Moderating Effects of Institutions and Economic Complexity on Green Growth

Abstract

In recent years, there has been a steady increase in environmental degradation, which has emerged as the primary cause of climatic variations. As a result, policymakers and researchers are investigating the factors that influence environmental quality. Previous studies have provided limited information on the effects of the interaction of globalization with economic complexity and institutions on the ecological footprint of 34 countries that are part of the Belt and Road Initiative (BRI). Therefore, this research aims to fill this gap by examining the factors mentioned above and their impact on the ecological footprint of the BRI countries. For empirical analysis, we used the two-step system generalized method of moments (GMM) that may address the endogeneity problem by orthogonal transformation and make the estimators more robust than the difference GMM. According to the findings of this research, globalization has a notable, beneficial impact after its interaction with economic complexity and institutions on the ecological footprint. In contrast, economic complexity alone, economic growth, and urban population have significant and positive effects on the environment. Institutions alone negatively affect the environmental footprint of the BRI countries. These conclusions offer valuable insights about the role of globalization, institutions, and economic complexity in promoting sustainable environmental development among the BRI participating nations. Additionally, this research provides a valuable reference point for ensuring ecological safety in other countries worldwide. The study may also shed light on important insights that policymakers and practitioners should consider while pursuing sustainable development policies.