مجلة النمو الاقتصادي والمقاولاتية
Volume 8, Numéro 3, Pages 86-95
2025-10-19
How Institutional Quality Influences The Economic Development-environmental Quality Relationship In Oil-rich Countries: A Non-linear Panel Threshold Regression Study
Authors : Boudjana Reda Hamza .
Abstract
This paper investigates how institutional quality moderates the relationship between economic growth and environmental quality in oil-dependent countries (some of the highest per capita CO₂ emitters in the world) using a Panel Threshold Regression (PTR) model from 20 oil-dependent economies during the period 1996–2023. The results reveal that economic development generally increases CO₂ emissions, but this negative effect is substantially reduced when institutional quality surpasses a certain level; in line with the non-linear relationship: countries with better institutions can soften the environmental costs of growth, whereas countries with weak governance structures suffer from a steeper trade-off between economic growth and environmental sustainability. The paper also demonstrates that human capital development, trade openness, and financial development help to lower emissions, while electricity consumption continues to be an important driver of environmental degradation. This study contributes to the Environmental Kuznets Curve debate by demonstrating how institutional quality mediates the relationship between economic development and environmental quality in oil-dependent economies using a synthesized governance index and considering threshold effects.
Keywords
Co2 emissions ; economic development ; institutional quality ; Oil rich countries ; PTR
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