Dose institutional quality influences the relationship between urbanization and CO2 emissions?

ABSTRACT

As a result of rapid economic expansion, increased energy use, and urbanization, global warming and climate change have become serious challenges in recent decades. Institutional quality can be the remedy to impede the harmful effect of factors on environmental quality. This study investigates the impact that urbanization and institutional quality on environmental quality in in the Belt and Road Initiative (BRI) countries from 2002 to 2019. By using two step generalized method of moment, the findings shows that urbanization leads to an increase in carbon dioxide emissions and a decline in environmental quality. On the other hand, the square term of urbanization indicates that an increase in urbanization leads to a reduction in emissions at a later stage after reach a certain level. Education, on the other hand, has the reverse impact of increasing carbon emissions; economic growth, foreign direct investment, and government effectiveness all boost carbon emissions. In a similar vein, the interaction between urbanization and the effectiveness of the government is unfavorable, underscoring the transformative role that the effectiveness of the government plays in leading to environmental sustainability. Finally, the findings of this study have considerable policy implication for the sample countries.