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Governance, Clean Energy, and FDI - Pathways to Sustainability in CEE

Author

Listed:
  • Mihaela Simionescu

    (Faculty of Business and Administration, University of Bucharest, Bucharest, Romania; Institute for Economic Forecasting, Bucharest, Romania)

  • Monica Raileanu Szeles

    (Faculty of Economic Sciences and Business Administration, Transilvania University of Brasov; Institute for Economic Forecasting, Bucharest, Romania)

  • Beata Gavurova

    (Technical University of Košice, Faculty of Mining, Ecology, Process Control and Geotechnologies)

  • Urszula Mentel

    (Rzeszow University of Technology, Department of Projects Management and Security Policy, Faculty of Management)

Abstract

In light of the European Green Deal, contemporary Environmental Kuznets Curve (EKC) literature emphasizes non-income mechanisms for mitigating environmental degradation. In particular, the decarbonization potential of renewable energy relies heavily on institutional frameworks that facilitate or impede green initiatives. This study examines the Renewable Kuznets Curve across 10 Central and Eastern European (CEE) economies from 2006 to 2025. Alongside standard economic controls - economic freedom, foreign direct investment, private sector domestic credit, and labor productivity- the empirical framework incorporates institutional metrics from the Worldwide Governance Indicators alongside language-specific Google Trends data on corruption-related search volume. Employing Panel Dynamic OLS (PDOLS) and Pooled Mean Group (PMG-ARDL) estimation techniques, the findings reveal that government effectiveness curbs emissions across both short- and long-term horizons, whereas rule of law and corruption control yield substantial long-term ecological benefits. Furthermore, search-based corruption queries serve as a viable real-time proxy for institutional performance, offering practical value for environmental nowcasting.

Suggested Citation

  • Mihaela Simionescu & Monica Raileanu Szeles & Beata Gavurova & Urszula Mentel, 2026. "Governance, Clean Energy, and FDI - Pathways to Sustainability in CEE," Bulgarian Economic Papers bep-2026-04, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Sep 2026.
    • Handle: RePEc:sko:wpaper:bep-2026-04
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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