Institutional factors-environmental quality nexus in BRICS: a strategic pillar of governmental performance

Abstract

A better understanding of the link between institutional factors and CO2 emissions is essential for economists and policymakers. Therefore, this study explores the dynamic impact of institutional factors on carbon emissions in BRICS economies for the period from 1996 to 2019 by using the panel NARDL approach. We found that positive shocks in corruption and law & order and government stability have a negative impact on carbon emissions in the long-run. However, the negative shocks in corruption and law & order exert a positive impact on carbon emissions, while negative shocks in government stability and political stability have a negative impact on carbon emissions in the long-run. These findings confirm the significance of institutional factors in alleviating carbon emissions in BRICS countries since institutional factors not only influence pollution emissions directly but also indirectly through foreign direct investment and economic growth. The findings recommend that there is a need to strengthen institutions to promote green growth and a healthy sustainable environment.