Introduction

Without preserving the environment, achieving sustainable development seems very difficult because both are strongly interlinked. The major issue of the continuous rise in CO₂ emissions around the globe made the Paris Agreement on climate change harder to implement. For example, almost 30 gigatons of CO₂ are emitted around the globe in the atmosphere, which is the major cause of climate change [1]. Thus, climate change threatens the existence of humankind and sustainable development [2]. Where CO₂ emissions have been the major cause of climate change in the last decades, globalization (GLOB) has also increased through the political, social, and economic integration of economies and their international trade [3]. The economies are greatly integrated with each other than ever before, and in developing economies, GLOB has a more beneficial impact on their growth in terms of poverty reduction and income equality among nations, but GLOB’s environmental implications are still debated [4].

Farooq et al. [5] highlight that closed economies have experienced lower development than open economies, and open economies are facing more environmental challenges. Additionally, human life is greatly affected by GLOB on a global scale through the political, social, and economic integration of economies. Therefore, GLOB is increasing continuously, and developing economies may be negatively influenced by GLOB because of their unbalanced and poor environmental regulations. This may lead to pollution-intensive industries in developing economies [6]. For example, industries demand high energy, which causes high CO₂ emissions as a byproduct of GLOB, thereby leading to global warming and air pollution [7].

There are two opinions regarding the impact of GLOB and CO₂ emissions. Lee et al. [8], Shahbaz et al. [9], and Haseeb et al. [10] argued that GLOB had a decreasing impact on CO₂ emissions. On the other hand, opponents have shown that GLOB will strongly damage the environment if current industrial technologies remain unchanged [11, 12]. Similarly, GLOB increases economic growth by expanding industrial activities, which consume more natural resources, leading to a scarcity problem. Shahbaz et al. [13] also highlighted that pollution and environmental degradation are currently more intense in developing economies than 45 years ago.

The developed economies now have strong concerns with the contaminated production and manufacturing in the developing economies because economic growth through the expansion of industrialization is directly associated with environmental degradation. Therefore, open economic policies, weak environmental regulations, and poor policy stringency are the factors greatly responsible for environmental degradation and significant climate variability in developing economies [14]. Moreover, through the GLOB, the developed nations transferred their pollution-intensive industries to the developing economies due to the aforementioned reasons [5].

With the rapidly growing GLOB, international trade and climate change are also emerging as burning research topics among the research community. National and international institutions have a strong desire to produce eco-friendly goods and services in order to lower CO₂ emissions. In this context, economies start to adopt eco-friendly policies that foster the sustainable and climate-neutral production of goods and services. To produce sustainable and eco-friendly products, diversified production is one of the sustainable options, which is known as “diversified products” [15]. These diversified products are characterized as energy-efficient and considered more environmentally friendly [16]. In order to analyze the influence of trade on CO₂ emissions, trade volume is used as a proxy variable for trade, which describes the scale effect only of trade [17]. Similarly, few studies have used export product diversification as a proxy variable for trade. Currently, product diversification is widely acknowledged as a proxy variable for trade compared to export product diversification [18]. Additionally, economic fitness (ECF) is a superior method for product diversification [15].

Fig. 1.

GLOB, ECF, and CO₂ emission in developing nations.

ECF describes the ability of an economy to produce diversified and globally competitive complex goods, which fosters the long-run economic growth of an economy. As developing nations majorly emit emissions, they must transform their production structure in order to produce eco-friendly products [19]. In this context, ECF is the most important element of economic growth as well as lowering CO₂ emissions.

GLOB in developing economies significantly complicates the process of achieving sustainable development because it may cause environmental degradation. On the other hand, the ECF has a strong reduction effect on CO₂ emissions. Fig. 1 presents the average CO₂ emissions, GLOB, and ECF of developing nations. It is observed that the CO₂ emissions in the panel of 80 developing nations are continuously increasing. Moreover, their GLOB has also increased over the years at a rapid pace. Their increasing trend in the ECF indicates that developing countries are improving their capabilities to produce diversified and complex globally competitive products.

Therefore, based on the aforementioned debate, the current study is planned to investigate the individual and synergistic impact of GLOB and ECF along with gross fixed capital formation (GFCF), renewable energy consumption (REC), and urbanization (URB) in developing nations in the light of the Environmental Kuznets Curve (EKC) hypothesis. This study significantly contributes to the literature in many ways. First, it enhances the understanding of insights regarding environmental function with the inclusion of GLOB and ECF in the lens of the EKC hypothesis in developing nations. Second, it is the first study that considers the GLOB and ECF in a single frame, which has not been explored before. Third, we have also included the interaction effect between GLOB and ECF (GLOB*ECF) on CO₂ emissions. Fourth, we also analyzed the EKC trajectories or fluctuations in turning points while including both GLOB and ECF individually and together with the other aforementioned variables.

Considering the specific contribution of this study, it provides advanced insights into environmental dynamics by considering the GLOB and ECF within the framework of the EKC hypothesis. However, this study pioneered the integration of GLOB and ECF in a single analytical framework. Incorporating the interaction effects of GLOB and ECF also provides a nuanced view of their impact on CO₂ emissions. Additionally, examining the EKC trajectories and fluctuations in the turning points with individual and combined effects of ECF and GLOB provides important insights for policymakers and institutions in developing nations. The findings of the study are expected to provide important insights for policymakers and institutions in developing nations in order to conserve their environment under increasing globalization and changing production structures.

Literature Review

There is extensive literature available that explores the GLOB as an important determinant of CO₂ emissions based on different types of panel and time series data. All of them acknowledged the impact of GLOB on emissions, as GLOB enhances interaction among nations through social, political, and economic integration [20]. In the context of the GLOB impact on CO₂ emissions, the findings are contradictory. It implies that the literature reveals both a positive and negative impact of GLOB on CO₂ emissions. Considering the favorable impact of GLOB's negative impact on CO₂ emissions, we can find various studies. For example, Chen et al. [21] used a panel of 16 Central and Eastern European (CEE) nations from 1980–2016 and analyzed the impact of GLOB and financial development on CO₂ emissions along with renewable and non-renewable energy consumption. The findings of dynamic, seemingly unrelated regression revealed the negative impact of GLOB on CO₂ emissions, which implies that GLOB improves the environmental quality in CEE economies. Similarly, You and Lv [22] highlight the impact of economic GLOB on CO₂ emissions using a panel of 83 countries from 1985–2013. They found a spatial impact of GLOB on CO₂ emissions and signified that being surrounded by highly globalized economies has a strong effect on GLOB in reducing CO₂ emissions. Moreover, they also found this negative impact of GLOB in light of the EKC hypothesis. Zaidi et al. [23] used the panel of Asia Pacific Economic Cooperation (APEC) economies from 1990–2016 and applied a family of econometric models. They also confirmed the favorable impact of GLOB on environmental quality by reducing CO₂ emissions in the presence of the EKC hypothesis. Liu et al. [20] have confirmed the inverted U-shaped relationship between GLOB and CO₂ emissions based on the panel of G7 nations from 1970–2015. They described that an increase in GLOB increases the CO₂ emission; after reaching a certain level of GLOB, the CO₂ emission declines as GLOB among G7 nations increases. Lv and Xu [24] used a panel of 15 emerging nations and found a negative impact of GLOB on CO₂ emissions in the time period of 1970–2012. Haseeb et al. [10] explored the impact of GLOB on CO₂ emissions in the case of BRICS nations. They found a negative impact of GLOB on emissions, but this impact was insignificant. After applying the panel ARDL econometric model, Koengkan et al. [25] found the beneficial impact of GLOB on environmental quality by lowering CO₂ emissions in 18 Latin American nations. On the other side, many studies have found a positive impact of GLOB on CO₂ emissions, which implies that a rise in GLOB increases CO₂ emissions. For example, Bilal et al. [26] found a positive impact of GLOB on CO₂ emissions in the region of the Belt and Road Initiative economies and South Asia. Kalayci and Hayaloğlu [27] used only one dimension of GLOB, like economic GLOB, and described that the economic GLOB increases the CO₂ emission in the case of North American Free Trade Agreement (NAFTA) nations. Moreover, Khan and Ullah [28] also found that GLOB pollutes the environment by increasing CO₂ emissions in Pakistan. Phong [29] used the panel of ASEAN nations from 1971–2014 and applied fixed and random effect regression. They explored the impact of GLB, along with energy consumption, urbanization, and financial development, on CO₂ emissions in light of the EKC hypothesis. They have signified that the GLOB increases the emission of CO₂.

The GLOB and vertical specialization have strongly affected international trade [30], majorly transforming the nature of cross-border trade. It has also modified the production systems and marketing strategies. Most of the studies concentrated on the scale effect of trade on the environment. This effect describes the direct impact of trade on emissions by using imports and exports as a proxy variable for trade, which only shows the volume of trade [31, 32]. There are many other indicators that are widely used as proxy variables for trade to analyze the impact of trade on CO₂ emissions or environmental degradation, including export product diversification (EPD), import product diversification, export product concentration, and export product quality [15]. Moreover, trade has scale, composition, technology, and spillover effects on the environment. Considering the EPD, Mania [33] has used a panel of 98 developing and developed nations from 1995–2013. They explored the EPD impact on CO₂ emissions in the context of the EKC hypothesis and found a positive impact of EPD on emissions by applying the system-GMM and long-run PMG methods. On the other hand, Zafar et al. [34] have found the negative impact of EPD on CO₂ emissions in the case of 22 top remittance-receiving nations.

With growing globalization and weak and polluted production systems in developing nations, developed countries started to focus on complex and sophisticated products that consume low energy and contribute to environmental preservation [35]. Therefore, the production of sophisticated and diversified products majorly contributes to economic growth, maintains revenue, improves human skills, and fosters the adoption of advanced technologies [36, 37]. Instead of EPD, there are many studies that have focused on the economic complexity index (ECI) proposed by Hidalgo and Hausmann [38] in order to explore the environmental implications of economic activities [39, 40]. ECI shows the level of capability of a nation to produce sophisticated manufacturing products [41]. Can and Gozgor [42] have described that economic complexity lowers air pollutants in developed nations. Yilanci and Pata [43] have found a positive impact of economic complexity on emissions in China. However, due to the ECI’s linear computational approach, it is greatly criticized in terms of proxy variables as economic activities for producing diversified products [44, 45]. Therefore, Tacchella et al. [46] proposed the ECF index, which is measured based on a non-linear fixed-point iteration approach. This index considers both nations’ economic complexity and production capabilities.

Based on the aforementioned discussion, it is confirmed that the developing nations are involved in continuously growing economies, which also have serious problems with environmental degradation. Moreover, with their increasing GLOB, the current study aims to understand the dynamic relationship between GLOB, ECF, and CO₂ emissions in developing nations by analyzing the impact of GLOB and ECF within a single framework. Considering all these points, the current study extends the existing literature by analyzing the individual and synergistic impact of GLOB and ECF on CO₂ emissions in developing nations.

Materials and Methods

Results

Table 2 presents the descriptive analysis of the variables. The skewness and kurtosis show the deviation of the variables from the normal distribution. The p-value of each variable regarding the Jarque and Bera tests indicates that the null hypothesis is rejected, which implies that variables are not normally distributed.

Table 3 presents the correlation matrix, which describes whether the variables are positively and negatively correlated with each other. For example, LnREC (=-0.75) implies that as the REC increases, the CO₂ emission tends to decrease. Similarly, LnURB (=0.35) means that with an increase in URB, CO₂ emissions tend to increase. Considering GLOB (=0.69) and ECF (=0.05), both of them are also positively related to CO₂ emissions.

The findings of the slope heterogeneity test are presented in Table 4. We found significant test values of both Δ (delta) > and Adj. Δ (delta) >, which implies that the null hypothesis is rejected. It concludes that slope coefficients are heterogeneous and depict slope heterogeneity.

Table 5 presents the stationarity and CSD of each variable. The CSD is explored by using the CD-test, and its findings provide a p-value of less than 1%, which implies that the null hypothesis of no cross-section dependency is rejected. It depicts those variables as showing cross-sectional dependency, which emphasizes that any change in one country has a strong effect on the other nations within the panel.

The stationarity of each variable was assessed with CIPS and CADF; these two panel unit root tests provide the findings at both level and first difference. The outcomes of tests signify that at the first difference, each variable shows stationarity.

Analyzing the Impact of GLOB and ECF on Emissions through the EKC Hypothesis

Table 8 shows the three different models, including the individual and interaction impacts of GLOB and ECF on emissions. After integrating the GLOB in the model alone, the PCSE outcomes again confirm the existence of the EKC hypothesis in developing economies, with a positive sign of δ₁ (-=2.31) and a negative sign of δ₂ (=- 0.11). Considering the impact of GLOB on emissions in developing nations (= 0.60) is positive and significant in the light of EKC. It implies that a rise in GLOB increases emissions in developing nations. It may be emphasized through various interconnected mechanisms. With the rise in GLOB in developing nations, economies expand their industrialization rapidly due to the demand for export-oriented production, which increases energy consumption, leading to high CO₂ emissions. GLOB may also change consumption patterns, which may also encourage developing nations to use outdated technologies leading to high CO₂ emissions. Model-5 presents the individual impact of ECF on emissions through the EKC hypothesis in developing nations. This implies that the increase in ECF of developing nations causes the rise in CO₂ emissions, while this impact is much weaker (ECF = 0.003) than those GLOB (= 0.60) have on CO₂ emissions. ECF in developing nations leads to the growth of energy-intensive sectors like manufacturing and construction and the consumption of more fossil fuels. Moreover, the ECF describes the ability of developing nations to maintain their globally competitive positions, and to maintain this position, developing economies start to use cheaper sources of energy to lower their cost of production, which increases CO₂ emissions. The interaction impact of GLOB and ECF (GLOB*ECF) is presented by Model 6. The findings of Model-6 depict a significant positive impact of GLOB and a significant negative impact of ECF on CO₂ emissions. Their interaction impact (GLOB*ECF) is positive and significant on CO₂ emissions. This interaction term confirms the moderating role of ECF between GLOB and CO₂ emissions in developing nations. It can be explained by various interacting factors. The positive impact of GLOB in developing nations often attracts more foreign direct investment and enhances their trade level, which expands their industrial activities rapidly, leading to high CO₂ emissions in developing economies due to high energy consumption and increased production. On the other hand, ECF varies significantly among developing nations. ECF demonstrates its ability to produce diversified and globally competitive complex products that sustain economic growth through the development of infrastructure, institutional quality, and technical capabilities. This may initially reduce CO₂ emissions by making the industry more efficient, but rapid industrial growth, high production levels, high energy consumption through the GLOB, and an increasing level of ECF in developing nations lead to high emissions.

Table 7.

Existence of the EKC hypothesis in developing countries.

	PCSE
Model-3	Coefficient	p-values
Constant	-11.53*	0.00
GDP	2.57*	0.00
GDP2	-0.12*	0.00
GFCF	-0.021	0.33
REC	-0.44*	0.00
URB	0.069*	0.002
Wald chi2/F-statistics	27746.75*	0.00
R2	0.83
No. of group	79
No. of obs.	1975

[i] ​Note: *, **, *** depict significance levels at 1%, 5%, and 10%.

Table 8.

Analyzing the impact of GLOB and ECF on emission through the EKC hypothesis.

Variables	Model-4		Model-5		Model-6
	Coefficients	p-values	Coefficients	p-values	Coefficients	p-values
Constant	-12.20	0.00	-11.49*	0.00	-13.34	0.00
GDP	2.31*	0.00	2.591*	0.00	2.598*	0.00
GDP2	-0.11*	0.00	-0.122*	0.00	-0.128*	0.00
GLOB	0.60*	0.00			0.722*	0.00
ECF			0.003*	0.00	0.29*	0.00
GLOB*ECF					0.082*	0.00
GFCF	-0.022	0.30	-0.028	0.15	-0.038	0.165
REC	-0.45*	0.00	-0.44*	0.00	-0.046*	0.00
URB	0.05**	0.03	0.07*	0.00	0.047**	0.023
Wald chi2	31609.04*	0.00	29781.32*	0.00	30181.30*	0.00
R2	0.834		0.836		0.84
No. of group	79		79		79
No. of obs.	1975		1975		1975
EKC trajectories

[i] ​Note: *, **, *** depict significance levels at 1%, 5%, and 10%.

Considering the EKC trajectories, the baseline model describes that developing economies require a relatively high level of economic growth in terms of GDP per capita (US $ 44727.03) to reach the turning point at which CO₂ emissions start to decline. Considering Model-4, the GLOB facilitates the developing economies to reach the immediate level of GDP per capita as compared to the baseline model. It implies that the turning points due to the integration of GLOB were reduced to US $ 36647.15. It confirms that GLOB accelerates the process of economic growth by expanding industrial activities and production levels in developing nations. Similarly, when ECF was integrated only in Model-5, the turning point was also reduced to US $ 40731.38 from the point of the baseline survey. It also demonstrates that when developing economies start to diversify their production levels to maintain their competitive position in the global market, they also expand their manufacturing and industrial activities, which increase their economic growth. Therefore, the developing economies can reach the earlier turning point at EKC, but this is not as strong as GLOB alone. The interaction impact of ECF and GLOB significantly reduced the turning point to US $ 24765.02. It implies the strong synergistic impact of ECF and GLOB, where both of them together greatly increase the economic activities of the developing economies and enable the economies to experience the turning point at a much earlier stage of economic growth in terms of GDP per capita.

Table 9.

System-GMM for robustness.

Variables	Model-3		Model-4		Model-5		Model-6
	Coefficients	p-values	Coefficients	p-values	Coefficients	p-values	Coefficients	p-values
Constant	-5.10*	0.00	-0.86*	0.01	-4.50*	0.00	-0.68*	0.00
CO2	0.57*	0.00	0.78*	0.00	0.64*	0.00	0.94*	0.00
GDP	0.878*	0.00	0.32*	0.00	0.80*	0.00	0.11*	0.003
GDP2	-0.035*	0.00	-0.015*	0.00	-0.033*	0.00	-0.007*	0.001
GLOB			0.235*	0.00			0.072*	0.00
ECF					0.0006*	0.00	-0.025*	0.00
GLOB*ECF							0.007*	0.00
Control variables	Yes		Yes		Yes		Yes
F-statistics	2153.56*	0.00	20175*	0.00	38607.77*	0.00	89130.74*	0.00
Significance test (p-value)
Sargan Test	51.67	0.199	45.28	0.173	74.42	0.306	43.09	0.144
Hansen Test	45.81	0.397	59.96	0.773	50.28	0.956	61.51	0.99
2nd order Correlation	-1.03	0.155	-1.23	0.201	-1.41	0.187	-1.41	0.176

Discussion

Rapidly growing integration among nations around the world has generated serious concerns about the environmental implications of globalization (GLOB) and economic fitness (ECF) in developing economies. These economies are characterized by unbalanced and weak environmental regulations and pollution-intensive industrial activities [6]. Therefore, this study is the first to examine the individual impacts of GLOB and ECF on CO₂ emissions through the EKC hypothesis in developing nations. The robust estimators of PCSE provide important and comprehensive insights regarding the impacts of variables in light of the EKC and its trajectories in developing nations.

Our empirical analysis shows a significant and positive impact of GLOB on CO₂ emissions, along with the EKC hypothesis in developing nations. This implies that GLOB in developing nations strongly affects environmental quality and is the primary cause of pollution by increasing the impact of GLOB on CO₂ emissions. This may be explained by the weakly inefficient technologies and environmental regulations for polluting sectors that lead to a further rise in CO₂ emissions in developing nations. Our findings are in line with the outcomes of Pata [12], Kalayci and Hayaloğlu [27], Khan and Ullah [28], and Phong [29]. All these studies found a positive impact of GLOB on CO₂ emissions in different panels of nations. Jahanger [56] described a positive and significant relationship between GLOB and CO₂ emissions in developing nations. They demonstrated that trade openness, a basic element of GLOB, is the main cause because developed nations generally shift polluting industries to developing nations. Moreover, developing economies mainly focus on economic growth rather than environmental quality. Increasing GLOB increases economic activity, which substantially depends on conventional energy sources to produce goods and services, leading to high CO₂ emissions [57].

The empirical findings reveal that the ECF also had a significant positive impact on CO₂ emissions in light of the EKC hypothesis. This implies that ECF, in the case of a panel of developing nations, causes a serious environmental quality issue because developing economies do not have strong and reliable production capabilities [58] to produce low-cost and globally attractive products. This may pressure developing nations to expand their manufacturing and industrial activities without considering the environmental quality. Moreover, to remain globally competitive, developing nations consume conventional energy sources and traditional technologies [59] to produce diversified and complex goods, which may cause high CO₂ emissions. Moreover, due to cheaper economic sources in developing nations, multinational corporations shift their production to developing nations, which spurs their industrial activities along with high CO₂ emissions. The economic complexity before ECF, which is extensively considered a proxy variable for country production structure to measure the capability of a nation to produce complex exporting products [60], developing economies characterized by a high population while adopting modern technologies to enhance their economic complexity by increasing exports of complex goods are at greater risk of environmental degradation due to the deficiency of green technologies [61]. Therefore, when developing nations start to enhance their ECF, they focus only on innovations that may produce low-cost, diversified, and complex products with no concern for environmental quality.

The findings of the model also revealed a significant positive interaction impact of GLOB and ECF (ECF*GLOB) on CO₂ emissions in developing nations. It is likely that a complex and diversified production structure is a driving force behind the reduction of CO₂ emissions by fostering the adoption of environmentally friendly methods that are easily accessible through GLOB. However, it may become more complex for nations to transform their production and consumption patterns from low environmentally friendly to highly environmentally friendly products that may demand high energy consumption, leading to a high risk of CO₂ emissions [61]. Moreover, the emission level may increase owing to diversified exports, economic expansion, and trade openness because of the high consumption of economic resources and energy [62, 63], which evaporates the combined impact of ECF and GLOB. In the context of interaction impact, the ECF moderates the impact of GLOB on CO₂ emissions because, after integrating the combined effect of ECF and GLOB in the model in light of the EKC, it is observed that their combined effect is stronger than their individual impact. Additionally, ECF enhanced the impact of GLOB on CO₂ emissions. Therefore, developing nations with high ECF may experience high GLOB through production expansion and improved capabilities to scale up production and trade, leading to high CO₂ emissions. Therefore, ECF enhances the positive impact of GLOB on CO₂ emissions due to scaled-up production and industrial activities enabled by GLOB in developing nations.

Concerning the impact of GLOB on the turning point of the EKC, it was observed that GLOB significantly reduced the turning point compared to the baseline model. This may be due to the impact of GLOB on the scale of production in developing nations because developing nations expand their production levels due to GLOB and increase the demand for energy and transportation [27]. Therefore, developing nations focus on economic growth rather than environmental quality, which enables them to reach a turning point immediately. Considering the ECF and EKC trajectories, the turning points are lower than those of the baseline model, but not as strong as those of GLOB alone. The strong combined effect has significantly reduced the turning point at a much earlier stage of economic growth due to its combined large effect on the country’s economic activities through diversified production expansion and trade openness. This implies that developing nations have great potential for expanding their economic activities through ECF and GLOB, but they require strong and careful international policies with no compromise on the domestic environment while integrating with other nations.

Conclusion

Globalization greatly affects human lives through the political, economic, and social integration of developing nations. Moreover, increasing globalization has caused serious environmental issues around the world, especially in developing nations, which are characterized by high population growth, high poverty, uneven distribution of natural resources, and different production scales. Simultaneously, the global demand for green products around the world requires the production of sophisticated and complex goods with low emissions and low energy consumption. This changes the production structure of developing economies to maintain their competitive positions in the global market. Thus, the current study analyzes the individual and synergistic impacts of globalization (GLOB) and economic fitness (ECF) on CO₂ emissions through the EKC hypothesis in developing economies.

The econometric method findings based on a panel of 79 developing economies from 1995 to 2019 confirm the existence of the EKC hypothesis in developing economies. This describes how increasing economic growth causes high CO₂ emissions, and after reaching a certain level of GDP per capita, the rise in economic growth diminishes CO₂ emissions. In light of the EKC hypothesis, both GLOB and ECF had a significant positive individual impact on CO₂ emissions. Therefore, GLOB and ECF in developing economies deteriorate environmental quality. With increasing GLOB, developing economies expand their industrial activities, which consume more energy, leading to high CO₂ emissions in developing economies. As many developing economies shift their low environment-friendly production to green products without modern and energy-efficient technologies, this may cause more emissions. The findings regarding the interaction impact of ECF and GLOB on CO₂ emissions based on the EKC hypothesis indicate a significant positive impact of ECF*GLOB on CO₂ emissions in developing economies. It was concluded that diversified exports, trade openness, and economic expansion in developing nations cause high emissions due to their high demand for resources and energy, which eliminates the combined favorable impact of ECF and GLOB on CO₂ emissions in developing economies. Moreover, the ECF moderates the impact of GLOB on CO₂ emissions, as economies with high ECF increase their GLOB through increased production scale to enhance their trade, which leads to environmental degradation. Concerning the ECK trajectories, ECF and GLOB reduced the turning point significantly compared to their individual impacts and baseline models.

This study has strong policy implications because the findings refute the current policies in developing nations. First, to achieve a favorable impact of GLOB and ECF in reducing CO₂ emissions, developing nations must develop a strong institutional framework. This institutional framework must strictly implement and enforce environmental standards to capture the environment-oriented benefits of GLOB and ECF. For this, developing nations must strengthen their regulatory frameworks, which must be compatible with international standards. Moreover, they must develop effective trade policies that encourage only the import of green technologies, which turns the positive impact of globalization into a negative one on CO₂ emissions. Similar to the favorable impact of ECF, developing nations must invest in sustainable infrastructure, especially environmentally friendly energy sources, which still have great potential for improvement. Moreover, they provide incentives for R&D in environment-friendly technologies and practices. Moreover, they must increase their international cooperation through climate agreements, foreign aid, and grants, and the mutual collaboration of neighboring countries to increase access to knowledge, resources, and financial support to enhance the diminishing impact of economic fitness on CO₂ emissions. At the domestic level, the development of effective economic policies, including carbon pricing, subsidies, and incentives, may encourage green investment to improve the economic fitness level. Thus, economies that increase their economic fitness may have a favorable impact on CO₂ emissions to align economic growth with environmental preservation.