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ORIGINAL RESEARCH
Does the Quality of Institutions Modify
the Economic Complexity- Environmental
Degradation? Evidence from a World Sample
1
School of Management, Universiti Sains Malaysia, 11800 USM, Penang, Malaysia
2
School of Economics, Jinan University, Guangzhou 510632, China
Submission date: 2024-05-20
Final revision date: 2024-07-25
Acceptance date: 2024-08-29
Online publication date: 2025-02-13
Publication date: 2025-11-04
Corresponding author
Pol. J. Environ. Stud. 2025;34(6):6943-6958
KEYWORDS
TOPICS
ABSTRACT
Economic complexity and environmental policies have significant impacts on environmental
sustainability. Furthermore, high-quality institutions may be a necessary tool for ensuring environmental
sustainability. This study investigates the impact of economic complexity and institutional quality on
environmental degradation. It analyzes annual data from 116 countries from 2008-2021 using fixedeffects
models and the method of moment quantile regression. The results indicate that increased
economic complexity leads to higher carbon emissions. Conversely, high-quality institutions reduce
carbon emissions. Moreover, institutional quality can effectively mitigate the environmental pressures
arising from increasing economic complexity. Additionally, foreign direct investment is found to
lower carbon emissions. It was recommended that the quality of institutions should be upgraded,
that differentiated environmental policies be developed, that the sustainability of urban planning be
emphasized, and that foreign direct investment and technology transfer be promoted to foster sustainable
development.
CONFLICT OF INTEREST
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
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