Modeling the macroeconomic determinants of environmental degradation in E‐7 countries: The role of technological innovation and institutional quality

• Published date: 01 February 2023
• Author: Ahsan Anwar,Amatul R. Chaudhary,Summaira Malik
• Date: 01 February 2023
• DOI: http://doi.org/10.1002/pa.2834

RESEARCH ARTICLE

Modeling the macroeconomic determinants of environmental

degradation in E-7 countries: The role of technological

innovation and institutional quality

Ahsan Anwar

1

| Amatul R. Chaudhary

1

| Summaira Malik

2

1

Department of Economics, National College

of Business Administration and Economics,

Lahore, Pakistan

2

Department of Economics, COMSATS

University Islamabad, Lahore Campus, Lahore,

Pakistan

Correspondence

Ahsan Anwar, Department of Economics,

National College of Business Administration

and Economics, Lahore, Pakistan.

Email: ahsananwar786@gmail.com

Environmental degradation poses a severe threat to life on earth. Similarly to other

countries, emerging seven (E-7) countries have been struggling to decrease their

dependence on non-renewable energy sources by adopting environment friendly

technologies for reducing environmental deterioration and to achieve sustainable

development goals (SDGs) of the United Nations. In present study, we reassessed

the technological policies of E-7 countries, and addressed the issues of affordable

and clean energy, institutional quality (IQU), and sustained economic growth (EGR) to

address the problem of environmental deterioration. For this purpose, we have inves-

tigated the role of renewable energy consumption (REC), technological innovations

(TINs), IQU, and EGR on CO

2

emissions (CE) by using the panel quantile regression

(PQR) for the period from 1996 to 2020. The empirical outcomes of FGLS reveal that

a 1% increase in REC, TIN, and IQU reduces the CE by 0.145%, 0.233%, and 0.249%,

while a 1% rise in EGR and population (POPU) raises the CE by 0.993% and 1.546%

respectively. Similarly, the results of PQR demonstrate that REC, TIN, and IQU

reduce CE, whereas EGR and POPU increase environmental degradation. The impact

of TIN on CE is high at lower quantiles and low at higher quantiles. The impact of

IQU on CE is low at lower quantiles and high at higher quantiles Based on these find-

ings, we have recommended a comprehensive SDG-oriented policy framework, so

that E-7 countries can make progress towards achieving the objectives of SDG

16, SDG 13, SDG 7, SDG 8, and SDG 9.

KEYWORDS

CO

2

emissions, institutional quality, panel quantile regression, technological innovations

1|INTRODUCTION

Since the approval of SDGs by the United Nations in 2015 (Cf, 2015),

the entire world has been trying to achieve these goals. But unfortu-

nately, the emerging seven (E-7) economies are still far away from this

ideal track of sustainable development. These emerging countries are

facing several issues for attaining SDGs, from which global warming is

one of the foremost issues for them. Greenhouse gases (GHG) are

responsible for global warming, and CO

2

emission (CE) is the critical

component of GHG (Jun et al., 2021; Salem et al., 2021). From the last

few decades, CE has been increasing very abruptly, as in 1990, the

global CE was 21,331 million tons which reached 34,169 million tons

in 2019 (BP-Statistics, 2021). Commonly, the trade-off exists between

economic growth (EGR) and the environment in developing countries.

Because mostly developing economies meet their requirements with

fossil-fuel energy. Therefore, the impact of economic and anthropo-

genic activities on carbon emission is becoming one of the foremost

topics among researchers and policymakers (Cohen et al., 2018).

Technological innovation (TIN) is a crucial factor in raising EGR. It

is also helpful for improving environmental quality and saving

Received: 12 October 2021 Revised: 26 April 2022 Accepted: 29 June 2022

DOI: 10.1002/pa.2834

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https://doi.org/10.1002/pa.2834