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Institutional Quality as an Antidote to the Environmental Resource Curse: Evidence from CO₂ Emissions in MENA Economies

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  • Mabrouki, Mohamed

Abstract

This study examines the complex relationships between institutional quality, natural capital, and CO₂ emissions in the Middle East and North Africa (MENA) region from 2000 to 2022. Using a comprehensive panel dataset across 10 MENA countries, we employ robust econometric techniques including fixed effects models in levels and first-differences, and system GMM estimators to address endogeneity and dynamic persistence. Our diagnostic framework incorporates tests for cross-sectional dependence, slope heterogeneity, and cointegration, revealing the absence of long-run equilibrium relationships in the region. The empirical results demonstrate that economic growth (0.48-0.60 elasticity), population pressure (0.73-0.95 elasticity), and investment patterns (0.05-0.09 elasticity) remain primary drivers of CO₂ emissions. Natural capital exhibits a significant positive relationship with emissions (0.11-0.29 elasticity), supporting the environmental resource curse hypothesis. Institutional quality shows a mitigating effect on emissions, though this relationship is complex and operates primarily through long-term channels. The absence of cointegration challenges conventional Environmental Kuznets Curve frameworks and underscores the region's environmental and economic instability. These findings highlight the urgent need for integrated policy approaches combining economic diversification, institutional reforms, and sustainable natural resource management to facilitate climate adaptation in this vulnerable region.

Suggested Citation

  • Mabrouki, Mohamed, 2025. "Institutional Quality as an Antidote to the Environmental Resource Curse: Evidence from CO₂ Emissions in MENA Economies," MPRA Paper 126563, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:126563
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    JEL classification:

    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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