluted countries from 1990 to 2021 by using cross‐sectional dependence techniques. The long‐run results corroborate the Environmental Kuznets curve in the sample countries. Moreover, clean energy reduces and fossil fuels increase CO2 emissions. Furthermore, globalization and regulatory quality reduce CO2 emissions. The short‐run findings also validate the long‐run results. In addition, we also find the bidirectional causality of CO2 emissions with economic growth, clean energy, fossil fuels, and globalization. Moreover, one‐way causality is found from CO2 emissions to regulatory quality and political stability. We recommend promoting trade globalization, clean energy usage, and regulatory quality to support environmental sustainability.